Is Water Reuse Going Mainstream?

[00:00:00] Speaker A: 300. That is how many baguettes the French buy every second. That adds up to about 27 million baguettes a day. Where am I going with this? Well, in the process, some 9 million liters of water for Americans, that's about 2.4 million gallons are baked into this cornerstone of French culture every day. Because in France, even tradition reminds us value begins with guess what, water. I am Reece Tisdall, and this is the Future of Water in which we talk about all the ways which companies, utilities and people are addressing the challenges and opportunities in water. This is episode 131. That's 1, 3 1. And I have a pretty good feeling it's going to be a good one. That's because today I'm joined by my Bluefield research colleague, Megan Bondar from our Boston office. Megan has just published what I see as a critical piece of analysis on the future of water reuse in the US Municipal sector. It's an area that's fast becoming a key piece of the resilient water supply planning puzzle. So in this episode we're going to hopefully unpack what I see are pressures and opportunities shaping water reuse across the country. So some things that we're going to try to address are what's really at stake as utilities confront growing water stress and aging infrastructure, where and how water reuse is expanding from California's drought driven projects to saltwater intrusion along the Eastern seaboard, and then how utilities, policymakers and vendors are responding to changing demand, industrial demand, things like data centers to agriculture. So I look forward to this conversation with Megan, but before we get to her, you're going to have to bear with me just a little bit longer. One thing has caught my eye this past week and it actually came from inside the house. Private equity is making bigger waves across the global water sector, more so than ever before. According to Bluefield Research's latest analysis, a report and a data set we've provided to clients, private equity holdings have more than doubled since 2019. So we're now topping, according to our data that we've discovered, 327 active positions worldwide. It's not hard to see why aging infrastructure, water supply, or water scarcity, should I say the demand for smarter, more efficient treatment solutions are all drawing investors in. So some quick takes from the data set. Since 2015, private equity firms have completed about 435 transactions across 25 different countries. Only 87 exits have been recorded since 2015. These are mostly strategic sales. And then there have been fewer but not insignificant number of Secondary buyouts by private equity firms. Treatment Engineering Services make up about 60% of the portfolios, reflecting the appeal of recurring revenue models. Then lastly, it's not really just about the number of deals, which is what I've been referring to thus far. Several players like New Mountain Capital Science, Water, Ridgewood Infrastructure, eqt, kkr, they've all built out notable water platforms through large capital commitments, sometimes exceeding billions of dollars. So these are some of the leading players. And, you know, why does all of this matter at the end of the day? Well, while there is a lot of talk, if you're reading the Wall Street Journal, the Financial Times, the Economist, it goes on and on. There's a lot of talk about private equity firms and where are they given high interest rate, environment, economic uncertainty. Then we're seeing things like continuation funds. And what does that mean for the sector itself? Well, in terms of water, the next few years could bring about some large exits that we've identified in some cases that are sort of ripening on the vine as we speak because, you know, about 60% of these assets are less than three years old that we've looked at. So there's a potential wave of exits coming, coming our way. So we look forward to seeing how that unfolds. And I know that will have draw some interest from not only private equity firms, but also strategics looking to capitalize on these opportunities. So with that being said, let's get to Mega Mandar and talk a little bit about water reuse. All right, so I'm joined here by Megan Bondar. Megan, how are things? [00:05:09] Speaker B: It's going pretty good. Rhys, how about you? [00:05:11] Speaker A: Things are good? Things are good. We're, as, you know, as we were prepping for this, I'm like, a little out of sync. I'm not sure why, but all I know is that it's Friday. The weather is incredible. It's a crisp, blue, sunny fall day in New England, which is where you are, correct? [00:05:30] Speaker B: That's right. Yeah. I'm calling in from our Boston office. [00:05:33] Speaker A: Nice. All right, so for all those tracking the weather, sunny blue skies, fall day, maybe in U.S. terms, what, probably 50 degrees, maybe it's pretty nice out. But with that being said, the reason we're talking is because after what seems like a mountain of data discovery, forecast modeling and analysis, you've just released a report or been the lead author on U.S. municipal