The Future of Digital Water: AI, IoT, Cybersecurity Trends & Challenges
The water industry is in the midst of a digital transformation, powered by cutting-edge technologies that are reshaping how we manage this vital resource. From artificial intelligence and the Internet of Things (IoT) to advanced data analytics, the realm of digital water solutions is revolutionizing water conservation, distribution, and treatment.
At the forefront of this revolution is Eric Bindler, a Senior Research Director at Bluefield Research, who leads the firm's digital water research. With his deep expertise in the field, Eric provides a comprehensive overview of the latest trends, challenges, and opportunities in the digital water landscape.
This thought-provoking episode delves into the broad spectrum of digital water technologies, from legacy systems like SCADA to emerging innovations like IoT and AI. Eric sheds light on innovative business models that are enabling utilities, especially small and mid-sized ones, to access cutting-edge digital solutions, overcoming resource constraints and technical expertise gaps.
Moreover, the discussion explores the critical role of cybersecurity in protecting water infrastructure from escalating cyber threats, as well as the impact of digital technologies on reducing the water industry's energy and climate footprints.
What you'll hear in this episode:
- The broad spectrum of digital water tech, from legacy systems to emerging innovations
- Innovative business models enabling utilities to access cutting-edge digital solutions
- Cybersecurity's critical role in protecting water infrastructure from escalating threats
- How digital tech reduces the water industry's energy and climate footprints
- Emerging water quality issues like PFAS and microplastics, and potential digital solutions
- Addressing the water industry's workforce challenges with digital tools
Listen On:
Watch the interview:
Meet Eric
Eric Bindler is a Senior Research Director at Bluefield Research, a leading market research firm focused on the global water industry. As the head of Bluefield's digital water research, Eric analyzes how emerging technologies and services are transforming water management. His expertise spans digital solutions like AI, IoT, cybersecurity, data analytics, and intelligent water systems.
Through custom consulting, Eric guides companies on market entry, M&A strategy, and competitive landscapes within the water technology space. His insights on digital water trends, challenges, and ESG implications make him a valuable resource for water innovators.
The Book, Movie, or Show
In our quest to discover the literary influences shaping our guests' visions, one title stands out in Eric's repertoire.
"The Death and Life of the Great Lakes" provides an insightful portrait of the ecological crisis affecting the Great Lakes, which hold 20 percent of the world's surface fresh water. This compelling read delves into the threats posed to these lakes, their historical significance, and the potential solutions for their preservation.
From the late 1800s, engineering marvels circumvented natural barriers to connect the lakes to the Atlantic Ocean and the Mississippi River basin, bringing about unprecedented ecological consequences. The introduction of invasive species like the sea lamprey and zebra mussels disrupted the native ecosystem and continue to pose threats to national infrastructure.
Egan also tackles the issue of toxic algae outbreaks resulting from over-fertilization of farms, leading to large biological "dead zones" that jeopardize fresh water supply. This book serves as a wake-up call for the urgent need to restore and preserve these valuable water bodies and would be a great read.
Contains affiliate Amazon links.
Transcript
00:00
Eric Bindler
Google just put out kind of a new corporate sustainability ESG report, and their water consumption has gone up like 20% across the company because of, like, AI training, these new chat GPT like platforms and internal types of AI products, we define digital water as basically anything related to data in the water industry. So collecting data, moving data, storing data, managing data, analyzing data, using data, and it really encompasses a broader scope of older technologies that are still very much important in the industry. And so, again, that does include artificial intelligence. It does include IoT.
00:39
Ravi Kurani
Welcome to another episode of Liquid Assets, where we talk about the intersection of policy, management and technology, all as it looks at the world of water today. We have an awesome guest for you, Eric Bindler from Bluefield Research.
00:53
Eric Bindler
Hi, everybody. My name is Eric Bindler. I'm a senior research director at Bluefield Research. I'm responsible for our digital water service as well as industrial Sherlock, water.
01:01
Ravi Kurani
Eric, how you doing today?
01:02
Eric Bindler
Doing well, Ravi, how about you?
01:04
Ravi Kurani
I am doing good here in LA. The weather, the weather. Weather can't better. We just hopped in right before I hit the record button here, you lead Bluefield Research's digital, you know, side of its research. And my question was like, what exactly does digital mean around what Bluefield does?
01:24
Eric Bindler
Yeah, absolutely. So I'll give you maybe two responses to that in terms of just first, for background on what Bluefield does. Right. So we're a market research firm. We're focused exclusively on the global water, wastewater and stormwater industry. And we really, more than anything, what we do is we work with companies to just help them understand the market dynamics within the water sector.
01:45
Ravi Kurani
Right.
01:45
Eric Bindler
Whether that be players that are deeply embedded in water, just understanding shifts in technology, shifts in policy, shifts in demand. But also, we work with a lot of outside firms that are increasingly interested in whats going on within water, trying to figure out a way to invest or establish a foothold in the industry. A lot of it is generating data, analyzing data, discussing company strategy, company trends. We forecast markets of various types within water. And we cover the whole gambit of the industry. A lot of our focus has been on kind of the municipal or the utility sector. So understanding what municipal water managers are doing and what theyre investing in and whats keeping them up at night, but also increasingly were building out our footprint in the industrial side of things, too.
