Water is an indispensable economic driver, generating income across countless sectors whilst also quietly sustaining our way of life. However, global freshwater systems continue to be in trouble. Decades of over- rampant nutrient pollution have collectively pushed them to the brink of disaster. Climate change coupled with the rising temperatures have only worsened this modern-day crisis. Yet, there is a silver lining: continuous innovation in environmentally friendly water treatment chemistry and breakthroughs in AI, environmental data and Industry 4.0 connectivity have collectively enabled the reduction in costs of treatment and prevention by over 20-30%¹. Therefore, making it more sustainable, more affordable and more efficient to monitor, maintain and safeguard our water supplies.

Key messages

• Water resources contribute towards ~60% of global GDP and are critically important to a wide range of industrial, commercial, residential and tourism sectors

• Impaired water endangers human health, the environment and has a significant negative and measurable economic impact

• Source lakes and their watersheds have not been adequately maintained and are subsequently in crisis: a huge inventory of polluted lakes has built up in the United States (“U.S.”) over time, having more than quintupled since 1988 with only 4% of lakes that are classified as impaired by the EPA being cured during that period²
• Current surface water treatment solutions are typically reactive to problems with a low penetration of digital tools or accurate data capture
• Integrating Industry 4.0 technology with existing products in the future will ultimately have huge economic and environmental benefit: boosting transparency, measuring efficacy and reducing costs

Water: The Overlooked Economic Powerhouse

Often taken for granted, water is truly indispensable to the global economy. Directly, it adds around 8% to global GDP or ~$7.5 trillion. When accounting for both direct and indirect uses, this figure skyrockets to a staggering $58 trillion, or ~60% of the global GDP³.

Water fuels hydropower, heats buildings and irrigates crops. For example, industries such as food, beverage and cement all depend heavily on water. Clean water can even boost residential property values by up to 25%, bolstering local economies⁴.

Managing our water systems value extends far beyond the obvious. It prevents environmental disasters such as droughts and floods, supports biodiversity and regulates the climate by absorbing CO₂.

The Growing Threat to Water Security caused by Nutrient Pollution

Water security is under threat globally, largely due to phosphorus and nutrient pollution, which fuel both invasive species and harmful algae blooms. These pollutants make water supplies too contaminated for drinking, aquatic life, fishing, swimming and recreation. Declining water quality can therefore have a severe economic impact, affecting human health, income, property values, agriculture productivity and biodiversity. Locally, high organic pollution can hinder GDP growth in downstream regions by a third⁵. Globally, it has been forecast that water scarcity could reduce GDP growth rates by up to 6 percentage points by 2050⁶. This economic toll often comes with serious associated health risks.

In the U.S., over 50% of waters are impaired⁷ leading to rapidly accelerated rates of eutrophication (when excess nutrients cause excessive algal growth). Climate change exacerbates this issue, raising water temperatures, reducing dissolved oxygen and increasing salinity while also increasing the impact of nutrient pollution. The number of harmful algae blooms (“HAB”) in the U.S. has been increasing year-on-year by around 27% since 2016⁸.

Boosting public and private spending on sustainable remediation is now critical. This investment safeguards environmental health, ensures human safety, supports economic activities and fosters long-term ecosystem sustainability.

Examples of the economic impact of nutrient pollution, harmful algae blooms and invasive species in lakes:

• Public health risks as HABs can produce toxins (e.g., microcystins, anatoxins) that are harmful to humans and animals, causing skin rashes, gastrointestinal issues, liver damage and neurological effects. Toxins in the water supply have regularly caused health advisories and increased healthcare costs in local communities.
• Reduced property value: Lakes with poor water quality and visible pollution can lead to decreased property values for homes and businesses located nearby thus reducing local property tax revenues for local governments and reducing the ability for community investments.
• Reduced tourism: poor water quality and the presence of harmful algae or invasive species can negatively impact recreational activities such as swimming, fishing and boating, leading to reduced tourism and significant economic losses for local communities.
• Reduced commercial fishing and agriculture: algal toxins can contaminate fish and shellfish, affecting commercial fishing industries and posing risks to food safety.
• Healthy lakes are crucial for flood control and erosion prevention: Wetlands and healthy lake ecosystems help mitigate flooding and prevent shoreline erosion. Degraded water bodies lose these important ecosystem services.
• Regulatory requirements and prevention of fines: Many regions have water quality standards and regulations that mandate the control of nutrient pollution and invasive species. Failure to comply can result in legal penalties and increased costs for remediation.
• Biodiversity protection:  Nutrient pollution and HABs can deplete oxygen levels, leading to ‘dead zones’ where aquatic life simply cannot survive. Invasive species often outcompete native species, reducing biodiversity and disrupting the natural ecosystem balance as well as having a long-term impact on the economic contribution of aquatic systems more broadly.

Regulatory Shortcomings and the Need for Investment

The U.S. Federal Clean Water Act of 1972 aimed to achieve "fishable" and "swimmable" waters by 1983, yet impairment levels have continued to climb. The issue is clear: entities have not been mandated or allocated the budgets to cure their water quality problems. The Act focused on 'point-source' pollution, neglecting 'non-point source' pollution like run-off and internal loading of accumulated phosphorus, which are key drivers of accelerated eutrophication. Pollution limits for some industries have not been updated for over 40 years and are rarely enforced. As a result, 80% of Total Maximum Daily Load plans fail to meet runoff- reduction targets⁹. Consequently, just 4% of impaired lakes and reservoirs have been restored since 1988¹⁰.