water reuse market trends and forecasts from 2025 to 2035. So good on you. I think it's a really impressive report. I think it's super interesting. It's been a couple of years since we put out a report on this topic. We have a number of clients who are interested in it. So let's talk about it. How's that sound? [00:06:23] Speaker B: Sounds great with me. [00:06:24] Speaker A: All right, so your analysis. Let's just start with the big picture. Your analysis highlights about $47 billion in forecasted capex capital expenditures for municipal reuse infrastructure through 2035. So let's start with the basics. What is reuse and how are you defining it? Let's pretend one of these days my mother is going to find out that I have a podcast and give it a listen. So let's explain it to her, maybe. [00:06:57] Speaker B: Sure. And I think this is a helpful question to start off with because water reuse can mean many different things because there's different source waters. Let's say stormwater produced water from, say, oil and gas operations. Like, you know, there's multiple different types of source waters that can be repurposed for other off tape applications. But for today's conversation as well as for the context of this report, we're talking about water reuse in the sense of reclaiming treated municipal wastewater for various offtake applications. So this is commonly irrigation, industrial and potable purposes. So just to dive into a few examples of each of these offtake categories, irrigation could look like municipal fountains, municipal parks, as well as like, you know, golf course. Irrigation, industrial could mean using treated municipal wastewater for boiler feed operations as well as for cooling tower purposes. And lastly, potable reuse. This could look like direct potable reuse where treated municipal wastewater is directly introduced into drinking water systems. Or could look like indirect potable reuse where there's a natural buffer, let's say a groundwater aquifer or a river that is serving as this natural buffer before the repurposed municipal wastewater is being introduced into drinking water distribution systems. [00:08:24] Speaker A: Yeah, so it's like the, I mean, it's just the hydrologic cycle really. I mean, might as well put it out there. People get kind of grossed out thinking about the fact that they may be drinking water that came out of a wastewater plant. But that's kind of what the hydrologic cycle is, right? [00:08:41] Speaker B: Oh, absolutely. You know, we drink water like, you know, from dinosaurs and like, you know, just thinking about like, you know, the, the how long water has been around on this earth, like, you know, it has been repurposed and recycled countless times. So this really is just looking at that in, you know, a smaller context. [00:08:58] Speaker A: Yeah. So I think, I mean, I mean, as Someone has said before, you hear it every now and then like the water on earth is all the water that's ever been on earth. Right. I mean it is what it is. It may be frozen, it may be, you know, in aquifers, it may be in the ocean, but that really is what it is. So. All right, well, reuse has, I don't know, it's gone through a series of spikes and popularity. I don't know of a better way to put it, but of it's drawn a lot of interest. Maybe that's a more professional way to put it. And so it's been around for more than a century. We've seen it in place like Arizona, I think Arizona. Was Arizona the first state to open a wastewater treatment plant for reuse? [00:09:41] Speaker B: Yes. Yeah, this is all the way back in 1926. So it's about to hit its 100 year anniversary. [00:09:47] Speaker A: Yeah. And I think for potable reuse, I'm just going to go a little bit further field and that is, I know, like Windhoek, Namibia. Right. That's one of the first. Is it the. It's one of the first like direct potable reuse systems, one of the larger ones in the world, maybe? [00:10:02] Speaker B: Yeah, exactly. There were global pioneers in that field. Namibia Lim that's where we saw one of the first facilities for this purpose. [00:10:10] Speaker A: And for those of you who haven't been in Namibia, there are not a lot of people there. And Windhoek is in the middle of the country and pretty isolated and it is definitely dry. But, but. All right, so we've explained reuse, so let's talk about what's driving the surge in investment. Right. As I mentioned, $47 billion of planned CapEx or forecasted CapEx. How does this reflect sort of the. So what's driving the investment and how does it reflect a shift in how utilities and I guess cities are thinking about long term water resilience? [00:10:46] Speaker B: Sure. So there's several market drivers, but for now I'm just going to dive into a few key ones. So first of all, patterns and population shifts is definitely a major incentivizer because when there's rapid population growth in an area, this can overwhelm existing infrastructure and available freshwater resources. And additionally, when there's this population influx, it also creates more wastewater flows. So if we're talking about