Michael Kanellos: August 31, 2009, 4:55 PM

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A Technology Contest for Water Experts

Imagine H2O will start accepting applications for a contest to find new, commercially practical ideas for alleviating some of the world's water problem.

The non-profit will give away awards of up to $70,000 in cash, prizes and services, but more importantly it will help incubate companies from the ideas. The organizations members include executives from General Electric, Harvard Business School, McKinsey & Co., Trinity Ventures, CMEA, Catamount Ventures and other places. One of the chief obstacles facing water entrepreneurs remains getting noticed, so these connections will help.

Water, according to many, is the perhaps the first major crisis that will emerge from climate change. Regions of Australia and China already suffer from prolonged droughts and crop failures. Approximately four in 10 people in the world are affected by water scarcity. And it's not just overseas. Many southern states are facing increased levels of natural arsenic in the groundwater. Water also consumes a significant amount of power: approximately 19 percent of California's electricity gets used to move, purify and heat water (the figure drops to close to 5 percent if you just count pumping and moving.)

In the middle of the 20th century, there was about 4,000 cubic meters of fresh water per person per year, DHI Water Group told me last year. Now we're close, globally, to 1,000 cubic meters per person per year. One thousand cubic meters per person per year is defined as water scarcity, he said. Water stress is defined as having 1,700 cubic meters per person per year. No matter how you cut it – water has to be consumed and purified more efficiently than in the past.

The demand has prompted GE and Siemens to snap up water companies and IBM to develop technology for desalination and generating power from the interaction between fresh and sea water.

But is the world bursting with startups? Hardly. One problem is the customer base. Municipal water districts constitute one of the largest customer segments, and even among utilities, a naturally conservative lot, water agencies are considered stodgy. Many new companies have instead focused their energies on oil refiners, dairies and others with large daily water requirements. A few companies have gained momentum – Energy Recovery (a desalination expert that IPOed last year), Miox, Oasys, Hydropoint Data Systems – but the number of water companies getting funding pales in comparison to those in solar.

The water also suffers to some degree from not being as cool as electric cars or space elevators. Still, we are going to need to need technology so we don't have to resort to more traditional tools (i.e., guns, bribery) to resolve water disputes.

Would-be entrants have until November 16 to file their entry. Winners will be announced early next year.