[00:00:00] Speaker A: And the kind of fact of the matter is that a lot of stormwater infrastructure has been designed and engineered and built for a time that doesn't exist anymore.
[00:00:15] Speaker B: I am Reese distal and this is future water, which we talk about all the ways which companies, utilities, and people are addressing the challenges and opportunities in water. This is episode 97, and I know it's going to be a good one. Well, counting down, we're just away from 100. So for all you first time listeners, that means there's an archive of discussion topics, things like topics on PFAS, M and A, private equity policy, shifts and more and more that are all at your fingertips. If you're only interested in the last episode, Amber Walsh and I, a colleague, we discussed water management trends across the industrial sector. So that was pretty interesting, including topics such as semiconductors and what's happening there. But today I'm going to be joined by my colleague, senior research director Eric Bindler. Eric's long awaited analysis that he and others have been working on has finally been released. I don't say that finally as a bad thing. It takes a lot of work. But the topic is us stormwater infrastructure markets, key drivers, competitive shifts, and the investment outlook or otherwise forecast for the stormwater management sector for this reason.
[00:01:26] Speaker A: Hi.
[00:01:27] Speaker B: So, Eric, to walk through the ins and outs of stormwater, including the role of municipal water, transportation, real estate sectors, and word has it that climate has no boundaries, so they're all impacted. So we go beyond just municipal water sector. It's pretty far reaching, but we also look state by state at what's happening. But before we do that and go into those heavy details on that sector, I thought I'd share some news that caught my attention this past week. Well, it's not. It's kind of news, truth be told, this past week, in collaboration with the National association of Water Companies, also known as NAWC, Bluefield put together a webcast. The topic was from PFAS to consolidation, key water market developments impacting utility strategies in the US. Shout out to my colleagues Charlie Seuss and John Berryman for presenting, but also the Bluefield marketing and production teams for helping us keep it between the ditches. If you only knew what happened behind the scenes on these webcasts and these report presentations, it's pretty significant. So thanks to everyone for the time and effort in doing so. But the discussion that we had with NAWC members as well as Bluefield clients was, you know, there are three big questions among others, but what are the emerging drivers and inhibitors for utility consolidation? How is the market share among leading ie you shifted in recent years. And also, how will PFAS regulations and other key policies impact the sector? So why should we care? Well, one thing, as I said, jumped out at me in developing the 30 page slide deck. In 2021, the us federal government capital congressional water infrastructure appropriations were $3.2 billion. Right. So we've looked at this, you know, going back as far as, you know, several decades, looking at congressional appropriations historically and what it means since the early seventies. And this is all according to the General Accounting Office and congressional budget offices. So $3.2 billion. How does that feel? Good, bad, ugly, right on time. It's all, for one thing, we can't live without, and that would be water wastewater management. So, to put in perspective, what I thought was interesting was comparing it to federal appropriations for other sectors. So, as I said, for water in 2021 is 3.2 billion. During that same period, 2021, $756 billion were appropriated for the defense sector. That's 214 times water and wastewater. That same year, federal appropriations for transportation was 105 billion. That's 30 times water on wastewater. Then, lastly, for the most important of all of them, it was $23 billion appropriated for space exploration. That would be 6.7 times the water and wastewater sector. So what does that tell me? Why do we care? Well, this tells me the royal we, that we have a prioritization problem. No, it's not a complaint, but it's just sort of a reality of my job. The status quo can't continue because we can't live without reliable sources of drinking water and sewer services. I think we take it for granted. I think there needs to be a greater federal focus on this, whether it be a national water policy or some form that dedicates ideas and capital towards this critical infrastructure sector. But also for this reason, for all these problems above, you know, the opportunities for private participation in water are poised to grow. After all, something's got to fill the vacuum if we can't raise rates. If you're a small system, you don't have access to municipal bonds, you don't understand the state revolving fund programs and how to access that capital, and you just don't understand the technology and resources. Well, guess who's ready to step into the fray? The private sector. For that reason, investor and utilities are acquiring, on average, about 135 utilities a year. But there's no reason that won't grow. As well as third party contract operations, large commercial facilities and industrial facilities. Separately, they're going to solve their own problems. We've talked a bit about this. They've got bottom lines. They have their own operational risk. They're going to just start doing things on their own, with or without their lawyer. Local communities, their local water, wastewater systems. There is a collateral impact. Utilities are volume sellers, right? They're selling water. They're treating water and volume. That's to their financial benefits.