repurposing treated municipal wastewater, this creates additional supply for fueling wastewater towards both potable and non potable purposes. So states through 2050 that are projected to experience the highest population increases, Utah, Idaho, And Texas are the top three states that come to mind. And it's also worth noting that these three states also rank in the top 15 water stretch states in the country. So that combination, seeing this rapid population influx as well as their water stress levels, creates a perfect storm that makes them well applicable for water reuse projects. [00:11:57] Speaker A: Yeah, so, and I think, you know, one of the questions I have is, you know, you, you mentioned these Western. I mean, they're basically Western. Right, so you got the western ones. But what else are you seeing as far as other events that are driving reuse applications? I mean, what else is on everybody's mind? Because everybody focuses on drought, but it's not just drought, correct? [00:12:21] Speaker B: Yes, that's right. So that's definitely a major driver, as you mentioned, in the West. But if we want to expand more broadly into, say, the Atlantic and Gulf coasts and as well as the Northeast, we're looking at saltwater intrusion and even like, you know, more like, you know, severe precipitation patterns, like, you know, fortunately growing more erratic as like, you know, the climate develops and evolves. But we're seeing, you know, saltwater intrusion and wanting to create barriers against sea level rise, because through the next century, the Atlantic coast and Gulf coast are especially vulnerable to sea level rise. And I want to call out Texas and Florida in particular, because their soil and bedrock compositions especially make them vulnerable to this phenomenon. So along the east coast, we're definitely seeing that reuse momentum crop up, especially over the past decade, as municipalities and utilities are increasingly thinking about what, you know, environmental events that are currently happening as well as those to come. [00:13:27] Speaker A: Yeah, I think the sea level rise, no one really thinks about that. We, everybody talks about climate, whether sea levels are rising. I mean, they are so. And I think the expectation is they will continue to rise, but that does put downward pressure and does influence what are used. But I think you mentioned Florida. Right, Florida. And maybe we'll get into this in a minute, but I'll sort of jump the gun. And that is Florida, is it still the largest reuse market in the US has it been surpassed by California as far as installed base? Do you know, at this point they're. [00:14:00] Speaker B: Pretty neck and neck, pretty comparable across both these states. And like, you know, they've been well established markets in reuse. And I know Florida in particular, they have very great, you know, annual reports they put out, and they've been like, you know, very comprehensive in their transparency about where and how they're practicing reuse. So you're able to even like, you know, see reuse flows since as far back as around 2000. So over the past 25 years, being able to track data across Florida, which is a very. Makes it very apparent how advanced they are. Like, you know, serving as a national leader in the US for water reuse practice. [00:14:45] Speaker A: Yeah. What I think is interesting is when you look at, I'll just pick two states, California versus Florida. The reason for reuse is very different. Right. The drivers are different. Right. Like you said, it's, you know, aquifer withdrawals in Florida, the subsurface, the, the geology, the limestone geology, but really saltwater intrusion into aquifers. And so what they're trying to do is slow that demand on the aquifers and therefore there's less saltwater intrusion. Whereas California is largely drought driven combined with things like population demand, et cetera. So I think it's interesting. Well, maybe let's kind of. So we've talked a little bit about population shifts, we've talked about climate or environmental events. But then there's another leg of the stool which does impact the municipal sector and that is industrial. Right. And so what can we say or what have you, what are the applications or what's the interface of industry with the municipal utilities and water reuse? [00:15:53] Speaker B: Yeah, absolutely. So definitely water intensive economic sectors. So I'm thinking of industries such as data centers. Such a hot topic these days. Data centers, especially the hyperscale facilities, they often partner with municipalities for public private partnerships. So the municipalities are able to expand their reclaimed water infrastructure through this private capital. While these data centers are getting this treated municipal wastewater for their, as I mentioned earlier, data center operations, even groundskeeping, such as watering the acreage surrounding the facility and boiler water as well. So data centers come to mind. And also agricultural farms, especially we're seeing around the Midwest and West. They are known for also sourcing