FutureStructure

Foreign Tech Companies Seek to Tackle California Drought

A series of Southern California conferences will deal with management of municipal water networks, the supply of water to farmers, and water management for industry.

by Yuval Azulai, Globes, Tel Aviv, Israel / June 9, 2016

(TNS) -- Seeking U.S. money, Israeli water companies are turning to drought-stricken California. Representatives of no fewer than 26 water purification, desalinization, wastewater treatment, piping, irrigation, and other companies will travel to Los Angeles at the end of the month in an effort to slake the thirst of Californians, while making a few dollars in the process.

"We have innumerable stunning developments in desalinization, management of municipal water systems, and handling of water losses. We're taking all of these to California, which has already realized that the situation must be taken in hand, with billions of dollars in investments in the coming years," says Ministry of Economy and Industry New Tech program head Oded Distel.

Israeli companies have a great deal to offer California, which in the past three years has suffered its worst drought in 1,200 years, according to researchers, involving real difficulty in maintaining a regular supply of water. "The state authorities realize that they have to do something daring to cope with this crisis, and that the crisis is a severe one," Distel explained.

"Enormous potential"

Some of the "daring measures" Distel is talking about involve fundamental reforms and setting a new priority in managing the water market structure and distributing water throughout the state. These reforms could come at the expense of local farmers, who have been enjoying bounteous allocations amounting to no less than 80% of the available water in California. "The change has to be structural, and the state has a long way to go in this matter. The process requires changes in legislation and the structure of the local water market, and heightened public awareness. This process is already underway," Distel declares.

When this kind of process is completed, and the lucrative tenders for rebuilding the infrastructure for piping water, desalinization, sewage purification, and waste prevention get started, the Ministry of Economy and Industry wants Israeli companies to be there. "The potential is enormous - billions of dollars. In recent years, the California governor and Prime Minister Benjamin Netanyahu have already signed a cooperation agreement that refers to the water sector, among other things. Meanwhile, delegations of senior Californian officials have visited Israel, been suitable impressed, learned from our actions in this area, and have come away with ideas," Distel says.

Those attending the WATEC Israel 2015 international water exhibition included California Secretary of Agriculture Karen Ross. In a "Globes" interview, Ross talked about one of the many challenges facing arid California. "Unfortunately, many of our reservoirs are not being managed correctly. Groundwater accounts for more than a third of the water we consume, and the problem is that when there is over-pumping, additional problems are created, such as land sinking and a decline in water quality."

The conference scheduled late this month in Los Angeles, to be followed immediately by another conference in San Diego, will deal with management of municipal water networks, the supply of water to farmers, and water management for industry. 26 companies are already preparing for the conference, which will be attended by the Ministry of Economic and Industry attache in San Francisco and a representative of the Israel Export and International Cooperation Institute, who recently predicted that the number of companies sending representatives to the US would grow, because the cure for California's troubles will involve spending a lot of money and a nice opportunity for a foothold for other businesses in the future. The Israeli companies interested in California's general dryness and the money likely to flow as a result include irrigation company Netafim Ltd., IDE Water Technologies, Atlantium Technologies, Amiad Water Systems, and TaKaDu.

For the past two years, IDE has been operating a desalinization facility in California that produces 200,000 cubic meters of water a day, amounting to 16% of the drinking water supplied to residents of San Diego. By the standards of Israel, which in a few years has become a water superpower in its own right, this facility is considered rather standard its capacity is only half that of the IDE facility in Ashkelon.

The facility in San Diego was built at a total cost of approximately $1 billion, which also includes the infrastructure for transporting the water and auxiliary infrastructure. "This is a very attractive market for Israel water companies," says IDE VP Sales & Marketing, North and Latin America Gilad Cohen. "California has a real need, and now there's also good momentum for a solution of the difficult problems in the water sector. At the same time, the market is very difficult, and very different from the Israeli water sector. The processes it must undergo are very long, and require a great deal of local directing and partnerships with local companies. It amounts to a marathon race - any Israeli company that thinks it can go to California and make a quick profit is making a mistake. You have to build systems of long-term business relations, a lot of staying power, and patience, but when things work, it will be very worthwhile."

As in many other places around the world, the California water industry features conservatism, not to mention suspicion expressed towards new management and technological approaches that change and revolutionize old orders and arrangements. "First of all, you have to determine an economic value for water in order to treat it, and to the same extent to conserve it. If you don't set a price for water, no one will care if the pipes are old and leaky and a lot of water is wasted, and all the technologies we offer will simply be irrelevant," Distel comments. "There's a considerable psychological element that can't be ignored. Israeli companies working in such markets must know how to minimize the other side's fears. They have to expose it to technologies that are already working in the market and systems that are already installed around the world, including in Israel. We frequently help such companies promote ventures in Israel for situations in which they are working in global markets and then they can invite the potential customers to get an impression of the products actually working in water corporations or in industry."

According to Ministry of Economy and Industry figures, Israeli exports of systems for water improvement and management of water networks totaled $2 billion in 2015. "This sum does not even approach the enormous potential in this market The problem is that in addition to being a conservative market, in many places around the world, no price has been set for water, and there is no closed economic model for how water is managed. At the same time, Israel water systems exports totaled $700 million in 2007. There are things to do around the world: China, Africa, and other places that need systems for treating water and handling it more efficiently. I believe that the moment that more countries understand the problem, we'll start multiplying exports of these systems dramatically. Our aim is to quintuple our exports in this sector, and that is definitely not a pipe dream," Distell declares.

A new memorandum of understanding 

On Monday, Federation of Israeli Chambers of Commerce chairman Shraga Brosh and US Chamber of Commerce executive vice president and head of International Affairs Myron Brilliant, who is currently visiting Israel, signed a new memorandum of understanding for deepening commercial ties between the two countries. The Israeli Chambers of Commerce presidium said that according to the memorandum, the two organizations would tighten cooperation between them in removing trade barriers between the two countries, extending trade ties, and conducting joint comprehensive research on this subject.

The US Chamber of Commerce is the world's largest business organization, representing three million businesses in all sectors and operating in over 100 countries throughout the world. "The new memorandum of understanding demonstrates our commitment to partnership with Israel," Brillant stated. "We have a lot of work to do in promoting investment, innovation, and information sharing. When you're talking about $40 billion in trade ties between the two countries, the private sector has to find the best way to deepen cooperation, even in politically and diplomatically challenging times." Brosh added, "The new agreement will make it possible to expand trade with the US, while conducting it more easily and efficiently, in a way that will serve the economic and commercial interests of both parties."

A year ago, the US Chamber of Commerce appointed Adv. Hagit Ganish-Gil to handle its affairs in Israel, in addition to its regular activity with organizations like the Israel-America Chamber of Commerce, the Manufacturers Association, and the Export Institute.

©2016 the Globes (Tel Aviv, Israel) Distributed by Tribune Content Agency, LLC.