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Industry Report

Industry reports, briefs and video-clips issued by Samsung Economic Research Institute

Water, a Potential Lucrative Business

Water, a Potential Lucrative Business

KIM Hyun-Han

June 23, 2009


Welcome to our video program. I'm Hyun-Han Kim from the Technology and Industry Dept.

Water has grown in importance as water shortages have grown frequent around the world. Water, once regarded as just a natural resource, has developed into a technology- intensive industry. Today, we will take a look at the water industry and the business opportunities it can provide.

Global warming, increased water usage and concentration of water resources in certain areas are intensifying water shortages worldwide. Shortages of clean water and aging infrastructure are also problems. Some countries such as China, India, Africa near the Sahara desert, and Middle Eastern countries are now facing dangerous water shortages.

What about water resources in Korea? Korea has a severe regional disparity in terms of water resources. The southeast coast of Cheju island has as much as 1,800mm of annual rainfall whereas the mountainous regions in the North have only 550mm of annual rainfall. Furthermore, over 70% of annual rainfall arrives in the summer monsoon season. This is why Korea faces periodic floods and belongs to the high flood risk group. Its flood risk level is 6.85, more than twice the US at 2.28 and 2.81 for Japan.

Shortage in water resources is another problem. Korea's water poverty index is 62.4, 43rd out of 147 countries. Compared with OECD countries, however, Korea is still low, ranking 20th among 30 OECD countries. Korea is one of many countries which need to develop water technologies to tackle its water shortages and its regional and seasonal disparity of water resources.

What water technologies are gaining attention these days?

First, there are various technologies available to resolve water shortages. Some of these include decentralized rainwater reserve systems, desalination technologies, and deep seawater technologies. Decentralized rainwater reserve systems can expand water supply capacity by recycling rainwater. This system uses small rainwater reserves installed in many cities to supply water rather than depending on several dams. The representative example is ‘Star City,' a commercial complex in Gwangin-Gu, Seoul. ‘Star City' has a rainwater reserve of a total 3,000 tons on the fourth basement floor. This commercial complex uses 40,000 tons of rainwater throughout the year thanks to this rainwater reservoir, which is comparable to 66% of the rainfall during the past year.

Desalination technology is removing salt from seawater and turning it into multipurpose water. This technology uses seawater, which covers 68% of the earth. This is considered the most effective way to tackle water shortages. As for desalination technology, there are two techniques available, distillation and membrane separation technology. Currently, the world market is focusing on the membrane separation method for its lower energy consumption and cost-effectiveness. The membrane separation method is used for 45% of the world's desalination market. This market is expected to grow by 15% annually. In December 2006, desalination plant projects were initiated to develop membrane separation technology. These projects used a 150 billion dollar investment over five years and 8 months.

Deep seawater refers to seawater near the sea floor where sunlight does not reach. Currently, deep seawater is receiving attention as a future environmentally-friendly natural resource as it has abundant nutritive salt and minerals. The applications of deep seawater are extensive, ranging from food, to health to cosmetics. Since the deep seawater business was initiated by the US in 1972, the deep sea water market has grown, particularly the drinking water market, in both Japan and Taiwan. From 2009 Korea has pushed ahead government research projects to develop high value added technology from 2000.

Second is water reclamation technology which recycles sewage after special treatment. The market for water reclamation, which was worth US$1.6 billion as of 2007, will be growing 18% annually. It will reach the level of a US$72.5 billion market by 2030. Semiconductor plants which consume a large amount of industrial water will likely increase the use of recycled water. Currently the membrane bio reactor process is rising as a promising technology. This process can filter floating particulate matter completely and its high cost efficiency will likely boost the growth of the future water reclamation market.

Lastly, there is total water management. Total water management systems use IT technology in managing water resources. Last March, IBM publicly announced that it will advance to the water industry. IBM is planning to provide a monitoring system by utilizing its own cutting-edge IT technology to prevent water pollution and promptly react to emergencies. IBM's project called “SmartBay” uses its cloud computing service to monitor ocean waves, beach ecosystems, and water pollution levels. IBM will develop this SmartBay further so that it can predict the state of water.

The water industry is currently one of the most promising infrastructure industries. Since it combines water management, environment, construction, engineering, agriculture, and biotech, many companies are turning their eye to this industry to seek business opportunities. In this area, it is more important to invest in developing core technologies rather than expanding simple infrastructure investment.

Korea is attempting to introduce various water technologies but is still lagging behind in many others. What Korea should do now is developing core technologies and explore water technology markets. Membrane separation technology, a newly emerging technology paradigm should not be missed.

Thank you for watching. I'm Hyun-Han Kim.

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