municipal wastewater or reusing it for say, crop watering and other operations around the farm. So those are two that immediately come to mind. But you know, even thermoelectric power plants in Arizona is one place where this is occurring. And even semiconductor facilities as well for like, you know, facility operation, watering? [00:17:10] Speaker A: Yeah, I think, you know, offtake is sometimes the hardest part of this equation. Maybe we can get into that. But is this investment really more about catching up with water stress realities and, or is it more a reflection of strategic foresight by municipal leaders? [00:17:28] Speaker B: Sure. So while I do think in some cases it can be the latter, in which these municipalities and utilities are being proactive, ultimately more often than not, I think it is more about finally Stepping up to the plate to confront the reality of current circumstances. Because you know, on the positive side, we have seen say policy frameworks really advance these even just within the past three years because let's say direct potable reuse. You know, four states, Colorado, California, Florida and Arizona have all developed guidelines for DPR since 2023. So we certainly have seen these improvements on the policy front. But I think ultimately the US reuse market has historically moved at a gradual clip. And this is due to a number of reasons. This could be, you know, complex permitting processes which can involve several departments in trying to move permitting along. This could mean high upfront capital costs for advanced reuse technologies. And you know, considering fortunately, you know, cash strapped budgets where you know, especially like you know, at Bluefield, we've even seen over time, you know, opec, the share of OPEX like, you know, slowly like, you know, growing over the past few decades over capex costs. So it's more like this reactionary band aid approach to capital investment and maintenance. So I think, you know, also putting that into context, trying to think like, you know, reuse and like you know, implementing reuse technologies and treatment trains and practices, I think ultimately it can be a more like, you know, it's finally occurring when this, you know, could have been a solution for a long time. And just to throw in one example, the city of Wichita, Kansas is currently considering piloting direct potable reuse within the city. But in my opinion the water reuse for this location is, you know, an overdue approach to a century old problem. In the reuse report, we highlight different aquifers across the country and their groundwater depletion rates over the past century. And the high plains aquifer like you know, around the Midwest experienced the greatest level of groundwater depletion of any major aquifer within this time. And you know, even today levels continue to remain warningly low in this particular aquifer in such a high water intensive agricultural region. So you know, in Wichita I think, you know, reuse is like, you know, great solution and is, you know, I'm, it's glad to see it like, you know, really unfolding in real time. But I think reuse has long been an applicable part of the solution at least so that's finally being rolled out. [00:20:22] Speaker A: Yeah, I think you raised a good point. One the it does require upfront capital. That's a sticking point right when you know, you do have to think long term. No politician or utility leader wants to get out there and I think it's tough. Politicians in Particular they live by election cycles, not the long term benefits of the community. With, with some exceptions, I don't even want to say few, but that's sort of the reality of it. The other thing that I think is really interesting and I sort of was alluding to this earlier but you know, we talked California and Florida. What I really like about where this industry is going or the segment should I say, it seems to be moving east, at least in the U.S. right. And it doesn't necessarily mean that it has to be potable reuse. It can be used for other things, ag or industrial offtake. And there are different drivers east of the Mississippi versus West, which we talked about. So we are seeing more of that. And part of it is a resiliency discussion. And you know, I know a lot of, you know, I know a number of people that we've a number of clients as well have asked about, you know, when is it going to move east, why is it moving east or how will it move east. And we're starting to see that. I think your project data shows that, I mean how many projects do we have in various stages, either completed or planned? What's the total number roughly do you have? [00:21:55] Speaker B: So in our entire data set we have like you know, considering cumulative completed and planned, we have over a thousand water reuse projects that we've tracked like you know, in 22 states across the country. [00:22:07] Speaker A: Yeah. And it's there's been a wave right after the California drought, you know, over a decade ago when it was, I think it was Jerry Brown was governor and there was a moratorium or I to reduce