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A sign indicating that recycled water is used to water plants is seen in Burbank, Los Angeles, California March 19, 2015. California Governor Jerry Brown and top lawmakers on Thursday announced a $1 billion emergency legislative package to deal with the state's devastating multi-year drought. The state is entering the fourth year of record-breaking drought that has prompted officials to sharply reduce water supplies to farmers and impose strict conservation measures statewide. REUTERS/Lucy Nicholson:rel:d:bm:GF10000031973
A sign indicating that recycled water is used to water plants is seen in Burbank, Los Angeles, California. Photograph: Lucy Nicholson/Reuters
A sign indicating that recycled water is used to water plants is seen in Burbank, Los Angeles, California. Photograph: Lucy Nicholson/Reuters

The California drought is a problem Silicon Valley isn't helping to solve

This article is more than 9 years old

While some water technology companies take on solving California’s drought, tech kingpins prefer to follow the money to mobile apps and internet startups

California’s drought – which last year is estimated to have cost the state’s agriculture industry $1.5bn and more than 17,000 seasonal jobs – has been met with a drought of ideas from some of the world’s most out-of-the-box thinkers.

But while close to $12bn went into just internet startups last year – even as analysts talk about another emerging internet bubble – only few hundred million dollars are traditionally invested in water startups every year.

In 2014, among the 60 deals that were done in water, as tracked by the Cleantech Group’s i3 research, there was funding for a company called Axine Water Technologies that makes a cell (with electrodes like a battery) that can clean waste water for the chemical or oil and gas industries. Another startup that found rare funding last year was MemTech, which makes low-cost, ultra-filtration membranes that clean wastewater.

But none of those companies have the profiles (or money from) California residents Mark Zuckerberg, Peter Thiel or Tim Cook; none of them have half the hype of pie-in-sky Hyperloop – the crazy transportation idea that has the attention of multiple competing startups – self-driving cars or apps of the day like Meerkat.

The problem is, according to water industry leaders, that there’s no value in saving water unless society starts placing a value on water. Water is a commodity in many places, often free or priced at a bare-bones cost, so it’s difficult to build businesses around something that isn’t valued. At a summit focused on water innovation in the face of the drought last September in Berkeley, California, water execs called this problem “the misaligned price of water”.

The business of delivering cleaner and more efficient water is tough. And in contrast, the barrier to building, say, the next-photo sharing mobile app or connected device, is lower than it’s ever been.

The time and money it takes to commercialize more science-dependent water tech innovations – like new membranes for water desalination – is far greater than it is for commercializing internet technologies. “An investor that puts money into dotcom companies can get a return on that investment in three to five years, while for a water tech company it could be over a decade,” said James Fotouhi, a research analyst at BlueTech Research, a firm focused on intelligence for the water industry. The same difficulties have plagued many Silicon Valley energy startups over the years, including many of the companies that tried to manufacture the next-generation of thin, flexible solar panels.

And solving California’s drought – and helping to better manage global water resources in an increasingly water-constrained world – isn’t necessarily a problem that needs to be solved by new technology. Other regions around the world like Israel are already successfully using (and exporting) available water conservation and cleaning technologies.

As David Sedlak, co-director of Berkeley Water Center, told the tech news site Re/code last year: “Solving the problem of water supply over the next 10 or 20 years is going to rely on technologies that are here and mature now.”

There’s no reason to wait to deploy future disruptive water innovations, when there’s current water tech that just needs financing and maybe the right business model to deploy now.

Israel reuses about 80% of its municipal wastewater, mostly for irrigation, and plants are using activated sludge (circulated micro organisms), membrane filtration and stabilization ponds, among other methods. Israel is also aggressively using conventional reverse osmosis desalination tech to clean seawater and is now a world leader for desalination.

From a startup perspective, one area that is ripe for new ideas and entrepreneurs is helping bring the world’s water infrastructure into the digital age and making it much more efficient, similar to what is now happening with the power grid. At a conference in San Francisco last week, startups like Lagoon, Valor Water Analytics, and Fathom, showed off algorithm and data-driven water products for companies and water utilities.

The majority of California’s (as well as the world’s) water use goes to agriculture – not to water used by cities, industries or the water-intensive energy industry. And agriculture is actually one area where Silicon Valley is starting to pay a lot more attention recently. Investors call this sector “precision agriculture” and it’s focused on using the latest computing technologies – from robotics, to big data tools, to drones to sensors – to help farmers deliver crops with less energy, water and fertilizer.

The large tech industries in the area can also just help by starting to make the same types of aggressive pledges to water conservation and reuse that they’ve started to do with issues like clean power. Google, Apple and Facebook have all made aggressive pledges to adopt large amounts of clean energy to power their data centers, despite the early nature and sometimes higher cost of these goals. Google has experimented with using recycled wastewater to cool a data center in Georgia, and seawater for a data center in Finland.

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