General Electric's water source

Sites in emerging markets anticipate severe shortages of drinking water, but so do regions in Europe, South America and Australia. Nearly half of the hospital beds in the world host people with waterborne diseases. Meanwhile, water consumption continues to escalate.

To top it off, we waste a lot of water. Nearly 60 percent of the drinking water in Chicago never makes it to the tap. It leaks out first.

The crisis, however, has drawn the attention of several start-ups and large conglomerates such as Siemens and General Electric. Some of the solutions to the world's water problems sound both obvious and brilliant.

In India, for instance, some builders are erecting apartment buildings without pipes for drinking water--instead, residents will get water from mobile purification units. Researchers are also trying to improve desalination membranes to turn sea water into drinking water.

Jeff Fulgham, chief marketing officer for GE's Water and Process Technologies, sat down with CNET News.com recently in Palm Desert, Calif.--a desert that's been turned into an artificial garden through irrigation--to talk about how bad the water problem is. He discussed GE's water technology shared his views on how future communities will be organized to help solve the problem.

Q: How large is GE's water business, and what areas do you primarily concentrate on?
Fulgham: We're about at $2.5 billon in (annual) revenue and growing at a pretty high trajectory. (CEO) Jeff Immelt says he thinks we need to be a $10 billion business, but the timeline isn't tight on that.

GE got into this space in 1999 with the acquisition of Glegg, a small Canadian company, and actually, we weren't even that interested in getting in the water space in a big way. It was more as an adjunct to the energy business, the gas turbine business. It was making a lot of money and one of the necessary pieces of equipment was the water system. Glegg made pure-water systems for the power industry. Then we looked at the space, and we started thinking "Wow, this is an interesting place to be."

So the next acquisition, in 2002, was BetzDearborn. At the time, it was a $900 million to a billion-dollar business specializing in industrial water treatment. The key to that business was 25,000 highly educated engineers on the ground around the world.

The next acquisition was Osmonics, which is into specialty membranes. In the dairy industry, they use membranes to separate protein out of milk before cheese is made. It's used in mining to remove caustics. Then the next acquisition was Ionics in 2004, which got us into desalination in a big way.

Then we had one missing link, which was this new hollow-fiber technology. With hollow-fiber technology, you can purify water unlike anything else. You can prevent bacterium and other things from passing through this membrane. We have waste treatment plants now that are physically located in a 2,000-square-foot home in a subdivision. You'd never know the waste treatment plant is there, so it allows us to do some distributed water treatment that we were never able to do before.

Q: How bad is the world's water situation?
Fulgham: It's bad and getting worse. Right now, there are roughly a billion people around the world that have an inadequate supply of fresh water. By 2025, the total is projected to be over 3 billion from a combination of depleting sources of water, pollution and population growth. It's a really tough situation, and unfortunately, water scarcity is the worst in those areas of the world that can least afford to do something about it: sub-Saharan Africa, India, China.

Q: A lot of people assume the problem is confined to those countries, but the first world faces challenges too, correct?
Fulgham: Look around. We're sitting here, and there is green grass, a lake, trees. Palm Desert is the result only of water being sucked out of the ground and desalinated. This is not natural.

Q: You mentioned Sydney, Australia, earlier as one place where it's particularly bad.
Fulgham: Sydney--and Eastern Australia in general--is in a terrible situation. If you think about all the lakes, rivers and well water--all the fresh water, forget about ocean water--in and around Sydney as one big giant lake, that lake is at 38 percent of full pool.

They have not had the rain or runoff needed, so they are in a desperate situation. They know when they reach about 30 percent, that's where massive curtailment will start.

Already, they've imposed restrictions. They're shutting down a lot of irrigation and farming industries. They're feeling the pain of water scarcity as much as anybody.