water. Right. I think the state was right. They were trying to reduce water uses by 25%. There was a wave of reuse projects moving into, into the pipeline and we were starting to see some of those roll out. So but one of the things that kind of jumps out at me because when you look around the world, not a lot of countries and I'll use that broadly in the US is you know, it's state by state policy driven. But not a lot of places are really focused on potable reuse. I mean one that stands out obviously is Singapore. But when you look at the US in your report, one of the striking things that jumps out is that it's expected to make up, based on the projects that we have about 37% of new capacity additions over the forecast period. So this would push it beyond irrigation. So really what's behind this transition to I think for our clients or higher value applications and then you Know, I think this is being driven by a number of different things, whether the policy, state level, you know, framework. So you give me the details, how big a role, you know, give me a little bit of detail on that. What do you think? [00:23:37] Speaker B: Sure. So I think looking at the technology aspect, as I mentioned earlier, like, you know, there can be high upfront capital cost, you know, to implement these advanced treatment trains, but you know, in considering the growing market maturity of these treatment technologies, this helps with the financial feasibility for actually moving forward with these planned potable reuse projects. And I think it's also important to consider other water quality regulations and standards that have arisen in the past few years, especially the EPA's last April 2024 when the PFAS maximum contaminant levels were passed for utilities to comply with by the end of the decade. So there's certain overlap in technologies between potable reuse treatment trains and what can be used to mitigate PFAS as well. So this is reverse osmosis, advanced oxidation processes and granular activated carbon come to mind. And these can both be used for reuse as well as PFAS remediation. So implementing these technologies is a double win for utilities and that they're able to, it's multipurpose. So you know, when considering the currency of capital budgets for utilities, this is huge. So also as well, decarbonization, it's increasingly growing conversational topic in the industry. And there's been on the subject of reverse osmosis, there's been recent innovations in the field in developing innovation technologies that are helping to reduce the energy intensity of reuse treatment. So growing market maturity and innovations in the field have certainly helped propel the reuse growth that we're currently witnessing. [00:25:28] Speaker A: So yeah, I think, and it seems like the world's changed a little bit over the past eight months in some respects. And that is a lot of these discussions. And you bring up decarbonization that is happening at a local level. It could be cities, states even, that are focused on it. The federal government seems to be less focused on that. So you're hearing less out of Washington on that. But cities are moving forward. Let's talk a little bit about cost effectiveness of reuse because, you know, there are different sources of water that, you know, cities have access to. So how does reuse stack up? [00:26:08] Speaker B: Sure. So definitely, you know, potable reuse stacks up pretty competitively against other alternative water sources. So especially seawater desalination. And I think I'd also like to call out the costs of imported water as well. Like, you know, I'm thinking about Southern California because there's a water district. Well, Santa Margarita Water district relies entirely on the metropolitan water district of Southern California for its water supply. And importing this potable water represents this water district's most significant operating expense. And I know too, that in Tampa a couple years back, they had to purchase water supply for the second time in a single year, for the first time ever. So definitely looking at the costs of imported water can unfortunately take up a large chunk of a utility's wallet. So I think when, you know, utilities backs are against the wall and, you know, there's been a combination of drivers where, you know, freshwater supply, especially for, like, you know, wanting to save fresh water supply and not using it for, say, water in your lawn. So I think, like, you know, conserving this water supply, especially in the context of rapid population influx, like, you know, climate events are incurring and becoming more erratic, and just all of these factors coming together to drive the perfect storm of water stress, it just creates like, you know, even just thinking about the public ick factor that unfortunately oftentimes surrounds water reuse, because if you're saying you're drinking treated municipal wastewater, that doesn't really sound very appealing. So I think sometimes even crafting the language around water reuse is a big part of, you know, driving this momentum forward. But everything