02:32
Eric Bindler
So looking at what are data centers doing about water, what are food and Bev manufacturing facilities and that kind of thing as well. So to the question of digital specifically, thats really been over the past couple of years. It was kind of a, a service that we launched, I want to say, in maybe 2017, 2018, around when I started at Bluefield. And we've really seen a tremendous amount of interest in it. A lot of companies are trying to figure out that side of the market. There's a lot of growth potential. There's a lot of really interesting R and D happening and tech development.
03:04
Eric Bindler
But from the beginning, we've taken a pretty broad view of it, because the nature of demand for digital technology and services in the industry is such that typically when people think digital, they think the most innovative, the most emerging, the newest technologies, they think artificial intelligence or IoT or big data. And that's all certainly part of what we're talking about. But for us, it's much broader than that, and it really encompasses a broader scope of older technologies that are still very much important in the industry. So I'll give you the way that I typically define it when somebody asks is we define digital water as basically anything related to data in the water industry. So collecting data, moving data, storing data, managing data, analyzing data, using data. And so, again, that does include artificial intelligence. It does include IoT.
03:54
Eric Bindler
It does include Lorawan or NBIot, kind of emerging communications technologies. But it also involves SCADA systems.
04:03
Ravi Kurani
Right?
04:03
Eric Bindler
It means systems that are certainly not new.
04:06
Ravi Kurani
Right.
04:07
Eric Bindler
They're decades old in many cases, but they're a fundamental part of the kind of data landscape for water utilities in terms of just the systems that are generating a lot of the core data that they have access to, whether theyre using it or not, is another question. But Scada systems, GIs systems is another one. Just that digital representation of a utilitys assets and their networks. People dont necessarily think of GIS as a cutting edge digital technology, but its very much an important part of how utilities are understanding their systems and their assets. We consider that part of the scope. We also dont only look at the hardware. Typically, when you think digital, you think technology, you think hardware, you think software. The services piece of it is also really crucial.
04:51
Eric Bindler
And so we try to make a point to focus on the business landscape, not just for software companies or smart metering manufacturers, but also the very large and fragmented and diverse ecosystem of service companies that are helping connect those technologies to utilities. Right. Because in many cases, and we can get way more into this, I'm sure. But, you know, in many cases, utilities don't have a ton of in house technical expertise for keeping on top of the latest technologies for, you know, for kind of optimizing those investment decisions. And so they need that help.
05:27
Eric Bindler
They need those third party kind of professional services providers, whether it be big global engineering firms or just kind of a local ScaDA integrator or somebody in between these players that are helping them make use of that technology, helping with installation, implementation, design and engineering planning, hosting data, whatever the case may be. And there's all kinds of interesting business models that are evolving there, too. But the services piece of it is really important for how we think about this market.
05:52
Ravi Kurani
Interesting. And what are the interest? That's such an interesting side that you say the services side of it, because I'm sure the audience and even my head immediately goes to the hardware, the software, the AI technology that's out there. Let's just double click into that services piece. What kind of interesting models are you seeing in what was services and what's happening now with the growth of all this technology that's coming out?
06:15
Eric Bindler
Yeah, I think a lot of it is your traditional. So engineering and design. And certainly we're seeing, we look a lot of our clients and a lot of the players that we work with in the industry are engineering firms. Right. I mean, they're extremely important set of stakeholders, set of players in the global water industry, I mean, especially in the US. Certainly it's true in other parts of the world as well. But I think in particular in the US, because utilities have these kind of longstanding relationships, these engineering firms often serve as these kind of trusted advisors to utilities. Right.
06:51
Eric Bindler
And so if a utility, if they don't have especially maybe smaller mid sized utilities that don't have the same degree of in house technical expertise, again, they dont have somebody thats following this landscape thats on top of this evolving digital sector, technology sector. Theyre kind of putting a lot of the onus and the responsibility for helping make those decisions around what technologies to invest in and in what order, what the technology roadmap is, theyre relying on these engineering firm partners. Engineering firms are increasingly kind of seizing on that opportunity and developing their own digital solutions. Theyre developing their own software and finding ways to add value and distinguish themselves that way. But I think thats a big part of it is basically just the upfront, okay, youre trying to solve this problem.
07:41
Eric Bindler
So these are the technologies that you can use, and lets put together an RFP so that you can go out to market and find the technology that you need or find the vendor that you need from that early stage and even earlier stage. When we're getting to some engineering firms are really getting more into overarching digital strategy and tech consulting. They're saying, here's maybe your ten year roadmap for taking stock of all the data that you have right now, helping the utility understand what those gaps are, what they need to do differently, what systems they need to get in place, and what integrations they need to make between their existing departments and silos and systems, and then saying, okay, these are the investments you should be making moving forward.
08:26
Eric Bindler
You need to implement an AI system, or you need to implement an IoT system or a data visualization platform or whatever. So helping utilities make those decisions all the way down into actually the work of doing it players, whether it be engineering firms or other service providers, other kind of specialists, consultants that are actually installing the AMI system, going in and installing the meters and integrating the software meter, data management software, or whatever the case may be. As far as the so that's all I'd say that's the kind of bread and butter from the services side of things. There's a lot of companies out there that do that.
