Growth in North American municipal water industry to accelerate, says report

DUBLIN, Ireland, Oct. 31, 2007 -- Research and Markets has announced the addition of Frost & Sullivan's new report, Outsourcing Opportunities in the North American Municipal Water, to their offering.

Public Private Partnerships in their Growth Stage
Public Private Partnerships (PPPs) in the North American municipal water and wastewater industry are currently in the growth stage of their lifecycle and have been estimated at a value of $2,337.5 million. Predictions for the forecast period are that the market will grow continuously in the near future, with accelerating growth rates toward the end of the decade. The market then is likely to see double-digit growth rates due to market advancement and development. At present, there are less than ten companies dominating the market and it is expected that these companies will continue to see steady growth. New entrants are also expected in the near future either through new technology development or through partnerships.

However, PPPs are considerably dependent on a successful relationship between the public and private entity. A previous bad experience, local opposition groups, perceptions on who owns the water and who will set the rates, opposition of partnering with a private firm with foreign parents can all pose challenges to a successful PPP. "Furthermore, many private entities indicate that there is an extensive bidding process set for many of the work that is requested by the municipalities," notes the analyst of this research service. "This extensive bidding process combined with low profit margins and high business development costs deters some of the companies from investing the overhead money to pursue a specific contract."

Evolving Environmental Regulations are a Key Driver
Evolving environmental regulations are a key factor driving outsourcing opportunities as it is becoming increasingly challenging for public utilities to keep pace with such regulations, both at the federal and state levels. A notable recent regulation was the new 2001 standard for arsenic in drinking water that replaced the old standard of 50 ppb to 10 ppb. This regulation required compliance by January 23, 2006, forcing many utilities to conduct expensive pilot studies on how to efficiently remove the arsenic from their water source. Other anticipated contaminants that might be regulated in the future include perchlorate and chromium-VI. Regulations related to these contaminants are expected to create opportunities similar to those generated by arsenic compliance regulations.

When outsourcing was initially introduced to the municipal water and wastewater market, there was a common impression the municipalities will outsource to save money. Although this is somewhat true even today, the list of what utilities are looking for has evolved further. "Working faster, safer, with a full knowledge base and attentiveness will produce a thorough, more profitable, and cost-efficient contract where both the public and private entities will benefit," says the analyst. "Cutting corners might save costs in the short term but in the long term, this will become a liability and a recipe for failure."

For more information visit: http://www.researchandmarkets.com/reports/c73004

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