But if large commercial facilities and industrial facilities don't feel like they're getting what they need, or they can do things on their own, not only just being more efficient, but insulating themselves with things like on site reuse or more advanced efficiency tools or measures. When it comes to water management, it's going to happen. So they're going to do it. And so there is an impact to communities as well. The federal government and states offer up all kinds of tax incentives and benefits to companies deploying renewables, electric vehicles and so on. It's not just the renewable sector. It goes on and on. Why can't that happen for the water sector? Why can't we incentivize industry to take on a bigger role and invest in associated infrastructure that benefits not only themselves, but the community as a whole? So this is something we've worked on with a number of different companies. We're working on a white paper. When it came to a water investment tax credit and what that could or couldn't mean for the water sector, I think it brings more stakeholders to the table. It also brings in capital that otherwise might be sitting on the sidelines.
Then, lastly, to this point, infrastructure doesn't pay for itself. From highways to rail systems, from broadband to, you guessed it, water and wastewater. It requires money. It requires leadership, and someone's got to protect us from ourselves. And this is the opportunity. Either we do it proactively and do it ourselves, figure it out, or we just wait till we're inundated by floods or we're out of water or drinking water. Wells run dry. It does happen. Go no further than Mexico City. Sure, Mexico City, but you can also go to southern California or Phoenix to see what's happening there. So that's my rant of sorts of the day. And so what I'd really like to do is get to Eric Benller so we can talk a little bit about stormwater, because I can promise you, it's interesting. And it may. He may talk about things that, uh, in fact, I know he does, that you don't even know. So stay on this, uh, podcast and listen to the conversation with Eric. So, here we go.
All right, so I'm joined here by Eric Benller Eric, how goes?
[00:08:26] Speaker A: It's going well, just, uh, back from a lot of travel, you know, Swan and Vancouver and Ace and Anaheim and some other client stuff. So it's nice to be. Nice to be home. How about you?
[00:08:36] Speaker B: It is pretty good, I think. I haven't been traveling as much recently as you, but summer is here in the Boston area. The Boston Celtics are the world champions, so the parade will be tomorrow. So I don't know what that means for getting to the office for people, but.
[00:08:55] Speaker A: Are you going to the parade?
[00:08:57] Speaker B: My kids really want to go. It's their first championship, so they're pretty excited about it. And they're going to camp for seven weeks on Sunday, so I think they're, they're not dying to hang out with me, but I think I'm a little bit dying to hang out with them, so why not? So, so I have, and it's also right next to my house, truth be told, so it's pretty convenient. But with that being said, those are the details of, of our lives. But for everybody else, stormwater is a topic of interest and concern increasingly, it seems, with flooding happening increasingly from here to there and everywhere.
You've just put out a report with colleagues. We sort of put this together and size of the market forecasted the market, talked about key players in stormwater management, and there's a lot happening. It's really interesting, but it's also pretty complex because it touches upon, it goes beyond just municipal utilities themselves, water or wastewater. It touches other segments. So I think we can get into that. But everybody knows what stormwater is. Everybody knows what flooding is, so what's driving the growth? Why don't we talk a little bit about that, sort of what's the background of the report and why we started looking at this?
