The UK is falling further behind in the race to capitalise on growing global demand for innovative water technologies, while countries like Israel, Singapore and Australia are increasingly well positioned to succeed in a market estimated by the Technology Strategy Board to reach $770 billion by 2016.

Attendees at The Future of Water Technology: innovation and investment opportunities seminar in the City last night heard that UK plc probably has a two to three year window to catch up with the competition. Hosted by leading law firm Pinsent Masons and moderated by Partner Mark Lane, head of Pinsent Masons' Water Sector Group, an expert panel debated two key questions – how well placed is the UK to take advantage of the market for water technologies and which present the biggest opportunities?

Ken Rumph Director, Cleantech Research at Nomura Code expressed the view that in the UK smart asset management of existing assets presented the most likely opportunity, compared with the developing world which required new build assets.

Stephen Kay, Managing Director of Cambridge Water said that other countries had stolen a march on the UK in terms of developing technologies around the world and the UK now needed to catch up. Companies from Israel, who have already proven innovative technologies in their own region, are prominent amongst the firms looking to do business with Cambridge Water.

John Bourne, Deputy Director, Water Availability and Quality Programme at Defra, commented that a regulated water industry was always going to have some constraints on innovation. However, ordinarily only 40% of available water supplies is for public use, with the balance taken up by industrial, agricultural and commercial use where opportunities for innovation undoubtedly exist.

Pinsent Masons Partner Gordon McCreath highlighted the key question of whether the opportunities which would come out of water sector reform would be of sufficient interest to investors and enable them to accept any accompanying levels of uncertainty.

Other issues raised by both the speakers and delegates included:

• The UK water infrastructure legacy means that the risk-averse sector “still thinks like Victorians” and avoids the perceived increased risks of new technology
• The Environment Agency’s ongoing focus on water and wastewater quality which must not be compromised inhibits new technology uptake
• Conflicting demands of quality versus energy use mean existing water and wastewater treatment approaches will have to change
• It is difficult for new technology developers with unproven technologies to sell their ideas to the funding and investment community
• The UK does not face enough of a crisis in water resources to make risks worth taking – unlike Israel and Australia where innovation has been driven by necessity
• The current nature of UK water sector investment attracted investors who would settle for relatively low rates of return accompanied by almost risk-free investment

Both speakers and delegates put forward a number of suggestions as to how further innovation and uptake could be encouraged in water technologies, including:

• Longer term abstraction licencing reform would have a significant and positive impact
• A shift from the Environment Agency’s current position of monitoring point value failure to average value failure
• Greater possibility of a trial and error approach to the use of new technologies which allowed the ability to fail without swingeing sanctions and penalties
• The need for technology companies to provide evidence of commercial traction of their innovations to demonstrate evidence of success to investors – e.g. already in use overseas, trials in UK water companies
• Regional water sector clusters to attract start-ups
• Pricing that reflected the true economic cost of water
• Increased competence in organisations responsible for promoting UK water sector in overseas markets e.g. UKTI
• Establishment of a Government-supported/funded National Centre of Excellence in Water Technology

Organised by green industry business network  ecoconnect (www.ecoconnect.org.uk), the high level of interest in the seminar, which was a sell-out, clearly demonstrates the need for some form of action, including Government-led initiatives, to foster a UK water sector where innovation by British companies is enabled to thrive.

It will be interesting to see whether the proposals for reform in the upcoming Water Bill will contain measures which address the issue, not least at regulatory level. Whether the conflicting schools of thought where in some instances regulation is seen as a significant barrier to innovation uptake, and others which see environmental legislation as a primary driver, can be reconciled, remains to be seen.