When we talk about the digital transformation of the water industry, the focus often turns to advanced economies in North America, Europe, and Asia-Pacific. And not without reason—countries such as the United States, the United Kingdom, and Australia account for the lion’s share of companies, project implementations, M&A deals, and venture investments that Bluefield has tracked to date in our Digital Water research service.
But as competition continues to heat up in the digital water sector, leading hardware, software, and service providers are increasingly seeking greener pastures, turning their attention to emerging pockets of opportunity across Latin America, Asia-Pacific, the Middle East, and Africa. According to Bluefield’s global digital water forecast 2022-2030, emerging and developing markets will account for roughly 30.0% of the US$387.5 billion in total global digital water spend expected over the next decade. What’s more, digital water expenditure in emerging markets is projected to scale at an annual rate of 11.4%, compared to 7.7% for advanced economies.
What is driving this growth, and where are the growth opportunities for digital water technology and service providers? Let’s look at the key drivers, trends, and market dynamics:
- Emerging market utilities in initial stages of digital water journeys, creating vast opportunities for long-term market expansion. While larger, more progressive utilities in the advanced economies of North America and Europe increasingly turn to cutting-edge digital solutions such as artificial intelligence, predictive analytics, and digital twins, utilities in emerging markets are at much earlier stages of their digital water journeys. In China, for instance, large urban utilities are making initial investments in core hardware and software solutions like meters, billing and customer management systems, and asset management platforms, creating new opportunities for growth in technology segments that have become more saturated and mature in other parts of the world.
- Rapid population growth, urbanization spurring greenfield water infrastructure buildout, enabling technology leapfrogging. Emerging and developing markets such as India are facing pressure to meet Sustainable Development Goal targets for water and sanitation access for their fast-growing and increasingly urban populations, spurring investment in new, modern treatment and conveyance infrastructure. This, in turn, creates opportunities for technology leapfrogging, with smart metering, remote monitoring, and SCADA capabilities embedded at the outset as part of new 24×7 water supply networks and greenfield smart city initiatives.
- Highly consolidated, centralized utility sectors in select regions see greater investment in holistic infrastructure, resource management. In the Gulf States, water is managed by large national multi-utilities (e.g., Dubai Electricity & Water Authority, Qatar General Electricity & Water Corp.), enabling water operations to enjoy the spillover benefits of investment in cutting-edge customer service, remote monitoring, and asset management platforms which are driven principally by the electric side of the business. A heavy reliance on desalination and wastewater reuse in the region results in increased focus on digitalization at the plant level, while integrated smart city initiatives (e.g., Dubai, Abu Dhabi, Neom) are creating showcase project opportunities to educate the regional market.
- Private participation opening door to innovation, digitalization. In select Latin American markets (e.g., Brazil, Chile), increasing private participation in the water and wastewater sector provides an avenue for greater market maturity, importation of foreign expertise and technology, and a growing emphasis on digitalization to drive efficiencies. The Chilean water industry, for instance, is dominated by large, regional utilities backed by both local and foreign private capital, investing in remote monitoring capabilities to better manage their vast networks of customers and assets.
Bluefield’s new global digital water forecast report and accompanying data dashboard provide more granular insights on these markets and many more, with in-depth forecasts, utility market data, and analysis across 45 countries and 34 unique technology segments. Our team of analysts offer ongoing coverage of the key competitive, technology, investment, and policy trends shaping the digital transformation of the water industry worldwide—in advanced and emerging markets alike—to give our clients the tools and resources they need to build effective digital water strategies.