[00:10:16] Speaker A: Yeah, I mean, I'd say there are probably three kind of major overarching drivers that we look at in the report. Certainly some other factors at play as well. But I'll start with, with three. I mean, the first one would just be, would be climate change. Right. I mean, as you kind of mentioned in the lead up to the question. Right. You know, the US is seeing significantly higher levels of flooding, of extreme and severe storms, you know, hurricanes, a lot of just stormwater related issues that we haven't seen in the past. Right. I mean, you know, there's, there's a lot of different data sets that we looked at for this report that all kind of point in the same direction, which is up. Right. If you're talking about kind of major climate and weather disasters and severe events. If you're talking about just kind of overall average rainfall levels in different parts of the country, if you're talking about extreme precipitation events and levels, flooding, flood insurance claims, all of that stuff, all of those things are pointing up, right? And the kind of fact of the matter is that a lot of stormwater infrastructure has been designed and engineered and built for a time that doesn't exist anymore. Right. They're kind of built to design historical average levels of precipitation that we're just not seeing anymore. Right. The kind of baseline is changing. And so those assets, that infrastructure is kind of increasingly insufficient to withstand the more frequent rain events, the more severe rain events that us communities are kind of facing, right? So number one would be climate change. There's also certainly that's kind of like the too much water problem, but there's also a quality issue. Right? Pollution issue. Stormwater is a major contributor to surface water pollution around the country, right? So something like a third of all of the nations water bodies are classified as impaired in some way, right? Which is a pretty astounding statistic. The sources, the kind of causes differ around the country, but stormwater is one of the leading factors in many parts of the country, whether that be runoff from kind of municipal and city infrastructure and roadways and all of that, typically in kind of more densely populated areas along the eastern seaboard. Urban kind of municipal stormwater is a big factor if you're looking more out in the midwest or the west. It's more agricultural stormwater runoff. But again, it's all kind of stormwater related. It's kind of flushing nutrients and pollutants and contaminants into water bodies. And of course, there's a regulatory component there. The Clean Water act does regulate stormwater from a number of different sources, although there's still a lot of latitude for states to shape the policy there. And so we see stricter policy moves and regulatory moves in places that have had big problems with pollution, right? The Chesapeake Bay or the Great Lakes or the Puget Sound, for example. So that's, number two, is kind of the pollution water quality side of things and the accompanying and associated policy and regulatory drivers. And then the third piece of it is just construction, right?
The construction piece is kind of interesting because both flooding and stormwater pollution, they're both exacerbated by impervious surfaces, right? Concrete and asphalt roads, parking lots, buildings. Probably the most interesting, maybe mind blowing stat from the report or that in my perspective that I found in doing the research for this report, is that something like half a percent of the entire us land area is covered just by parking lots. That's an area larger than the state of Maryland is parking lots. And thats especially, again, in more dense, more urbanized states like along the east coast and into the midwest. But were seeing just a lot of construction right now as weve talked about on this pod and a lot of our research, theres a lot of infrastructure investment happening. Theres a lot of industrial and commercial kind of build out happening. Theres a lot of residential build out happening. A lot of that is coalescing around the sunbelt, the west and the south. And all of that is, is changing the stormwater conversation too, because on the one hand, all of that concrete and asphalt is exacerbating the problem. But it's creating a lot of new opportunities for stormwater management as builders and municipalities, commercial facilities are required to invest in stormwater management as they're putting all of this new infrastructure, all these new buildings in place.
[00:14:27] Speaker B: Yeah, I mean, there's a ton to unpack there. Like you said, I think a couple of things that caught my eye or my ears in this case.
You've talked about sort of the climate larger storm, the billion dollar events, we cover that sort of the number of them I think. But the number is even much larger when you even go below the billion dollar events. Right. One of the data sets that we present to clients is we use NOAA data looking at all storm events, climatic events, water, not water related. And just when I was, as you were talking, I was clicking on the just storm water or, and flooding events. So what we basically recorded or Noah has, I don't want to take credit for it. Since 2000, there have been more than 62,000 stormwater flood events in the US alone at an average property damage or agricultural damage, combined price of $2.5 million each. So we're talking real money. I think that's pretty incredible. And then I think the other thing that's interesting is when you start talking about stormwater runoff and stormwater pollution so dispersed, cant put a finger on it, its hard to do. But what were starting to see, obviously its summertime and ive already noticed it in just reading the Boston Globe. Algae blooms, right? Theres runoff. You get the warmer temperatures. Climates as weve seen over time. Weve put out research in the past on algae blooms. They seem to be moving further north every year or every decade. So where it used to just be a sunbelt or a Florida problem, now we're seeing it in the Midwest, upper midwest, even in the northeast. And so when it really starts impacting communities and their ability to go swim in their lakes nearby or the beaches, then hopefully that will drive some action as opposed to being like, it's not that big of a deal. Lets talk about the management or really the funding of stormwater management.
Why has it been historically underfunded compared to, lets say, drinking water and wastewater? I think at Bluefield, we sort of put it in three buckets, drinking water, wastewater. And then over here is the redheaded stepchild, stormwater.
Ive said this to Dave McGimpsey last week. Im a stepchild, too, so I could be in that spot as well.
Back to my question, though. Why has it been unfunded historically?
