"No doubt that credit problems slowed some projects in the market," Connors says. "Some desalination projects rely on bank financing, and some of that has fallen apart. But it's clearly a temporary delay."

Indeed, the U.S and other nations dealing with century-old water infrastructure face inevitable upgrade projects whose costs will be in the trillions of dollars. The U.S. tab alone is estimated at $1 trillion over the next 20 years.

But some of the most promising companies aren't public, nor are they the most obvious. "You want to avoid municipal markets and niche industrial markets," says Laura Shenkar, a principal at the Artemis Project, a San Francisco consulting practice that links water technology companies with investors and corporations. "That would remove a lot of what classic water industry people would consider 'the market.'"

Instead, one of Shenkar's focus areas is on storm water control, which the Environmental Protection Agency is actively engaged in regulating. "Another exciting area is anything that dramatically reduces the use of potable water on a site or wastewater coming from a site," she says.

In April, Artemis announced its inaugural list of the top 50 emerging water-related technology companies. The list included AbTech Industries, an Arizona company focused on storm-water filtration; Aqua Pure Technologies, an Israeli company that uses a proprietary nonthermal plasma technology to remove micro-pollutants from contaminated drinking water; and SCFI Group, a sludge treatment company in Ireland.

Shenkar says the venture capital community thus far hasn't turned on the spigot for water-related investments. Indeed, VC investment in the so-called "cleantech" arena-including solar, wind and geothermal energy-totaled roughly $1.7 billion in last year's fourth quarter, whereas the investments for water and wastewater were practically nothing. Shenkar's group has therefore reached out to financial advisors as a funding source. "The investors who are making a difference are usually high-net-worth individuals and family offices," she says.

Her sales pitch isn't about feel-good environmentalism. "We're not selling water because it creates a beautiful environment," she says, adding that emerging technologies are "bottom-line business values based on cost and benefit decisions."

 

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