coming together, I think this ick factor is surmountable when, you know, once again, your back is against the wall and you need to turn to an alternative water source to augment your existing water portfolio. I think, like, you know, reuse is certainly definitely a viable option. [00:28:16] Speaker A: Yeah, I mean, one way to look at it is you mentioned the ig factor, but it's sort of like water reuse projects or potable reuse projects beget more potable reuse projects. You know, once one is developed, another one is more likely to be be developed. And there does. There's a groundswell of momentum, if that's the right way to put it. You know, people become increasingly comfortable with it. It's demonstrated, I think, one of the challenges, and I completely understand this, it's not to go. What happens is, I think a lot of utility leaders and operators, they're feeling pressure from the community saying, well, I don't understand. Why aren't we doing putable reuse? It makes all the sense in the world. We're treating, you know, our wastewater, and then we're just dumping it out in the ocean or dumping it into the river or Some channel. So why wouldn't we reuse it? It's being treated to drinking water standards almost. If not almost. So why, why wouldn't we do it? Well, I mean, there is risk aversion, right? I think there is a real concern. I think that's why, if our numbers, if my memory serves me correctly, we are seeing more indirect potable reuse than direct. Right. I think that's, that's moving along because like you said, if Orange county is putting water into an aquifer, you know, it's recharging an aquifer or a water supply, there is that natural buffer that, that remains, and then you can sort of, you know, polish it off as you withdraw down the road. I think that's a big part of it. Well, one of the. I mean, we talked a little bit about the geographic pivot eastward. As I said, we jumped the gun. But one of the questions I have for you would be industrial water. Industrial demand is a key driver. And so particularly like data centers. Right. I think this says in the report, maybe it comes from our data center report itself or maybe both. 97% of data center water is sourced from municipal systems. So how are industrial or utility partnerships, how are they changing the economics? Are you seeing anything there? And what lessons can municipalities take from places like Loudoun County, Virginia? [00:30:39] Speaker B: So I think it's also really interesting seeing where these data center developments are occurring because once again, as we are seeing reuse move eastward, like, you know, there's certain states like, you know, you mentioned Virginia, but even like, you know, Georgia and Tennessee, because I know Memphis, Tennessee is currently considering repurposing its tree municipal wastewater to a data center development like, you know, close to the city. So in these more untraditional markets, I think also these industrial reuse partnerships maybe are also furthering along other reuse policy developments. Because I know, you know, while Memphis is actively considering this industrial municipal reuse partnership, I know there's a water reuse task force in the state as well that's currently looking into implementing indirect potable reuse regulations. So, you know, if they're like, you know, existing potable re or existing reuse agreements can beget additional policy developments. So I think when, you know, say, these industrial partners are settling in, you know, states outside of the west, this can also encourage further development of other potable reuse regulations within the state. So, you know, looking at where these industrial developments are occurring, I think these could potentially be, you know, new states moving forward for future growth opportunities. [00:32:04] Speaker A: So you, you describe reuse as A defining role in addressing U.S. water challenges. I mean, I think we as a company, we feel that way because it makes sense, like I said. But it's execution, you said is slow to date. And because it involves multiple stakeholders, multiple policy layers. Where do you see the biggest hurdles today is IT policy alignment, financing, technology, coordination and sort of what's going to separate the leaders from the laggards over the next decade? [00:32:45] Speaker B: Yeah, for me I believe it's data transparency and reporting practices. So altogether this coordination piece of the picture because the EPA does have a federal water reuse action plan in place which is currently working towards supporting, coordinating and funding initiatives related to recycled water. But it is important to note that a lot of reuse development falls upon the states because there are currently no federal requirements or restrictions governing water reuse projects. So state level reporting on reuse activity, like, you know, looking at the bigger picture, unfortunately it does remain sorely lacking. Like, you know, there are a few states that are doing it extremely well. I know I alluded to Florida earlier in California, but even Arizona, they