[00:16:58] Speaker A: Yeah. So, I mean, just to put it in perspective in terms of what we mean when we say underfunded. So one of the kind of avenues of research we did here was just looking through some of the major kind of state and federal and local funding sources that we, the datasets that we collect at Bluefield. And so that's stuff like the state revolving fund program at the federal level and the state level infrastructure Investment and Jobs act funding, wifia funding, but also even just the utility CIP data that we track. And there was a pretty interesting pattern across the board. All of those funding sources, stormwater only typically got about 7.5% on average, of the total funding pie, whatever that was. Right. And so water, wastewater, drinking water, wastewater. The averages or the shares kind of varied across those different funding sources, but stormwater sat at basically between six and 9% for all of those major funding buckets. And so, yeah, to your point, certainly not getting nearly as much attention, as much financial resources as these other sectors are. And we talk all the time about the water sector as a whole is significantly underfunded. Right. So stormwater getting even a very small piece of that pie relative to all of those challenges and those pain points that we just talked about a minute ago, um, one of the things that makes it really complicated is that, you know, as, as fragmented as the municipal water wastewater utility sector already is, you know, we're talking 50,000 drinking water utilities, you know, 20 something thousand wastewater, you know, systems and facilities, stormwater is even worse. And that's, that's why this report, this research has been, you know, it's something we've been talking about for a while, but, but it's been, it's taken us some time to figure out a methodology to kind of get our arms around it because you're certainly talking about municipalities, but you're, you know, you're talking about maybe the wastewater utility, but you're also talking about the kind of municipal public works department or the streets and transportation department. Maybe the parks department even has a role to play. But then there's also kind of the transportation element of it. When you get outside of cities and municipalities, kind of state or county dots that manage significant stretches of roadway that, again, we're talking impervious surfaces. We're talking about flooding. There needs to be investment in stormwater management. And so those organizations have a role to play. You get these kind of larger, maybe regional flood control districts. And then, as we'll talk about in a couple of minutes, there's a really significant role to play for private property owners, for commercial and industrial property owners in terms of managing and mitigating the impact of their own impervious surfaces. Right. The buildings that they're, the facilities that they're building, the malls, the office buildings, the manufacturing plants, the parking lots, all of that has a big stormwater impact. And so increasingly, we're seeing that private property owners are compelled in some way to invest in solutions. And so that's why this market, it's so broad, it's so fragmented. There's so much kind of overlap and complexity from kind of a jurisdictional standpoint. It makes it really tough to get your arms around it. And there's a lack of a clear champion. Right. There's a lack of dedicated funding streams and a coherent response to the problem. Again, I think it's changing a little bit. That's one of the reasons that we thought now would be a good time. We are seeing that level of funding start to tick up across the sector. We're seeing more regulatory and policymaker interest in this. We are seeing more local funding initiatives, dedicated stormwater utilities that are collecting funds to help finance stormwater infrastructure at the local level. So we're seeing changes, we're seeing growth, we're seeing progress. And that's why we thought now would be a good time to finally sit down and get this thing together.
[00:20:43] Speaker B: Yeah. I think, you know, the cost on a property owner. I know in the case of your rehabbing at, let's say, a household, and I have friends who've been through this, it's, you know, there's, you don't have to do anything. But if you're definitely building Greenfield, like new, new home, new construction, you have to consider this in a place like Newton, Massachusetts. Right. Shout out to my friends John and Debbie. But they've had to install essentially tanks. Right. You know, underneath their backyard and the subsurface partly to control this. And it doesn't come at a low cost. It's pretty significant. Add on to what has historically been done. I mean, some respects you might as well add a swimming pool, but that's a whole other matter. That is one way of catching stormwater, I suppose. But it might be a little gross. But let's get to the numbers.
How much is the US stormwater infrastructure market expected to grow? What's the size of it? What are we seeing? Because I know there was a lot of math that went on behind the scenes.
