Mitsubishi Corporation

Contributing to solving the world's water problems through business

Contributing to solving the world’s water issues through business

Water is essential for life, society and business alike and yet today we stand on the brink of a water crisis. Globally, around 8.8 million people do not have access to safe water and in developing and emerging nations, maintaining water supplies is a pressing issue. Even in developed nations, the aging water supply facilities are giving rise to serious problems.
MC's comprehensive water business is accumulating leading water treatment technologies and management knowhow and rising to the challenge of solving the world's water issues through initiatives in areas such as water supply and sewage management, seawater desalination and waste water recycling.

The Worlds "Water Majors"

Water business can involve a number of different areas throughout the water cycle including, irrigation and water production (seawater desalination etc), water purification, supply and distribution, and waste water treatment. "Water majors" are companies that are able to provide flexible water business solutions in both developing and developed nations. They deal comprehensively in a wide variety of areas such as holding facilities, project operations and management, and maintenance.

Today there are two key "water major's" on the global scene. Veolia Environment S.A. (France) and GDF Suez S.A. (France). Besides the two Water Majors, Thames Water (UK), a subsidiary of Kemble Water Ltd (Australia), and recently, companies such as General Electric (US) and Hyflux (Singapore), are also exerting a stronger presence in this field.

Percentage of privatized water suppliers per region

Why does western companies seem so proficient in the field of water business? A major factor behind this is the fact that water privatization took place comparatively early in these countries' histories. France privatized public utilities during the Napoleonic era some 150 years ago, allowing businesses to acquire a great deal of know-how in this field over the years. Privatization was also introduced in the UK in the 1980s by the Conservative government led by ex-Prime Minister. Thatcher. While in the US, the expertise of private organisations have been introduced to renovate the aging infrastructure, and at present 15% of domestic drinking water is provided by companies that are privately owned.

Coverage of water supply system in Japan – 97.5%, Leakage rate Japan's water business in facing serious isuues

In 2008, the coverage of water supply system in Japan has reached up to 97.5%, and the leakage rate stood at 2 to 3%, which has been seen to be the highest standard accross the world. Up until now, the water utilities has been managed by municipalities, but however, this system is currently facing serious issues.

One issues is the aging of Japan's population. Facilities are also aging and becoming increasingly worn out and outdated.

Japan's water system was build intensively in the 1960s. Those who worked on such projects and who built up expertise in this area are for the most part now retired. Water supply facilities that were build back then are becoming outdated and are in need of renewal, however this is hindered by a shortfall of local government funding.

Age distribution of water supply facility personnel

What is more, are the structual and institutional issues

There are numerous laws in Japan that pertain to the field of water business, and these influence a variety of different stages from water uptake to drainage. Each areas of the water industry are also under the jurisdictions of different ministries: water supply is overseen by the Ministry of Health, Labour & Welfare, industrial water by the Ministry of Economy Trade & Industry and drainage systems by the Ministry of Land, Infrastructure, Transport & Tourism. The management of these various water services is then handled by municipalities as part of the Ministry of Internal Affairs and Communication's public enterprise framework.

During Japan's period of rapid economic growth, when the Infrastructure was build up radically, this system proved itself to be effective. However, it has become difficult to determine which body should be taking the lead when it comes to uniting the water industry. In some ways the current system could be seen to be a restriction against solving water related problems.

However, on the other hand, a certain level of deregulation is underway and in 2002 the Waterworks Law was revised, allowing the management and operation of water projects to be outsourced. Then in 2003 the Local Autonomy Law was amended allowing the management of "public" facilities such as water purification plants to be undertaken privately, marking the first step towards privatization.

Supporting a population of 9 billion people by 2050 Serious water shortages and increasing demand

Out of all of the water used around the world, approximately 70% is used in irrigation, 20% in industry and 10% domestically. Of course drinking water is of the utmost importance as a vital building block for business, society, and life itself.

However, unfortunately at present, not everyone in the world is blessed with sufficient supplies of water.

While the total volume of water on the earth's surface is approximately 1.4 billion km3, only 0.01% of this can actually be used as water resources. This relatively small amount of water is also at risk from factors such as increasing populations and industrial development; changing patterns in rainfall brought about by global warming; as well as droughts and pollution.

The percentage of the world’s water that can be easily accessed:0.01%

The world's population currently stands in excess of 6.7 billion, however this is expected to reach 9.1 billion by 2050. On account of this increased population and lifestyle changes brought about by economic development, the total amount of water the world is likely to be using by 2025 is predicted to be 30% higher than levels recorded in 2000.

Today in developed countries, including Japan, almost everyone has access to good quality water. However if we look at the world as a whole, approximately 1.1 billion people do not have a secure supply of drinking water. In particular in countries that have achieved rapid economic development in Asia and the Middle East, there are concerns that supplies will not be enough, leading to serious water shortages.

The reality of global water infrastructure: Percentage of population with access to safe drinking water.

Solving water issues through private sector management and finance

The scale of the global water business market is expected to almost double in the 20 years from 6 billion yen in 2005 to 11 billion yen in 2025. Private companies are currently getting involved in this large market in Europe and the Americas. The background of the emergence of the private companies is not just because the huge market size is attractive to them but that their fundraising capacity and their capability to conduct efficient management is necessary for the industry to match the demand.

Changes in the global water market

As water is a fundamental part of life, water business came to be administered by governments in various countries around the world. It is essential to ensure a safe and stable supply of water to all people and it has been widely thought that such activities should be undertaken by public rather than private bodies.

However, cutting edge technologies and know-how are essential in delivering safe and stable supplies of water. Developing cutting edge technologies often requires considerable funds as does developing and managing the necessary human resources and facilities. Therefore, one could argue that this is a field which should be undertaken by the partnership between the public and private sector.

public private partnership scheme study Leveraging private sector strength and public sector experience

Contents Produced in Cooperation with Nikkei Business Online Special / Cross Architects, Inc.

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