09:04
Eric Bindler
But you are moving into, especially with cloud based software and as a service business model, software as a service, data as a service that's opening up a new set of doors to players that are kind of taking on more of the, not just the upfront. I guess a lot of the traditional service landscape has been more upfront, set up implementation and integration and then saying, okay, utility x, you've got your software, you've got your metering system, good luck, have fun. Now there is more of that ongoing relationship where the service provider or the hardware manufacturer, the software company, whoever it may be, is more involved in the lifecycle of that data, the life cycle of those assets, the life cycle of that technology platform.
09:51
Eric Bindler
To say that theyre not just selling sensors or installing sensors, but actually being the first line thats collecting the data, analyzing the data, just giving the utility what they need to do their jobs. Because in many cases, again, utilities often don't have a lot of that technical expertise. They may not have the resources to maintain this fleet of sensors or meters, or they may not have the resources to maintain this software infrastructure, this it infrastructure.
10:22
Eric Bindler
If a third party service provider is able to come in and say, look, we'll handle the responsibility, the risk, the cost of maintaining this technology and managing this data, and just give you the insights that you need to make your jobs easier, tell you when something is wrong and what you need to do to fix it, or tell you where you may be able to make your processes more efficient, your pumping regime more efficient or your treatment regime more efficient, and just give you that information. You utility do what you do best, which is managing your water and wastewater assets. And the third party provider is going to actually give them the information to help them make their lives easier. We're seeing more of that.
11:00
Eric Bindler
I mean, it's still early days and there's a lot of procurement challenges around kind of changing the way that utilities are used to buying things. Right. Just buying that type of service is not really something that they're often used to, but we're seeing it happen in some cases in certain geographies, for example.
11:17
Ravi Kurani
Super interesting because we actually see very similar parallels in other industries as well. If you take something that was predominantly analog, in this case, obviously moving water and pipes was generally a very analog game, and then you kind of figure out how to put sensors in, you end up unearthing this kind of first order new product scenario where you actually now have the data and that in itself is a product versus like, how do I get water from point a to point b, which was the kind of question 20, 30, 40 years ago? Super interesting. And then there's obviously a whole bunch of other industries, a bunch of services, a bunch of other companies that'll pop up because now the data itself is a product. And how do you look at this data? How do you analyze the data, et cetera? Yeah, totally.
12:02
Ravi Kurani
Super interesting to see that kind of shift happening. If we zoom up from the services side. You obviously said Bluefield. You kind of lead the digital side of it. What other service areas do you guys have? Like, what other besides digital is there in Bluefield?
12:18
Eric Bindler
Yeah. So we basically, we kind of tell people that we do three things across six different areas. Right? So the three things that we do is we basically write and sell reports, kind of market research reports. And that could be anything from a 60 page or 40 page analysis of the state of play for engineering firms active in the digital water market. We talked about that. That's actually a report that we have or forecast for industrial water management, water and wastewater management spend in the chemical manufacturing sector, for example. We put the kind of these one off reports that any company or anybody that's interested in learning more about business opportunities in the industry can go on and buy those reports.
13:01
Eric Bindler
We also have basically research services, kind of subscription services, we call them corporate subscriptions, where a company can sign up for any number of topics that we offer and they get access to all the research that comes out in that topic. And I'll get to what those are in a second, that's the six buckets of research that we have. And then we also do custom consulting. So weve got a lot of companies, especially where financial investors will come and say, hey, Im a private equity firm. Im really interested in ESG and sustainability. Im really interested in the water industry. I have no idea where to start. Maybe theyre used to doing energy related stuff or other kind of infrastructure sectors and dont really know the lay of the land.
13:42
Eric Bindler
And the water industry will kind of do, you know, a much more kind of bespoke, more focused. Maybe maybe a six week project or an eight week project will kind of, you know, help size a particular market segment or help, you know, do some due diligence on an m and a target or, you know, bring out the competitive landscape, whatever they need. Right. So those are the three services that we offer. Right. It's the reports, the kind of research subscriptions and the custom consulting. And then as far as the topics, we basically have six kind of buckets of research which are digital water. We do us and Canada municipal water. Theres also a global municipal water service where were looking at basically everything outside of the US and Canada.
14:20
Eric Bindler
We have a private water service which is mainly looking at the investor on utility landscape in the US. Obviously theres private water activity. Theres private utilities all over the world. But in particular, the US IOU market is a really interesting and unique and dynamic one. And so we have kind of a focus area there. And then the last two would be industrial water. Right. So looking at kind of water, wastewater, stormwater management strategies within anything outside of the utility space. Right. So like I've said, you know, chemical manufacturing, food and bed manufacturing, data centers, semiconductors, commercial, you know, CNI or I should say commercial or institutional type spaces like, you know, hotels or office buildings or apartment buildings. And then our final service is a, it's kind of m and a and company strategy, right. So it's kind of cross cutting the other services.
15:11
Eric Bindler
But were really focusing specifically on m and a trends and some of the resulting company competitive positioning. We look at publicly traded companies active in the industry and we look at what theyre seeing, what theyre saying in their earnings reports and things like that. So thats kind of our catch all competitive analysis service. Interesting.