have interactive data dashboards where you can see break down the water supply of the state. Like you know, how much is coming from the Colorado river, how much is coming from municipal effluent, et cetera. New Jersey in particular, I know that they've been reporting their annual reuse flows at the state level since early 2000s. Even Texas, they mentioned water reuse in their state, state water plan. And I think it's important to note so Texas, there's 16 regional planning organizations within the state and out of those 16, 15 mentioned reuse as a viable source of future water planning moving forward. So you know, Texas is another, you know, state to look at in driving forward reuse growth over the next decade. But unfortunately this is only a handful of states that I'm currently alluding to. So there still remains much work to be done about, you know, advertising, publicizing reuse and just honestly publicizing this accessible and comprehensive data on state level reuse activity. So I believe this really is a primary inhibitor to rapid progress in this market. [00:34:51] Speaker A: All right, so Megan, one of the things we, maybe we should have gotten into this earlier, but one thing, and not to put you on the spot, but I'm going to do it. And that is methodology. But how did we do this? So our final number is 47 billion in capex by 2035 and we've talked a little bit about over a thousand projects. How did we do this? What was your process at least simply to get from a to Z sure. [00:35:22] Speaker B: So this forecast relies heavily on our tracked reuse project data set that we've been monitoring and adding to since, you know, for at least the past eight years. And it also leverages state provided data on reuse as well as looking at future water water action plans like you know, provided by states say like you know, Texas and California. And, and we track, for each reuse project, we track, you know, expected years of completion, project costs, cost per million gallons per day or cubic meters per day. So we do track several different metrics for each reuse project and we leverage those in putting together this forecast. So if say a project had a reported capacity but didn't have an expected date of completion, leveraging our historical data we were able to fill in the gaps ourselves and vice versa. If a project had an expected date of completion but didn't have a reported planned capacity addition, we were able to estimate that using our historical data. So as well as like, you know, some certain planned projects, it's great because they provide all the data we need. But unfortunately, more often than not, due to what mentioned earlier about reporting standards, unfortunately not being altogether comprehensive, we did have to use several estimation methodologies in order to really piece this forecast together. [00:37:00] Speaker A: Yeah, it definitely takes triangulation. Right. You can only work with the data that's provided. And I think there are a number of plans, they list projects or that have these long term plans but they don't know exactly what the size is going to be or they don't know exactly the timing. So they, you basically have used experiential data to figure that out. And I think also what's really important, what I really like, and this is years ago, I think, I don't know if it was five, maybe five years ago, a client had encouraged us to take our project data and put them in the various phases of development, whether it be feasibility, development, financing, construction, completion and track them. And so that's what we do. And I think that's really helped you. It sounds like tracking projects and also making assumptions when we think certain projects will be delivered based on historical data. It's not exact, but it gives us a pretty good understanding. And like you said, over a thousand projects. But how many of those are in planning? [00:38:09] Speaker B: It's a good amount. So we have over 600 projects currently in the planning phase. [00:38:15] Speaker A: Yeah. So I'd say two thirds, we'll go with that. But it's super interesting. So my last question to you is what else is interesting? What jumps out at you in this report? I mean, you've been working on this while going through the data and trying to piece it together. What would you like the listeners to. To know about it before I cut you off? [00:38:37] Speaker B: Sure. So this report does have a section on the funding portion of reuse projects and I think that's very interesting to look at as well, seeing where these federal funding sources are coming from to help supplement the budgets for these projects. I think the Bureau of Reclamation, their Water Smart program has provided over a billion dollars funneled toward reuse projects in particular. So in this report we have a map of where these investments are being channeled to and what states are receiving them. Spoiler alert, California does have a pretty considerable share of this financing. So that's one aspect or one section of the report that I would encourage readers to look at and I think the policy