The Inefficiencies of Current Water Treatment Solutions

The U.S. surface water treatment market is currently valued at approximately $10 billion¹¹ but continues to suffer from inefficiencies due to its largely reactive nature.

One example is the Homeowners Association who manage lakes within its community. Without regular monitoring and easy access to underlying lake health data, landowners often spot algal blooms only after they have spread, making treatment more challenging and expensive. This process involves urgent testing, consulting engineers for remediation plans and hiring applicators who have to spend significant amounts of time and resources towards controlling the outbreak. The inefficiency, long duration and high costs, coupled with the need for more treatments to get the problem back under control, discourages remediation efforts and worsens water body impairment.

The lack of precise data also makes it tough to quantify the extent of impairment and demonstrate the benefits of treatment thus weakening the case for increased spending to address.

Technology is the Solution for Higher Productivity and Early Prevention

Customers and professional applicators are demanding innovative, cost-effective solutions for monitoring, restoring and maintaining waterways.

Industry 4.0, characterised by the integration of digital technologies, can significantly enhance the application of chemicals in the management of nutrient pollution, algae blooms and invasive species in our surface water system. By leveraging these Industry 4.0 technologies, we can become more precise, efficient and cost-effective in this application. This approach will enable the implementation of preventative solutions before problems actually occur, ultimately leading to healthier aquatic ecosystems and more sustainable management practices.

Industry 4.0 solutions like real-time monitoring, geospatial analysis, satellite imagery and advanced AI/ML-powered analytics could revolutionise the current diagnostic and delivery model. Enhanced data collection and analysis will boost awareness, direct resources to critical areas, optimise solutions and enable the long-term monitoring of effectiveness.

Imagine that same Homeowners Association if they had the luxury of access to real time analytics and digital solutions. They could access real-time water monitoring through affordable IoT sensors and satellite imagery via a user-friendly app. This setup eliminates detection delays with sensors and is up to 70% cheaper than older systems¹². Machine learning-powered analytics would leverage this data to predict and prescribe solutions, allowing lake managers to respond both swiftly and effectively. Remote monitoring combined with economical lab services would provide streamlined reports on the lake's condition, making the entire process much more efficient and responsive.

An end-to-end solution simplifies water treatment for customers. Costs drop for both customers and providers as preventative and more frequent maintenance treatments reduce the treatment scale. In addition, automated data collection cuts labour costs and high-fidelity information boosts effectiveness plus there is the ability to secure much needed funding for remediation processes. Leveraging Industry 4.0 technologies makes water treatment more precise, efficient and cost-effective. This leads to healthier aquatic ecosystems and sustainable management practices that protect public interests.

Examples of the positive contribution of Industry 4.0 technology on surface water quality:

Improved data-driven decisions leading to preventative and targeted solutions

• Predictive models using AI and machine learning analyse patterns in water quality and predict future blooms or infestations, allowing for pre-emptive and targeted chemical applications. By predicting and preventing issues before they become too severe, the need for large-scale, costly interventions can be minimised.
• Using low-cost satellite Imaging and Remote Sensing provides high-resolution images that can identify affected areas with high accuracy, guiding where and when to apply treatments. These sensors can provide real-time monitoring of water quality parameters like pH, temperature, nutrient levels and algae concentration.
• Combining various technologies (sensors, drones and automated systems) into a cohesive platform can streamline operations and improve decisions by these technologies to reduce the time required for monitoring and application.

Application productivity improvements

• Drones and autonomous vehicles can be equipped with sensors and GPS technology to apply chemicals precisely where they are needed, reducing waste and ensuring an even distribution.
• Aquatic robots for underwater monitoring and precise chemical application.
• Robotic systems can continuously monitor water conditions and dispense chemicals as needed without the need for human intervention, increasing efficiency.
• Optimisation algorithms can provide routes and schedules for drones or boats applying chemicals, ensuring the fastest and most efficient treatment coverage. Algorithms can also optimise the amount of chemicals used, reducing waste and lowering costs.
• Labour costs are reduced as automation and maintenance control reduces the need for manual labour, lowering operational costs.

 Improved safety

• Improved training via augmented reality (“AR”) and virtual reality (“VR”) can reduce the likelihood of accidents, lowering insurance and healthcare costs associated with manual application processes.
• The use of automation and drone application reduces the requirement for lone working and more significantly the risk exposure for applicators.

Conclusion - A Call for Collaboration

Leveraging cost-effective new technologies requires continued partnership and collaboration with all stakeholders. This includes technology providers, product companies, lake management companies, regulators and physical distributors. Lake management companies and physical distributors are essential for linking end customers with solution manufacturers and implementing remediation solutions. These solutions benefit both end consumers and local medical committees (“LMC”) by boosting customer intimacy and improving operational productivity. This allows LMCs to focus their efforts on higher-value service delivery projects.

Sources:

[1] Stanley Capital Partners analysis

[2] EPA – Integrated Water Reports

[3] WWF: High Cost of Cheap Water

[4] EPA: Effects of Nutrient Pollution on the Economy

[5] World Bank: The Impact of Water Quality on GDP Growth

[6] World Bank: High and Dry: Climate Change, Water, and the Economy

[7] Environmental Integrity Project: The Clean Water Act at 50

[8] EPA: Integrated Water Reports (2016, 2018, 2022, 2024)

[9] EPA: Overview of Listing Impaired Waters under CWA Section 303(d)

[10] EPA: Overview of Listing Impaired Waters under CWA Section 303(d)

[11] Stanley Capital Partners analysis

[12] Environmental Research: Towards online surface water quality monitoring technology