15:30
Ravi Kurani
You kind of mentioned there was the corporate subscription piece and then the customer consulting that you guys have of people looking to get into the market. A question that kind of hit my mind is who is buying these corporate subscriptions? We don't need names. But like, what is the kind of demographic of companies that are interested in getting a bluefield subscription.
15:53
Eric Bindler
Yeah, absolutely. I mean, we work with companies kind of across the value chain in the industry. It's, you know, it's a lot of engineering firms, like I mentioned, you know, we have pipe companies that are clients, or valve or hydrant companies, you know, treatment technology providers, software firms, smart metering companies. Thats probably the bulk of it. And then the resulting service providers. We do work with a lot within that private water service. Theres a lot of investor and utilities in the US that are clients of ours. Weve worked in the past with public utilities too, although theres not as much of a habit or a custom within the utility sector to buy market research. Its just not really something thats done.
16:35
Eric Bindler
I think we're always interested in finding ways to make our research useful and actionable for utilities, but our core audience really is private companies that are active in the water industry, that are selling into the utility sector or selling into industrial end user segments and things like that.
16:53
Ravi Kurani
Got it. And actually, two questions that just came up right now is, as you guys are looking at this research, two columns are sitting in my head right now. The first column is, what is the pareto of kind of water use? Roughly, we don't need exact percentages, but who are the largest users of water? Just because you guys cover such a wide spectrum from municipalities to industrial to food and beverage. And then the kind of flip side of that is it'd be really probably interesting, because I don't even know the answer to this, of how much money is in the water industry and how much money is actually going in even a total sum or per kind of market.
17:31
Eric Bindler
Yeah, no, those are interesting questions as far as the high level global number that you see cited, pretty often, it's like a total global water use, right. It's like 70% ag, 20% industrial, 10% domestic or residential or kind of municipal. Right. We actually, we haven't done a lot in the ag space, which is kind of ironic because that is by far the biggest water user. It's something that we've kind of been looking at because you see a lot of, there's a lot of parallels between kind of the utility sector and the, that the agricultural sector and just the kind of conservatism. Right. The utility sector in particular, it's very fragmented. Right. There's thousands of individual municipalities that are kind of managing water in specific communities. It's a very different model than what you'd see in kind of the power utility or electric utility side.
18:23
Eric Bindler
So very fragmented organizations that are not super tech savvy, that are kind of slow to change. But you are getting these interesting pockets of innovation of new digital technologies in farms, just like in utilities. I guess we've mainly focused on the 30% that's non ag, but we do want to move into that more. And it's something that we're actually talking about right now, trying to figure out ways to address a little bit more clearly. As far as overall dollars, it's a good question. We're going through a global capex exercise right now. I mean, in the US, it's something on the order of think. If you add up like us, municipal water, wastewater, capex and opex, its something like 100, 2130 billion a year. The digital piece of that is something like 20 or so. I have to look back at my or.
19:20
Eric Bindler
No, no, for us alone, for digital, its more like going to be like ten. We do have forecasts and I can definitely pull up some specific numbers. But thats, yeah, if you're talking kind of overall spending, both capital investment, right, investing in building out pipe networks and treatment infrastructure, and then also just the day to day operations, the labor, the energy costs, the chemical costs, the consumables, it's something like in the US. Yeah, it's changed a lot because prices have gone through the roof in the past couple of years in the industry. So we're kind of going through that forecasting exercise now. But I think some of the most reliable budget data that I see is something like, you know, 100, and I want to say 100, 2130 billion.
20:00
Ravi Kurani
Super interesting. And out of that 30%, that's the non ag around your industrial municipality. If you were to zoom into that, what does that kind of breakdown look like from a production standpoint or is it just kind of pretty evenly spread out across multiple different industries?
20:18
Eric Bindler
That's a good question as well. I know that the energy sector is a big user of water. Our industrial team is going through an exercise now of basically doing forecasts for eight verticals that we've identified as like some of the most, the heaviest water users. It's not, you know, they're not, I don't think it's like the top eight necessarily, but they're some of the most, the heaviest water users and some of the more interesting in terms of just what is happening from a kind of water wastewater management perspective. And so we're looking at chemicals, we're looking at data centers, we're looking at semiconductor manufacturing. Pulp and paper is a big one. Food and Bev is a big one. But I think oil and gas and power are two of the biggest ones, just in terms of total volume, especially oil and gas.
21:00
Eric Bindler
When youre thinking about the fracking industry and things like that, theres a lot of water use there, a lot of wastewater management issues as well, because youre talking about wastewater, depending on what industry, theres a whole range of potential contaminants and both opportunities and challenges related to reuse to resource recovery and that kind of thing. So we're going through that exercise now of really kind of mapping out those eight verticals that we think are the most interesting. And then from there, obviously we'll keep expanding. One of my teammates is working on looking at the hydrogen sector, right. There's these newer emerging industries or segments of the economy where there's not a lot of activity yet.
21:41
Eric Bindler
But if green hydrogen becomes as significant of an industry and of an opportunity as I think, theres a lot of hype around it because theres a lot of decarbonization and net zero benefits to green hydrogen if its actually produced with renewable energy, theres a lot of opportunities to displace fossil fuels, but it takes a ton of water to produce. And so were starting to look at what is the kind of current footprint versus if it grows the way that its projected to over the next 10, 20, 30 years, what is that going to mean from a water perspective? How much water is going to be needed and where is that water going to come from? Because were already seeing in so many parts of the US, let alone the world, there are major water scarcity issues.