map as well. That was something that very much excited me in putting this report together. So it leverages a, you know, several different sources and ultimately it's, I think this really does highlight where, which activity is happening where because you know, you see a lot of DPR developments in the west, particularly around the Colorado River Basin where, you know, supply can be fickle and like, you know, water rights agreements. That's currently a very contentious issue. That is, you know, hopefully there'll be future developments in the next few months. But we're seeing a lot of DPR development in that region of the country. But once again that those pockets of indirect potable reuse interest we're seeing along the Atlantic coast as well as even in the Midwest, you see a lot of where there aren't as many planned projects we've tracked in this region. So it's a bit of a quieter area so far, but we're seeing a lot of non potable for say industrial and irrigation that we're seeing along the Midwest. And I know Illinois, that's one state I'd like to call out because they recently just allowed for industrial applications for municipal reuse when there was previously just irrigation applications allowed. So we are seeing, albeit gradual, we are seeing developments in the Midwest as well. So I think that, you know, could be another region to look out for in the future. [00:40:51] Speaker A: Yeah, I think it's super interesting. I say that a lot because I think what we do is super interesting. But I think you've made this report. I think it's impressive. I think, you know, I know we've talked sort of big picture trends and such, but it is loaded with data, I think. I mean it is the foundation on which it is built and So I appreciate that and I know what you've put into this and I hopefully anybody who is interested in municipal reuse in those opportunities, whether it be the projects themselves, the size, the economics, but also the policy and sort of the, the broader trends or I think it's all in there and I really like it and appreciate it. So now my final last question. What's next? Because you just put this out. So what are you working on next? [00:41:46] Speaker B: Well, right now, so I'm an analyst on our utility strategies and ownership team, so I'm currently piecing together the quarterly report. So I've been tracking the, you know, regular utility M and A activity across the US So I'm looking forward to putting that report out. I think there's been a lot of interesting developments in this area this quarter. So I'm excited to publish that and discuss what's been going on as of late. [00:42:14] Speaker A: Yeah, I think that we had a conversation about this the other day, was changing gears and that would be fair market value legislation. There's some things happening in different ways, right. Not only in Pennsylvania, we're seeing some, to call it regulatory or policy discussions being had at the state level. And then in my home state of South Carolina, different, different ends of the fair market value spectrum. But I know you've been digging into that. We had what I thought was a really interesting conversation about the other day and maybe something will come out of that over the next couple months or so. We'll see. But. Well, Megan, thanks a million for jumping on. I know it squeezed you time wise to make this happen because I will be at the California Water association meeting next week, so I wanted to get this done. So thanks a million. But you made it happen because of the report you just released. So it was easy. So thanks, man, and we'll talk again soon. [00:43:18] Speaker B: Yeah, thanks so much for having me on, Reese. This is fun. [00:43:20] Speaker A: All right, see you. Take care. All right, that's it with Megan Bondar, analyst with Bluefield Research. I do think, and I'll say it again, the Rees report is really interesting. I think it's a good one. And I think that if you're interested in this, it's worth it. Like I said, lots of data. There's data dashboards that go with it, and I know there's been a lot of production work that's gone into it. So speaking of, before we sign off, I want to recognize the team that makes these conversations happen. Mike Gaylor, Ryan Sullivan, Kelly Talbot, Steph Aldock. Without them, this podcast wouldn't make it past my desk. I have that memorized by now. And it's true. If you're in Boston, Barcelona, New York, Chicago, San Francisco, or Paris, all the fun cities to be. Reach out because we'd love to connect in person. And if you have ideas for topics you'd like us to tackle, what are [email protected] is how you can connect with us. That's our email address. This podcast is for you, not for us, because we've already done it. And if you've enjoyed today's episode, the best way to support us is simple. Share it with a friend. Or you can just give us a review. This podcast and these water industry insights have been brought to you by the one and only Bluefield Research. To learn more about us and our work, Visit [email protected] Till next time, Be well, be safe, and take care. Sam.