Q: One problem that water companies talk about is getting the public to pay for water upgrades. People tend to look at water as a right and sometimes, they also think it should be free.
Fulgham: That's a major issue. Water is a subsidized commodity. Rarely does any community pay the true price that it costs to treat that water. If you look in the United States, traditional municipal, drinking water plants are pretty simple plants: they are concrete basins with sand. They're paid for, so water doesn't cost much to treat right now.

But in order to meet new regulations and guidelines, major investment is needed. I liken it to gas. With gas, when oil prices go up over $75 per barrel--and I'm paying $3.50 or $4 for the pump--I really think about the distance that I'm going to drive and which car I'm going to take. Similarly, with water, we have to get to the point where people feel the pain of water usage, and right now, that doesn't exist, particularly in the developed world.

You also want to give people the water purity that they want. I mean, why has the bottled-water industry taken off? It's because people want that high purity, they want that security. So in order to get there, it will take investments.

Q: Is terrorism much of an issue? There's often talk about someone poisoning the water supply.
Fulgham: Honestly, I wouldn't have thought a lot of the things that have happened with terrorism would ever happen, so I don't know. I think that one thing that works in our favor with terrorism is that water is a wonderful solution. It takes a lot of a contaminant to be a significant issue. Part of this is the barrier technology I mentioned earlier; you could put a barrier in place that would prevent some terrorism thing.

Q: A couple of companies are talking about distributed water systems. What exactly are these?
Fulgham: Well, if you think about distributed water in its most natural sense, it's wells. So rather than creating a 100-million-gallon-a-day massive water plant with pipes running for hundreds of miles, there's the opportunity for smaller community systems. Right here in Palm Desert, there's a project involving a thousand homes. (The developer) is looking at a small waste water treatment system, dual runs of pipe, so that the gray water in a house--the shower water, that kind of thing--all gets collected, cleaned up and sent back. That's kind of the medium-size distributed system needed so that a community could be self-sustaining.

I think that there's also opportunity for distributed water in small industrial clusters. If there are 20 industrial plants--go to the ship channel in Houston, where there are many refining petrochemical plants--is there an opportunity to cluster those together into a centralized waste and water treatment system? Instead of taking water from Houston and piping it 30 miles, there are ways to do some things closer.

At the other extreme, we're working in a project now with a customer with 2,000 grocery stores in India. If we can have water purification systems located strategically in these grocery stores, consumers could get 5 to 10 gallons of water that's inexpensive and with high purity.

Q: Tell me about the water trucks.
Fulgham: We have mobile water trucks, 40-foot tractor-trailer rigs, that can produce 300 to 500 gallons a minute of high-purity water. The 600 trailers we have are primarily for the industrial marketplace and are used during outages or during catastrophic events. When the tsunami hit Aceh a couple of years ago, within about 48 hours, we had two trailers on the ground in Mount Aceh making water for 200,000 people.

One idea is, potentially, to use these as mobile production machines in South Africa and India. In a village, you could have a 10,000-gallon tank. You could take the truck by, fill up the tank and go to the next village. So you take the water treatment plant to them rather than that community having to afford one.

There are more than 600,000 villages in India, and more than 200,000 of those villages have severe water quality issues: high arsenic, high lead, high iron. They have a really dangerous water supply.

Q: There's also the subject of waste. Even after water is cleaned and processed, a lot of it never reaches the tap.
Fulgham: Yeah, it is amazing, particularly in older cities. You'll see different figures depending on whose literature you read, but roughly a third of the drinking water never makes it to the end user because of leakage to pipes. In older cities like Chicago--where they have a 100-plus-year-old infrastructure--50 percent to 60 percent leaks out of the pipes before it ever makes it through.

So a couple of things on that. One, there's an opportunity to correct the leaky piping system in place rather than digging it up and replacing it, and there are some companies doing that.

The other thing is, if you look into your crystal ball, by the year 2050, there's going to somewhere around 20 megacities in the world with more than 5 million people each that don't exist today. If you look at the population growth, there's the opportunity to build new cities in a different way instead of having pipes running everywhere. Maybe distributed water is a way to avoid that infrastructure in the future.