22:29
Eric Bindler
There was a really interesting survey that I saw. So black and Veatch, which is a big engineering firm, they put out this annual water survey where they talked to, I dont know, a couple hundred utilities around, mainly around the US, if not North America. One of the questions this year was basically for utilities. If a large industrial user was trying to set up shop in your service area, would you be able to cater to them? Would you be able to provide them with water? And a quarter said no, either because they lacked the water supply or they lacked the infrastructure to cater to. They get the capacity, the water, wastewater network capacity or treatment capacity to cater to a large industrial user, which is astounding.
23:13
Eric Bindler
And you see these stories of Phoenix, Arizona, cutting off new residential developments because of a lack of water resources. So we're seeing a lot of pressure in water scarce areas to cut back on industrial water use, on even residential water use. In the Phoenix case, yeah, I think in terms of understanding where industrial footprints are going to continue to grow, especially these newer industries that are really heavy water users. Data centers. Another one that we've been talking about quite a bit, I just saw, I think yesterday a report that Google just put out a new corporate sustainability ESG report in there. Their water consumption has gone up like 20% across the company because of AI training, these new chat GPT like platforms and AI products.
24:04
Eric Bindler
And it's just like a massive increase for actually, data center tech companies have been pretty forward looking compared to a lot of other industries and trying to reduce their water. So to say that from year to year, it's gone actually up 20% in spite of whatever else they're doing to kind of try to mitigate their water footprint because they're spending so much, there's so much water going into training these AI algorithms. Kind of astounding.
24:28
Ravi Kurani
So when you kind of said that figure of 25% of the municipality saying that, no, we don't have the supply available or the infrastructure, what do you think is the solution there? Do we go and figure out where these industrial hotspots are and build out better infrastructure? Is there like a supply problem? I mean, it seems like it's kind of multifaceted, but if you're looking at a crystal ball, what would you say is the fix there?
24:56
Eric Bindler
Yeah, it's a good question. There have been some interesting conversations we've been having. I mean, so I guess a couple of things in terms of the supply question, right. There's a lot of your kind of classical fixes related to so alternative supply could be reuse rate, just stepping up water reuse. There's tremendous opportunity there. A lot of the technology kind of exists. I think a lot of the big barrier there is really on just the kind of public perception factor, the policy factor, right. There's only, I think only one state still, which is, I believe, Colorado, that allows for full direct potable reuse. There's indirect, there's aquifer recharge in other places, but still a lot of opportunity on the reuse side, both for municipal, commercial, but also industrial reuse.
25:40
Eric Bindler
And so I think municipalities, again, just given kind of the relative conservatism, not a ton of speed in adopting new technologies and adopting new ways of doing things, you know, with reason, right? I mean, they're responsible for protecting public health. They don't want to try out something new that ends up poisoning the community or kind of causing a major service disruption. So I think that the conservatism is warranted there. But we do need to see a little bit more acceleration in terms of reuse adoption. We are seeing on the industrial side too, right, that there's also a lot of opportunities there for industrial facilities to reuse, if not all of their water, if not maybe their dirtiest processed water.
26:21
Eric Bindler
There are things that they're applications that they're using water for that maybe they can reuse it, they can have more of a kind of a closed loop system. Maybe they don't need super high quality potable water quality for their cooling towers or for cleaning their facilities and things like that. There's a lot of opportunities there that we're seeing more interest. I think desalination obviously is another alternative supply. Theres a lot of work that can be done in just reducing water waste and leakage in terms of helping people, consumers use less water. So theres a lot of levers there, id say, on the kind of demand and supply side. More broadly, though, I mean, I think in the capacity, the infrastructure side of things, right. Because those are the two sides of that survey, right.
27:05
Eric Bindler
That data point that I mentioned, it was either supply or infrastructure capacity. Yeah, I mean we certainly have been tracking closely all of the federal infrastructure funding and its not just in the US. I mean, I think Im talking more in the context of the US. But if you look at Europe as well, theres a lot of post COVID infrastructure funding thats going to be going into the water industry in places like Spain and Italy. So just dollars going to building out more infrastructure, building out capacity, there are a lot of opportunities to use digital solutions to do more with less, whether that be help better manage and more intelligently managers water supply and wastewater flows within an existing network or within an existing treatment plant without needing to upscale significantly, without needing to grow that capacity.
27:55
Eric Bindler
If you're smarter about understanding where the demand is at any given time, where the flows are, where the rain event is going to hit, you can do more with existing infrastructure without having to build out a lot of new infrastructure. The other thing that we've, I think very recently been talking about just internally at Blue Field is kind of these emerging examples of companies, of corporate actors that are finding ways of investing in or supporting municipal infrastructure build out. There's been some discussion with the Water Reuse foundation about industrial players, corporate players getting tax credits for supporting reuse infrastructure not within their own corporate facilities, but in municipalities and communities.
