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water treatment

Localized water treatment infrastructure

Photo by Ivan Bandura on Unsplash

Localized water treatment infrastructure

Compare IOA
Country
Brazil
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Utilities
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
> 25% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Good health and well-being (SDG 3) Clean water and sanitation (SDG 6) Industry, Innovation and Infrastructure (SDG 9)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Reduced Inequalities (SDG 10) No Poverty (SDG 1) Gender Equality (SDG 5) Decent Work and Economic Growth (SDG 8) Sustainable Cities and Communities (SDG 11)

Business Model Description

Invest in self-sufficient private water treatment plants adjacent to or embedded into large institutional facilities like social housing, hospitals and schools

Expected Impact

Serve millions of individuals and significantly reduce water-borne disease risk

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Brazil
Region
  • Brazil: Acre
  • Brazil: Paráiba
  • Brazil: Maranhão
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Infrastructure

Development need
Brazil is held back by chronic underinvestment in infrastructure spending only 2.5% of GDP (2) This leads to critical structural inefficiencies: deficient existing transmission lines are responsible for a 20% energy loss (5); lack of investment in wastewater treatment is responsible for epidemics in over 1/3 of Brazilian households (6)

Policy priority
Infrastructure development is a top priority for the new administration, who has pledged to invest nearly US$ 50 billion in infrastructure in 2019 alone (vs. e.g., US$ 7 billion in 2018) (3) (4)

Gender inequalities and marginalization issues
Poor access to core infrastructure services forces women to allocate a large fraction of their available time to family chores (7)

Investment opportunities introduction
New administration's infrastructure development pledge means closer collaboration with private investors (e.g., continuity of PPI program and concessions timeline from past to current administration) Key bottlenecks introduction: Licensing, funding for land acquisitions, capital requirements

Key bottlenecks introduction
Licensing, funding for land acquisitions, capital requirements

Sub Sector

Utilities

Development need
Blackouts and power outages have increased in frequency (8) across a country with one of the highest urbanization rates. The absence of effective energy transmission infrastructure keeps energy projects stalled e.g., over 10% of wind farms (1) Over 100M Brazilians have no access to wastewater management services and over 35M have no access to clean water (9)

Gender inequalities and marginalization issues
Fostering gender equality may depend significantly on the externalities that infrastructure creates in terms of women’s time allocation and bargaining power (7)

Industry

Water Utilities and Services

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Localized water treatment infrastructure

Business Model

Invest in self-sufficient private water treatment plants adjacent to or embedded into large institutional facilities like social housing, hospitals and schools

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

> USD 1 billion

Investment in wastewater treatment in 2016 in Brazil amounted to nearly US$ 3 billion, approximately half of what the National Water Sanitation Plan recommends (US$ 6 billion) (20)

The value of this market can climb to over US$ 100 billion over the next 15 years in order to meet water demand (19)

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

> 25%

Benchmark investors in this space target an IRR at the 30-35% range at ticket values between US$ 5-40 million, compared to 15-20% IRR on public water utility concessions (17) (18)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Short Term (0–5 years)

Since private, localized projects do not depend on public contracts, they can be completed in short delays of time, from under a month (for a 400 meter sewage collection network in the city of Teresina) (23) to a year (24). This will largely depend on the nature of the establishment

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Market - Highly Regulated

Investors have concentrated on large centralized capital projects as solutions to water and sanitation challenges, and have been mired in regulatory, licensing and contract-protection challenges at the municipal and state level, without considering decentralized treatment models.

Capital - Requires Subsidy

Concentration on large-scale centralized projects has created a 'wait-and-see' effect resulting in the limited crowding in of capital in the sector overall

Localized water treatment infrastructure will likely need to be complemented with broad-based investment in the public sanitation system to solve for this development need
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Over 100M Brazilians have no access to wastewater management services and over 35M have no access to clean water (12)

Lack of wastewater treatment is responsible for epidemics in over 1/3 of Brazilian households, and over 3/4 of cases of dengue are related to poor sanitation (5)

Gender & Marginalisation

Poor access to core infrastructure services forces women to allocate a large fraction of their available time to family chores (7)