[00:21:43] Speaker A: Yeah. So we didn't include pools, swimming pools, I'll say that up front. But the kind of market as we defined it, and we can, we can get it out in a minute. But basically we're talking, you know, top line numbers. Uh, we're talking just kind of capital expenditure rate investment in stormwater infrastructure equipment management. We're seeing at about $35 billion in 2023, growing to about $55 billion by the end of the decade, by 2030. And so that's something like a 6.7% compound annual growth rate. We do see a bit of a quicker kind of near term market opportunity, something like 8.5% over the next few years. And that's really driven by a lot of that. What I kind of mentioned earlier, a lot of the construction activity that's taking place, there's a lot of federal funding and infrastructure investment going in, both on the municipal and public infrastructure side, but also all of the investment behind kind of industrial build out, you know, the CHiPs act and the Inflation Reduction act and all of the tailwinds related to industrial kind of reshoring and manufacturing reshoring. So a lot of interesting kind of growth opportunities there. We do see maybe getting towards the end of the decade, things will start to slow back down to something like maybe four and a half percent more in line with what we've seen historically in this market. Trey.
[00:22:54] Speaker B: Yeah. And I think, I suspect it depends on where you're looking to housing market trends, what's happening there with the impact of new houses and such are, but when we put this report together and it came across my desk, I was, I dont want to say shocked or I was surprised just by the scale of the numbers. Theyre not insignificant. I mean, youre talking about being underfunded or relatively speaking, $54 billion to stormwater management, in my mind, is pretty big.
Can you break them down? What do they include?
Whats the focus area of the underlying numbers, Steven?
[00:23:32] Speaker A: Yeah, absolutely. And so I think maybe ill say two things. The first is just were talking total capital investment, total capex, and so thats the infrastructure and equipment portion of it, as well as the labor and services. Right. So all of the design, the engineering, the construction, really significant share as well. And so actually, we focused a little bit more on the report as well, get into a little bit more on some of the hard infrastructure and equipment solutions, a lot of the companies involved. That's really the core focus for this report. That's actually only about 40% of the total market. That's your pipes and your catch basins and your detention vaults and all of that. The labor and services piece is the remaining 60% of that market. A lot of opportunity there for engineering firms, construction firms, and actually designing and installing all of that infrastructure. The other thing I think thats really important to mention, as weve alluded to already, is that this is, its a very fragmented market. And were not just talking about the municipal utility sector, right. Were not just talking about municipal stormwater management. Were not talking about utilities, as we typically are in a lot of our kind of municipal drinking water and wastewater reports and deliverables and forecasts. So the muni piece is actually only about a third of that total market. That number that I gave a minute ago, only about a third of that is muni. The biggest share by far is actually the commercial and industrial piece. Thats not quite 60% of the total market, more like 57 or so percent. And again, so thats all the decentralized infrastructure that commercial facilities, industrial facilities are putting in to deal with stormwater. And then transportation is in the mix as well. Thats the balance of about ten or so percent. So overall, its a pretty big number. But it's important to note that it's not like an apples to apples comparison with what clients would see for our drinking water wastewater forecasts, which are more focused just on the utility scale. Water wastewater infrastructure.
[00:25:29] Speaker B: Yeah. And I think thinking back when the IJA or the infrastructure week was being discussed, depending on when you're looking at it or we were in the water sector, new water spend out of IJA is 55 billion. Right. Thats sort of the number thats being, has been thrown around. But I think when we started looking at it were $55 billion for water, but transportation was getting 105 or 110 billion out of the IIJ and the water sector, theres a lot of complaining and moaning about, you know, why does the water sector get so much less? But I think one piece of analysis we put out was actually, even though transportation is getting a lot more money, and whether it's fair or not fair is another argument to be made. I think the point is that there's water spin within that transportation, within those transportation dollars. For every road that's built, so many culverts have to be installed or manholes, et cetera, et cetera. So I think that's really interesting. I think that's part of what you're getting to in this analysis.
Sort of digging down, taking a little bit of a turn here. Are there any trends you're seeing at the state or regional level that shows some differentiation in the market overall?
[00:26:49] Speaker A: Yeah, the state level analysis was really interesting here. And so we took basically a two pronged approach to figuring this out. And I won't go too far into the weeds as far as the methodology, certainly check out the report. We've got some details there and how we put all this together from a starting point. We wanted to look at just the underlying asset base. We called it the built environment.
If were talking roadway for the transportation sector, were talking the number of commercial and industrial facilities for the CNI sector, housing units for the municipal or utility level sector.