28:38
Eric Bindler
We've seen a couple examples recently of Microsoft basically paying to have leak detection, acoustic leak detection systems installed on utility pipes and then claiming any water loss reduction that comes out of that, claiming that towards their corporate sustainability goals, their water replenishment goals. So these are very new models. Just before we got on this podcast, I was talking to our president about this really new interesting models of not necessarily fully investor owned utility infrastructure, which theres plenty of that too. But these newer models where corporate actors can find ways to contribute to the infrastructure of communities that theyre active in and help support that build out. If the utility itself, if the community itself cant afford it, and in many cases they cant. Thats really the issue.
29:28
Ravi Kurani
William, really interesting model. I would have never thought that you could make complete sense like a Microsoft that has the technology to actually deploy this on a potentially underfunded utility and then using that almost as like.
29:41
Eric Bindler
Yeah.
29:42
Ravi Kurani
Rebate, a rebate back on their CSR strategy, or there might even be a monetary rebate available. That's really interesting.
29:48
Eric Bindler
Stupid. Yeah. Yeah. So a lot more to come on that we're just starting to kind of, we're hearing these examples. There may be some others out there, but it's kind of a new concept we've been kicking around with in Bluefield. At least these examples that we've seen in the news lately that are. Yeah, again, it's very small scale at this point. There's not a ton to point to, but it could be something that could continue to scale and could continue to have impact. Yeah.
30:12
Ravi Kurani
Entirely. I want to pivot a little quick to the digital side of what you're doing. If you were to think of three bullet point trends that you're seeing right now. Be really interesting to look at those. And then almost after those three bullet points, are there another three that you think should be invested in the next, like, I don't know. Name your, name your tithing scale. I don't know, ten years, 20 years, 30 years. But you get to, you get to kind of use that as a, as you get to pick the time scale that you ought to pick.
30:44
Eric Bindler
Okay. So I'd say the first one that I'm kind of interested in, that I've been, I guess banging the drum on for a while is its not so much new technology as it is a different scale of technology. And by that I mean basically small to mid sized utilities. Right. So I mentioned kind of the fragmentation of in particular the US utility sector. We do see the same pattern in many other parts of the world, although there are exceptions like the UK market, which is highly regionalized, highly privatized, is a little bit of a different story. But mainly when we look across North America, most of Europe, a lot of APAC markets, we get the same situation where water is typically water, wastewater services are provided by a small kind of local municipal government. Right.
31:32
Eric Bindler
And so the kind of budget, the technical capacity of utilities in that scale is very different than a large city that's serving a couple million people, that's got a massive staff, that has the budget and the internal technical capacity to make a lot of really intelligent decisions about and really just take on this new technology. Because it isn't just technology. There's always an obligation there in terms of maintaining it, in terms of using it properly, learning how to actually use the system, use the data to make better decisions. It's not just an automatic. You turn it on and all of a sudden you're saving 20% on your energy costs, or you've got, you know, customers are 20% more satisfied because they've got access to real time data. It's not that simple.
32:18
Eric Bindler
So there's a stat that I saw in a Public works association report a couple of years ago that in, I think in the US water sector, it's something like, let me make sure I get this right. About half of us water utilities only have like one or two full time staff total, and about 85% have only three or fewer people. So the vast majority of utilities have like a couple, one to two to three people working on staff full time. These are, it may be the water division of a public works department. There's not a lot of full time resources.
32:54
Eric Bindler
And so you hear these stories of, I was talking to some cybersecurity consulting guys a couple months ago, and it's like you hear these stories where they're doing these cybersecurity workshops for utilities, and the people that are attending these workshops that are making decisions about cybersecurity for a municipal treatment plant are the same people that are mowing the lawn and shoveling the snow depending on season. These are not people whose expertise, who have significant training or background or expertise in cybersecurity and digital technology. They are having to make the best with what they can make the best with what limited budget they have and limited technical expertise, keep the lights running, keep the lights on, and keep everything running at their utilities. They dont have the time or the resources to invest in understanding this technology landscape and what it can do for them.
33:45
Eric Bindler
Thats the first trend that Im really interested in is just companies that are finding ways to scale technology down to small to mid sized utilities. The cloud plays a big role in that, putting something in the cloud so that you dont need a dedicated resource or significant on prem server capacity to host stuff in your utility. Because again, most utilities at that layout level, they don't have an IT department, they don't have an IT person there. Maybe they're using the IT resources of the broader kind of municipal government or the public works department. So the cloud is a big part there. And again, back to what were saying earlier about business models, right? Putting more of the responsibility, the risk, the onus for actually processing whatever data is coming in and giving, you know, turning it into insights that are actually usable.
34:34
Eric Bindler
There's a big role for cloud and software as a service, data as a service, network as a service, metering as a service, whatever you want to call it. So that's maybe my first big trend that I think is really interesting and important. I mean, cybersecurity is a big one, especially in the past couple of years we have seen a couple of different versions of this data, but the most recent one I saw was, I think it was a dataset on cyber attacks with physical implications. So places where hackers took control of some sort of physical resource in the world, and it wasn't only water, it was kind of all industries, it was manufacturing, transportation. But the number of those attacks globally increased by like 1000% between 2019 and 2021.
35:14
Eric Bindler
So just with COVID and with just a lot more remote from work, from home, and kind of more touch points, more kind of more vulnerabilities, the amount of just cyber attacks just skyrocketed in kind of the operational technology sector, in the water sector too. We've heard of a lot of those high profile attacks, Oldsmar, although turns out maybe that wasn't an attack hack after all. But anyway, that's something that we think has really kind of maybe lit a fire under a lot of utility managers around the country, around the world, because very few utilities in at least North America, Europe for example, don't have any digital capabilities, right? They're connected to something, right?
