The water table is the new cap table.

Water insecurity is coming for the P&L. How do you compete when margins shrink and competition grows?

Download bundle

Welcome to the Era of Water Insecurity

Water insecurity, driven by climate change, is reshaping water management and treatment.

  • Why this matters: Long considered a commodity, scarcity and increasingly tough regulations are forcing water to behave more like an asset class, a change that will have a profound impact on every sector of the economy.

We’ve spent the last year listening to our customers, reviewing the science, and discussing how this shift will impact industrial brands that rely on water and operators who serve them.

  • What’s clear: Water operations (private or public, first-party or third-party) is being asked to be more strategic, play a role in interdisciplinary planning, and do more with less so that the P&L isn’t negatively impacted by the changes underfoot.

Nine themes are shaping our thinking at CarboNet:

1. Regulations: Governments will intervene as water insecurity rises. Some policies will be predictable and easy to accommodate, while others will be as unpredictable and damaging as the climate itself. Leaders should game out scenarios and adjust their strategies and investments for maximum resilience—and minimum penalties.

2. Collective Action: Communities are suing corporations and boards for water mismanagement, including issues like chemical waste or disputes over access. While good PR helps, root changes to access, treatment, and drawdown have to be on the planning table.

3. Costs: OPEX will be the star of the show as scarcity drives up the price of water and CAPEX is deemed too costly to overhaul treatment systems. Expect operations to offload more to third-party vendors, and increased interest in novel chemistry (ahem) that lowers cost-to-treat.

4. WaaS: While operations might not have money for big ticket items like DAFs or clarifiers, the mobile phone supply chain has flushed the industry with inexpensive components, making sensors, monitors, and—finally!—data more easily available.

  • Vendors will push Water-as-a-Service. Data dashboards, a staple of the tech scene, will become a fixture in the treatment industry, opening pathways to predictive monitoring.

5. Interdisciplinary teams: Water insecurity makes outcomes less predictable—a problem for rigid management models. As challenges become more complex, interdisciplinary teams—drawing across the org horizontally rather than just vertically—are the ones solving problems and impacting the bottom line.

  • Management should push for increasingly flat hierarchies and dynamic teams, enabling those who are closest to the source of risk to shape the agenda.

6. Talent: Water insecurity is as big a threat to mankind as carbon, yet today’s best and brightest are drawn to the latter as water management watches its workforce age out. Companies who embrace modern tech and technique will outpace their rivals, while mission-driven firms will run even faster.

  • Can’t hire the best? Expect to see the rise of outsourced talent and remote monitoring/automation as 3rd-party vendors rush to fill the gaps that corps can’t fill.

7. Industry activity: Expect more M&A at the top and startup funding at the bottom as the industry copes with accelerated change.

  • Big players are bulking up to take on massive international projects as regulations trigger a wave of new incentives.
  • Startup activity will steadily increase as investors look to bet on the next unicorn, and talent, frustrated by slow-moving BigCos, takes the leap to entrepreneurship.
  • Client-side, big B2B and B2C will embrace joint-ventures, divestitures, and mergers as regulations and legal challenges redraw market opportunities.

8. Brand: Expect emotion to play a part in strategic planning as leaders invest in brand management to ease anxiety with regulators, investors, and activists. Much of it will be greenwashing, but mission-driven companies will face less headwinds as they’re embraced by stakeholders looking for real heroes and problem-solvers.

9. Arbitrage: Companies will gain leverage in working with regulators, investing in new treatment tech, and attracting the best talent as the water crisis intensifies. It has never been more true that “ships don’t sink because of the water around them; ships sink because of the water that gets in them.”