Just understanding where that since, again, a lot of the challenges related to stormwater management come from that impervious surface build out. Where are the impervious surfaces and in what measure? By. And so that piece of it is what you would expect. The biggest states, California, Texas, Florida, have the most assets. So not a big surprise there. But we also wanted to really dig in on the market attractiveness. We basically used four different parameters. We used essentially climate risk by state, some of the construction and urban development trends that we've been talking about, but also the policy and then the funding environment by state. Because the argument was basically, you've got maybe some states in the southeast, maybe Mississippi, Alabama, for example, where there is a really significant climate risk, right. They're seeing really high levels of severe storms and flooding, and they're feeling those impacts of climate change, but they haven't necessarily made the moves yet to prioritize that from a policy standpoint or funding standpoint. So we really wanted to take each state one by one and kind of understand where the opportunities were, where maybe some of the roadblocks or the challenges were. Um, and look at states along those lines. And so, you know, what does that tell us when we kind of put it all together? You know, maybe, maybe not surprisingly, the south is the biggest market overall. At a regional level. It's about 40% of the total us market. And that's really led by, you know, Florida and Texas. Right. You know, two of the three biggest states. Massive market opportunities there. But there are also some other really highly attractive stormwater markets in, in the southern region that, you know, kind of maybe punch above their weight from a, from a built environment or an asset standpoint because they've got so much, so much climate risk, so much development and construction activity taking place. Maybe the policy and funding environments are more favorable. So that'd be like Georgia, North Carolina, Virginia are examples there. But you do see some really interesting wrinkles when you kind of look at this at a state level and especially across those different sectors that I talked about. One of the things that really jumped out to me was that some of the larger kind of more rural midwestern states that have really low, large areas but low population densities like Kansas, Nebraska, Alaska, north and South Dakota, they account for actually a pretty big, or at least I'd say a disproportionate share of the transportation related spending because they just have so much roadway. These are really large states. They may not be super populated, but you still need that kind of transportation infrastructure to connect communities and connect commercial and industrial hubs and that kind of thing. And so you get a lot of road miles to cover these vast areas and therefore a kind of bigger share, a disproportionate share of the kind of transportation related store water infrastructure spending.
[00:30:09] Speaker B: Yeah, I think that, I remember you saying that. That was really interesting. Just where are the parking lots and where are the roads? And it makes sense for a lot of reasons. But when you sort of put pencil to paper and look at it, it's interesting. So we've talked a lot about, we've talked about the problems and the sort of the impacts. We've talked about sort of the underlying reasons and assets, but also geographies of where this is happening. So what are some of the solutions? Right. Because on the back end of this, we look at it to say, okay, here's the size of the market, here are the solutions, and ultimately we get to the providers. So where does that stand?
[00:30:49] Speaker A: Yeah, so like I said, we were mainly focused on kind of the infrastructure and equipment and especially what we'd consider to be like the gray infrastructure, the kind of traditional infrastructure solutions in this report. So that's really what the forecast that we put together. The competitive analysis we did was really focused on those classes of solutions. So that would be things like pipes and drains and culverts, pumps, catch basins, wells, a lot of that more traditional gray stormwater infrastructure, though even within that large classification, there are some more, maybe emerging, more faster moving product categories.
We talked a little bit about from the commercial and industrial standpoint or from the residential standpoint, some of the onsite or the decentralized kind of stormwater storage and management and treatment solutions. Right? So storage chambers that are buried under parking lots or these kind of stormwater pollution and kind of treatment products like interceptors, hydrodynamic separators, things like that. So that was really kind of the major focus for the report and kind of looking at what the outlook was for those different types of product categories. But we do certainly touch on the fact that when we're thinking about maybe the future of stormwater management and some of the more cutting edge, maybe more niche solutions that are starting to get some traction, there's certainly a digital play here. There's a number of digital plays. And so you get everything from the more hardware focused remote monitoring, IoT control solutions to software used to engineer and design stormwater infrastructure. There's a big software, uh, you know, engineering and design software opportunity there. Um, there's all kinds of, you know, kind of SaaS software as a service portals that are popping up for, like, stormwater compliance management and reporting, you know, flood risk modeling for everybody from, you know, homeowners to property managers to utilities to communities, right? So there's, there's a lot of really interesting applications for basically, you know, digital hardware and software here. There's also the green infrastructure conversation, right? And so we didn't dig in as much in this report on that, but it is certainly part of the overall conversation and things like these kind of green infrastructure, nature based solutions which kind of mimic natural processes to offer different ways of dealing with stormwater storage management treatment, all of that, right? So even just like rain gardens or permeable pavement, rain barrels, bioswales, all of that kind of thing. Again, this is all kind of part of the broader conversation around stormwater management. And then there's even some really interesting kind of finance strategies as well, right? We've seen some interesting examples of cities, kind of DC and Atlanta and cities like that trying out these environmental impact bonds, which are basically kind of a unique financing mechanism to help finance green infrastructure. You also see states popping up with kind of stormwater quality or nutrient trading systems, right, where I should say credit trading systems, nutrient credits or water quality credit trading systems, where a specialist stormwater management provider can build stormwater management systems and then sell those credits back to a property developer that's trying to build a new office complex or airport or whatever the case may be, some really interesting newer niche solutions that, again, are part of the overall ambit of the report, but not as big of a focus.