35:57
Eric Bindler
They may have an air gap treatment plant, but they've still got people coming in with iPhones and plugging in and charging their iPhones, or they've got some sort of smart metering system, they've got something, they've got some software capability. So understanding the vulnerabilities, understanding cyber risk and cybersecurity strategies, I think the need for that has become much more clear in the past, really just two to three years since the pandemic so that's one that we see as a big, I guess, secular trend in the industry thats not going away anytime soon. And then the third one, what would be a good third one? I mean, the other thing thats been an area of focus in the past, id say also in the same, maybe the last couple of years has been the energy and climate footprint of the utility sector.
36:45
Eric Bindler
This is a thing where the municipal utility, municipal water industry, I think, has in many cases really approached climate from an adaptation standpoint, from how do we prepare to deal with the consequences of whether it be water scarcity and finding alternative water supplies and promoting conservation and that kind of thing, or dealing with extreme weather events, with extreme precipitation, with wildfires, where, depending on where you are in the world in the past couple of years, we're seeing, I think, more recognition of the fact that the utility sector also is a major contributor to climate, to greenhouse gas emissions. Right. And that's, you know, there's a ton of energy that goes into pumping right. Pumping water and pumping wastewater from place to place and through treatment plants and around communities.
37:29
Eric Bindler
You know, there's a decent kind of fleet footprint of a lot of large utilities that serve large service areas. They're sending people around in trucks all day long to fix things and to read meters and to, you know, exercise valves and inspect hydrants.
37:44
Ravi Kurani
Right.
37:44
Eric Bindler
There's that. But especially on the wastewater treatment side, theres a big methane and nitrous oxide footprint, which is, methane is, I think, 84, 85 times more potent than carbon dioxide. Right. So youve got this increasing realization that I think we, so the water sector accounts for something like 2% of global greenhouse gas emissions and something like maybe seven or 8% of global methane emissions specifically. Right. It's not the biggest contributor by any means, but it's not insignificant. Right. So there's a lot of opportunity within digital tech, but also just other types of just treatment technology, anaerobic digestion, what have you.
38:24
Eric Bindler
But in the digital space specifically, there's a lot of opportunity there for kind of helping utilities to mitigate their energy use, their emissions, whether that be more efficient pumps or IoT and smart meters to prevent the truck rolls, to minimize the amount of people that have to be out on the road or just better monitoring, better data collection and monitoring and optimization of treatment processes and that kind of thing to reduce that overall emissions footprint. And that's something that I think especially in Europe, where there's a lot more immediate exposure to the Russia Ukraine conflict and the energy price spikes associated with that but in other parts of the world as well, Australia has been a front runner in terms of sustainability.
39:10
Eric Bindler
Within the utility sector, we're seeing a lot of interesting applications and projects related to basically using digital technology to be greener, be more sustainable to reduce energy use. So those are, my long winded answer is small to midsize utility, cybersecurity and climate mitigation, essentially. Yeah.
39:29
Ravi Kurani
Yeah, totally makes sense. And so I guess I'll change my second question. If we assume that all three of these things get solved, right, in the next 1520 years, ten years, what do you think is the next frontier then? Like what's after to solve?
39:44
Eric Bindler
Well, that's a good question. I mean, there's a lot of water quality stuff coming down the pipe that, I mean, we're still, you mentioned PFAS when were chatting beforehand. Right. Like PFAS is a massive issue that I think we're still very far from dealing with and really very far from understanding the consequences of. But even if you go beyond that, where there's microplastics, there's endocrine disruptors, kind of pharmaceutical products, there's a lot of water quality issues that I think we've not even really begun to think about how bad they are and how we're going to fix them. And that's something that there's digital implications there.
40:20
Eric Bindler
But I think there's also a lot more in terms of treatment, advances in treatment technologies, which is not as much my area of expertise, although I'm starting to learn up on it, but advances in treatment technology or pollutant destruction technology, in the case of PFAS, there's all kinds of really interesting ways to actually just destroy it, let alone filter it out of your water. But then, yeah, microplastics, what are we going to do about that? Or what are we going to do about some of the pharmaceutical product pollutants and things like that. So that'll still be a while, I think. Unfortunately, because I think, again, the health impacts, I think are going to continue to become, make themselves more apparent as we just see a greater exposure to this stuff. What else as far as longer term?
41:04
Eric Bindler
I mean, one of the other long term trends I think is just the workforce issues in the industry. This is kind of another secular trend that it's not new. I mean, since I've been in the water industry, we've been talking about the aging workforce and the high rate of retirement and the kind of silver tsunami and that kind of thing. But I think especially during COVID it was exacerbated. A lot of people retired early. A lot of people changed positions. Right. And the water industry, it's in a world that's becoming more interested in remote work. The water industry doesn't really, water utilities don't really allow for that. Right. Because you have to be in a community to be to go read the meters or to go fix the infrastructure. You can't be doing that from a suburb 2 hours away. Exactly.
