Water Industry News

Aging U.S. Water Infrastructure Requires Increased Government Spending on Restoration and Upgrading

PALO ALTO, Calif.--June 6, 2005--With water becoming a scarce commodity, the aging U.S. water infrastructure is a cause for much concern. Although government spending in this sector is substantial, the infrastructure requires urgent restoration for compliance with updated water safety standards. What remains is a gap between budgeted and required investments. Remedial action on this front will give water equipment companies the necessary impetus to grow at a faster rate.

New analysis from Frost & Sullivan (www.frost.com), U.S. Municipal Water Equipment Market: Investment Analysis and Growth Opportunities, reveals that revenue in this market (excluding the pipes and fittings sector) totaled $4.09 billion in 2004 and projects to reach $5.22 billion by 2011.

The municipal water sector accounts for 40 percent of the total water usage in the Unites States. While water safety and quality concerns are the primary drivers for many investments made at the municipal level, the need to disseminate drinking water efficiently through structured water mains is drawing considerable industry focus.

"Water, a basic necessity, is turning out to be an investment necessity," notes Frost & Sullivan Research Analyst Santosh K. Ejanthkar. "The Environmental Protection Agency (EPA) estimates that heavy investments will be required in the U.S. to upgrade or replace the water infrastructure to ensure compliance with the safety standards prescribed by the Safe Drinking Water Act."

In order for water equipment manufacturers to take advantage of the increasing opportunities in the municipal water treatment and distribution sector, they must develop new technologies to treat emerging contaminants.

While developments in ozone and ultraviolet (UV) technologies are expanding the application areas of these technologies, membrane technology may eventually replace conventional filtration equipment, due to its increased reliability financially viable technology. By upgrading aging infrastructures with membrane treatment systems, municipalities can achieve cost savings in the long run.

However, advanced water treatment systems are relatively capital intensive, which affects public municipalities who often have limited funding.

Nonetheless, the current state of water municipalities and increasing public awareness on drinking water quality standards will force federal agencies to implement corrective action at a quicker pace.

As the government looks to increase its focus on improving the national water infrastructure, water equipment vendors stand to benefit from resultant opportunities and display solid growth. Water meter companies may fare even better on account of the increased demand for advanced meter reading equipment.

"Until recently, the water sector had been largely ignored by the financial community," says Ejanthkar. "However, with conglomerates buying out smaller companies and a growing number of investors eyeing this sector, the water equipment market promises healthy opportunities for vendors."

U.S. Municipal Water Equipment Market: Investment Analysis and Growth Opportunities, part of the Financial Benchmarking & Analysis in the Water Industry subscription, provides insight into the various segments of the municipal water markets: water treatment equipment, water meters & accessories, water pumps & components, and water pipes & fittings. The study provides a comprehensive financial analysis of leading U.S. water equipment firms to support the investment and financial analysis needs of decision makers in the water arena. Executive summaries and analyst interviews are available to the press.