[00:34:16] Speaker B: Yeah, I think some of these are also performance based. They're setting in place different performance metrics, and that impacts the rate of return for the financial investors, places like DC, I think Buffalo, even. So, really interesting stuff in that regard. So maybe that's a good segue. So we're talking companies. Are there any companies to look out for? I know we've profiled a number of companies in the report, but who are the players to watch? So who's moving the needle?
[00:34:47] Speaker A: Yeah, absolutely. So we did kind of full profiles and detailed competitive analysis rankings for about 30 major companies in this report. Right. And again, these are primarily the kind of infrastructure and equipment manufacturers and suppliers, primarily the gray infrastructure players specifically. Right. And so these are some of the biggest names here. Some of the most active would be like advanced drainage systems or ads, Old Castle, Northwest Pipe, iPex. These are all players that are really active, especially on maybe the kind of pipe and drainage side of things, but also especially in the case of ads or northwest Pipe. Really, all of these players, to an extent, have been moving more and more in the direction of some of the other types of stormwater management products I mentioned, like the storage products, the treatment products. So really interesting mix of players and a lot of really interesting strategic directions here as well.
Those four companies in particular, ads, Old Castle, Northwest Pipe, iPex, they've all been pretty active on the m and a front.
Part of that is just geographic expansion. Part of that is building out their stormwater product portfolio and moving into adjacent markets. AdS has leveraged m and A to get into the wastewater septic tank market as an example. Adjacent to what we're seeing in terms of decentralized stormwater management, getting into digital solutions, getting into the agricultural market, a lot of interesting strategic pushes that we're seeing there. But we also look at some more, maybe more niche or more regional players like Prinsco or Southeast culvert that are serving smaller sections of the country and building out their footprints there. So that's really the core focus. A lot of great competitive analysis in there to see who those players are, what they're up to, how they stack up from a product standpoint, from an m and a perspective.
We also, again, we are keeping an eye on that broader range of maybe more emerging solutions. So I mentioned green infrastructure. There's a couple of names that we look at there true grid, MKB innovation, invisible structures that are all developing these kind of manufactured solutions for green infrastructure. A lot of green infrastructure is more just more on the engineering and design side. If you're talking about Rain garden, there's not really a product to buy, but permeable pavements and that kind of thing. Where you do have these kind of manufactured products, there's some players specializing in that. And then on the digital front, I mean, again, as I mentioned, it's a pretty broad range of opportunities there, whether it be on the hardware side, Opti comes to mind, but also ads, not the stormwater ads, but the flow metering ads, environmental, they also have some rain gauges and stormwater level monitoring solutions. OTT Hydromet, which is part of Roalto, some of those hardware players that are increasingly looking at basically stormwater kind of monitoring and measurement and control. And then on the software side, I mentioned some of the modeling and design opportunities. Bentley and Autodesk, both very big names, both very familiar to listeners of this podcast.
They have a play in the stormwater market, specialty stormwater compliance software players like second nature. So really interesting ecosystem. Certainly not nearly as, as maybe diverse and as expansive as what we see on kind of the digital water, wastewater side of things. But it is growing. I feel like every couple of days I'm seeing a new stormwater management, especially over at Ace. There were some interesting new companies that maybe we'll make it in the next round of this report. But, yeah, broad range of players here, certainly some really interesting competitive analysis to check out to kind of see who's who of the stormwater market and what the opportunities are moving forward.