Expected Development Outcome

Provide clean water to millions of individuals through independent, localized water treatment systems within facilities providing key public services, thereby reducing dependence on centralized water grids suffering from critical underinvestment

Reduce rates of water-borne and other infectious diseases by up to 50% in states like Bahia (5) by keeping these places water free of untreated wastewater. This will help lower the burden on the public healthcare system and improve people's daily livelihood

Gender & Marginalisation

Improved access to infrastructure services may free women’s time in such a way that they could devote more time to building their own human capital (7)

Primary SDGs addressed

Good health and well-being (SDG 3)
3 - Good Health and Well-Being

3.9.2 Mortality rate attributed to unsafe water, unsafe sanitation and lack of hygiene (exposure to unsafe Water, Sanitation and Hygiene for All (WASH) services)

Current Value

1.0 deaths per 100,000 of population (2016) (29)

Target Value

Target 3.9: By 2030, substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination (29)

Clean water and sanitation (SDG 6)
6 - Clean water and sanitation
Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure

Secondary SDGs addressed

Reduced Inequalities (SDG 10)
10 - Reduced Inequalities
No Poverty (SDG 1)
1 - No Poverty
Gender Equality (SDG 5)
5 - Gender Equality
Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth
Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities

Directly impacted stakeholders

People

General population: Over half of the Brazilian population can benefit from Increased clean water access and sanitation

Gender inequality and/or marginalization

Lack of basic water sanitation disproportionately affects women and lower income groups (15) (16)

Indirectly impacted stakeholders

Public sector

Healthcare system: Reduced strain on the system for managing epidemics and water-borne diseases (5)

Outcome Risks

By not connecting to a grid system, independent institutional facilities will have a strong dependence on the operational capacity of the standalone plant, creating occasional disruption risks

Impact Risks

Execution risk: due to the dependence on the operational capacity of standalones creating disruption risks

Drop-off risk: model is based on localized water treatment infrastructure which has a small-scale limiting the scale and endurance of impact

Impact Classification

C—Contribute to Solutions

What

The outcome is likely to be positive, important and intended because wastewater management could serve millions of individuals and significantly reduce water-borne disease risk

Who

The general population is underserved, particularly children and medical patients, due to a lack of basic water and sanitation

Risk

While the model is based on good precedents, localized water treatment infrastructure is small-scale and will need to expand to deliver on the expected impact

Impact Thesis

Serve millions of individuals and significantly reduce water-borne disease risk

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

(Provisional measure (868/2018)): The bill allows private companies to participate in the provision of services such as water and sewage treatment in municipalities (22)

(BNDES Working Group): BNDES has set up a working group to map, study and propose empowerment measures for investments in water supply and treatment services including wastewater treatment (10)

(Senate Bill, June 2019): In June 2019, the Senate approved a bill allowing to enhance private sector investment in water and sanitation projects (13)

Financial Environment

Financial incentives: BNDES has increased funding for water and sanitation projects by 11% this year and plans on increasing by 20% next year, to US$ 310M to be disbursed (26)

Regulatory Environment

(Agência Nacional de Águas): regulates the water sector

Construction and operation of traditional, large capital projects depends largely on a patchwork of municipal and/or state utilities, who are governed and regulated by their respective political bodies

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

LGTIV, eneral Water, BRK Ambiental, Grupo Aguas do Brasil, AEGEA, CAB Ambiental, GS Inima, SANEPAR, COPASA, Sabesp (25)

Government

Companhia Estadual de Saneamento Básico - 27 Cesbs (State Water and Sanitation Utilities) (12)

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map

Brazil: Acre

The North of Brazil has the lowest levels of water and waste water treatment particularly Acre, Paraiba and Maranhão (1) (2) (15). Only 11% of the population in the North of Brazil has access to wastewater treatment (3)

Brazil: Paráiba

The North of Brazil has the lowest levels of water and waste water treatment particularly Acre, Paraiba and Maranhão (1) (2) (15). Only 11% of the population in the North of Brazil has access to wastewater treatment (3)

Brazil: Maranhão

The North of Brazil has the lowest levels of water and waste water treatment particularly Acre, Paraiba and Maranhão (1) (2) (15). Only 11% of the population in the North of Brazil has access to wastewater treatment (3)
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References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.
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