Report urges action on several fronts to capitalize on Canada's strong water sector

Canada must move strategically on several fronts to ensure that has the research, technological and financial capabilities to capture a significant share of the growing global market for clean and sustainable water, concludes a new report by the Blue Economy Initiative (BEI). While Canada is well positioned to take a leadership role, it says the country first must develop a national strategy and roadmap, as well as tackle perennial innovation challenges such as access to capital, scaling up of promising companies and reinforcing and coordinating the distributed research base.

The BEI — a joint project of the Canadian Water Network (CWN) Network of Centres of Excellence, the Royal Bank of Canada (RBC) and the Walter and Duncan Gordon Foundation — produced the report to stimulate future discussion around options that could determine the degree to which Canadian-based technology firms can seize opportunities in global markets, which are worth $500 billion and estimated to grow to $1 trillion by 2020.

The report — entitled Canada as the Water Solutions Country: Defining the Opportunities — is the third in a series produced by BEI. The first — Running Through our Fingers: How Canada fails to capture the value of its top asset — found that the data required to determine water's economic benefit was "disturbingly incomplete"; a situation that has not changed in nearly 20 years since the first important study on water's economic impact was commissioned by the federal government.

Despite the less than precise understanding of water's economic impact, it's universally agreed that the market is huge and is only going to get bigger as the impacts of a growing population, pollution and climate change put increasing pressure on the quest for solutions.

"Here is an opportunity to create jobs by building a sector for which there is huge global demand and where we have significant capabilities," says report author David Crane, a veteran business journalist. "The biggest concern is that we miss the opportunity. The private sector must play a pivotal role. There are a lot of existing things happening but can we get the private sector engaged?"

champions

For that to occur, the sector requires champions and if they don't come from the private sector, business must be involved in identifying them.

"The BEI is doing it with RBC support and the Walter and Duncan Gordon Foundation is also pushing," says Crane. "But it's like forming a cluster. It can't be just government or there are no legs."

Within the business community, Crane suggests there are several strong candidates who could become champions for the sector including London ON-based Trojan UV or David Henderson, managing partner of XPV Capital Corp, a Toronto-based a venture capital fund specializing in leading-edge water technologies.

The report contains a representative list of more than 40 companies — many focused on niche or high-value segments of the water market — that comprise the private sector foundation upon which Canada can build. Many are already globally focused and have taken advantage of NAFTA regulations to export into the US and Mexico. China and India represent expanding markets that hold massive potential for growth.

The Global Cleantech 100 ranking identified 11 firms in the water and wastewater category and three were Canadian. The Artemis Project ranking found two Canadian firms among the top five water technology companies and five in its top 50 list.

Even though Canada's two largest water tech companies — Trojan UV and Zenon Technologies — have been acquired by foreign companies, Crane says they remain a strong base in Canada.

"GE Water and Process Technologies (Zenon) is a major presence in Oakville and Trojan UV (a subsidiary of Danaher Corp) is running as a separate company," he says.

On the research side, Canada has considerable strength which is integrated nationally through the CWN and provides a solid base for skills development. A relatively high level of water infrastructure regulation and water management systems has helped to place Canada fourth in a Conference Board of Canada ranking of 17 peer countries.

"There's a lack of recognition of the value of water. It's a fundamental problem for getting the drivers, setting the agenda and getting the funding," says Bernadette Conant. CNW's executive director. "We've partnered with a bank and a leading foundation and our core mandate is to move the discussion towards more sustainable water management and social and economic benefits. We need to do the right kinds of research."

Like BEI, CWN has also commissioned several reports with the latest on the role of water in the production of food due out this summer.

Conant says Canada has several advantages that can work to the country's benefit in exploiting its broad-based water expertise, the most important being a research culture of research collaboration.

"The way we connect culturally and institutionally is a huge advantage. We have a strong history in aquatic and ecosystem science as well as water treatment and water energy. We're also gaining strength in the social sciences on the economic side and the entrepreneurship side," says Conant. "Our greatest strength is our ability to combine research strengths and create responsive, resilient systems. The US could never get this to work (and) European nations are more discipline-based. This advantage will be key going forward."

The funding of water research comes from an array of sources but by far the largest single funder is the Natural Sciences and Engineering Research Council. The report says NSERC invested $54.1 million in water-related projects in FY11-12 in addition to funding 13 water-related Industrial Research Chairs. Water also figures prominently in two Canada Excellence Research Chairs, while 86 Canada Research Chairs are water-related.

But Conant stresses that many research areas which may not directly relate to water can be critical in building a vibrant and prosperous water sector.

"Soft skills are key. You can't pigeonhole engineers in Silicon Valley. Allow them to be adaptive. Water is the same way. You don't train researchers to research solutions," says Conant. "You need adaptive management and a movement to larger systems, then decisions can be made on how the system is behaving ... Research areas and the solutions will become evident. Define the problem and allow the people in the room to respond with their particular skills and expertise."

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