41:50
Eric Bindler
From a cottage up in Vermont. Right. So there's a lot of, I think there's a lot of risks there. There's a lot of opportunities there. And we do hear about, especially on the digital side as new, this is kind of, I think, a standard, if anything, it's something that digital startups will say to themselves to kind of console themselves about why they're not getting more adoption. Is that like, well, we've got more young people coming into the industry and they're going to see the light and they're going to be interested in data and digital tech and they're going to adopt my product in five years. I just have to hold on till then. There's truth to it, but I think it is also kind of one of these.
42:24
Eric Bindler
It's a truism maybe in the industry, but we need to find the people that want to work in water. Right. And it's an industry that has very significant challenges with just paying people. I mean, we've done some analysis on average wages between water utilities, different roles like meter readers and engineers and management in the water utility sector versus the gas and electric utility sector. And water, the same job in the water industry gets about 40% less pay than that job in the electric sector, the gas sector. Not to mention if youre talking about the water industry wanting to hire data scientists to get with the digital revolution, then youre having to pay, not just trying to outpay your local gas utility like Google or Microsoft, its just not going to happen. Thats a longer term problem.
43:14
Eric Bindler
That again, there's a lot of implications for digital technology. There's challenges, there's opportunities, but it goes beyond technology because again, if we don't have people to run these facilities, run these assets, run this infrastructure, we're going to have a lot bigger problems on our hands.
43:31
Ravi Kurani
Yeah, entirely. Eric, I asked everybody on the show one last question. Do you have a book, a tv show, a movie that has profoundly changed your outlook either on water or just your outlook on the world?
43:48
Eric Bindler
That's a really good one, that it's a really good one. I am trying to think of something recent. I mean, a recent one that. So I just moved, it's been about two years now, but I moved up to outside Chicago from Florida. And so, of course, when I got here, I was thinking, okay, what are the water issues in Chicago? And I, you know, got really interested in the Great Lakes. And so there's a book called the death and life of the Great Lakes by Dan Egan. It's kind of a keys, a journalist of sorts, but it goes through basically the history of a lot of the issues with kind of great lakes water quality. So one of the big, really interesting things that I think a lot of people don't realize, especially if you're in this area, you hear a lot about it.
44:33
Eric Bindler
But basically, there's a very small amount of international kind of cargo shipping that comes into the Great Lakes. Right? Like ports like, you know, Chicago or other kind of ports on the Great Lakes. Most of the shipping, I think most of the Great Lakes kind of actual shipping is kind of within Great Lakes ports. But there's a little bit of, you know, every, there's. There's some small amount of boats that basically come in from other parts of the world and basically discharge their ballast water when they get into the Great Lakes. And as they're doing that, they're also discharging all of these different species that are not native to the Great Lakes. And so there's been this series of invasive species that have caused all kinds of problems. So there's, the one that everybody talks about now is like, zebra and quagga mussels.
45:13
Eric Bindler
They're just, these really small mussels that there's literally trillions of them all over the floor of the Great Lakes. Like, they've completely changed the ecosystem within, and they filter out a lot of the nutrients, which causes a lot of fish to die because they're kind of. They're not getting. They're. They're food. So if you go to the bottom of the Great Lakes, it's just. The entire floor is just mussels. Right. And they've caused. You do get these cases in the news where they're like, clogging up intakes for water treatment plants and stuff like that. Or, you know, people are kind of, you know, cutting their feet on the shelf. Like there's. There's all kinds of problems with them. Is the carp. Asian carp is another one that I think that actually, ironically, was introduced as a form of wastewater treatment.
45:55
Eric Bindler
They were trying to basically see if carp could eat a bunch of other pollutants in water. And I think some of them basically got out and now they're basically trying, they've kind of been going up the Mississippi river towards the Great Lakes and they're not, I think the jury is still out on whether any have probably some have made it into the Great Lakes, but they haven't like taken over because they are taking over ecosystems. You know, they're very, I guess, you know, they, when they're, when they spawn a lot and they, again, you know, eat up a lot of other food and they kind of take over ecosystems very quickly.
46:27
Eric Bindler
So theres a lot of kind of state and federal action related to trying to set up these barriers to prevent them from making it into Lake Michigan and from there the rest of the Great Lakes. Right. So that book, the Death and Life of the Great Lakes, it kind of goes through a bunch of different species and when theyve been introduced and what the kind of stories behind that and talks about a lot of these issues a lot also related to nutrient runoff and algae blooms. Theres some of that in there as well. So I say that as far as water books go, that's probably my top.
46:58
Ravi Kurani
Awesome. Cool. Yeah, we'll definitely put that on your page on liquid assets. Eric, thanks a ton for joining us today. This was absolutely amazing.
47:06
Eric Bindler
Yeah, absolutely. Thanks. Thanks for the opportunity. And, yeah, maybe if we start doing some guests on our, some outside guests on our podcast. We'd love to have you one day. We're still, like I said, we're still doing kind of internal analyst chat, but one of these days we'll probably have some outside guests, so we'll have you on, too. And, and, yeah. Looking forward to talking to you again someday.
47:24
Ravi Kurani
Yeah, that'd be awesome. And for all of those of you out there, you can find liquid assets wherever you usually find your podcasts. It's on Spotify, on Apple or on Google. Thanks again for listening. And this has been another episode of Liquid Assets.