[00:38:39] Speaker B: Yeah, I think it's interesting. I mean, so as you go through the list of companies and sort of what you're saying before really looking, I mean, part of it is just storing water. Part of it is just moving or channeling water. And sort of the last group which you mentioned about, when you start talking about digital, it can be pretty complicated. When you start, they start bringing in things like meteorology and then the remote sensing or remote asset controls where they're opening and closing gates remotely based on weather patterns. Because part of it is, you know, a storm rolls through town or your city, and part of it is like the water, you know, hits storage areas, finding ways to store it as long as possible. So any treatment facility or, you know, water management infrastructure is not overwhelmed. So if it can be controlled as the storm passes through, I mean, it's summertime, right? It's hot as Hades here in Boston, relatively speaking, everybody's in a panic. I'm from South Carolina, and truth be told, it's not that bad. But those storms are big, fast, and furious. Right? And so it's a lot of water hits, it's the ground, it's got to go somewhere. So controlling that is pretty interesting. So with that being said, as the fire engines roll by, I don't know if you can hear that, but, Eric, what's, this is really interesting. What's next on your plate? What's coming down the pipeline, pun intended.
[00:40:04] Speaker A: Yeah. So we're in forecast season. So getting the stormwater forecast report done is a big project we've been working on for some time. Really, really happy to see this one out the door. I know a lot of clients have been interested in it, asking about it. So now we're moving into some of the next forecast updates. Our core us and Canada drinking water, wastewater utility scale, capex and Opex forecasts. Big push to get those updated and up to speed. The team more broadly is working also on updating our digital water forecast for North America and for Europe, as well as our industrial water forecast for North America and Europe. So over the next couple of months, youre going to be seeing a lot of big state of the market, state of the sector reports coming out from the Bluefield team. Probably a lot of podcasts digging into the ins and outs of those reports as well. So id say those are kind of the biggest priorities for me and for the team.
[00:40:58] Speaker B: Yeah. Oftentimes people ask me like, oh, you know, what does Bluefield do? What do you focus on? And usually I refer to a three legged stool. But just listening to you, we seem to have a number of legged stools out there. One, like you said, we've got Europe and us, if that's a stool, and then you've got water, wastewater, stormwater. That's sort of how we look at things. So we're doing forecasts across all of this, but sort of within those segments themselves. We look at things like, you know, plants or vertical assets, as we often refer to them. We've got linear assets that'd be the pipes, distribution and collection. Then we've also got digital reuse, pfas and a couple other areas. So, yeah, lots, lots going on. And the stormwater one is a really good one. It's something that clients have been asking about for a while. And I'm not going to lie. Clients do come to us, and sometimes we're like, oh, man, that's going to be tough. That's going to be hard. This has taken us a while, you in particular, a while to kind of figure out, right. Because it's not just the municipal water sector, it's transportation. It's commercial and industrial. So there's so many different factors coming into play. So this is a good one, and I really like it. And if anybody, any listeners out there are interested in stormwater, stormwater management, I think we've got something for you. I don't think many have taken on an exercise such as this, particularly when accounting for sizing the market, forecasting it, but also looking at the competitive landscape. You know, the combination of the, those two or three things is really, really impressive what you've done. So with that, I think we're on to other meetings, Eric. So I will let you, let you go and I'll see if I can wrap this up.
[00:42:45] Speaker A: Sounds good. Thanks, Reese. Appreciate the, the opportunity. Talk to you soon.
[00:42:49] Speaker B: All right. Take care.
That was really interesting to have Eric on one. He's been looking at this for a while, and he's tired of hearing me ask him about it. So it's great to have him on and actually talk about stormwater management. And what comes to mind is just the other day I was looking at, I don't know, it was a video on what's happening in, I think in Malaga in Spain. It was raining two inches an hour. The airport not only could planes not land, but also water was flooding into the, through the ceilings into the airport itself. So there was nowhere to run from. Planes couldn't land. But that's kind of the state of the world. And, you know, the reality of it is if we're not doing anything about it, we're going to have to adapt. And so we might as well get used to this. Whether it be large storm events or extended and more frequent droughts, the list goes on and on. So when it comes to storm and climate impact. So this report that we put out is just another thing, value add to the market and to our clients. So if you're interested, just let us know or visit
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