Last year, almost 1 billion people lacked access to potable water. Each year, 3.575 million die from waterborne diseases like diarrhea, which could be easily prevented by treating the water.1 To prevent this global catastrophe, the World Bank estimates we need to spend $36 billion a year over the next 10 years to meet the U.N. Millennium Development Goal of providing potable water to populations not currently served.2

Water shortage is not an issue restricted to the developing world. For example, Australia has been experiencing extreme drought conditions in most regions of the continent for over seven years.3,4 Barcelona, Spain had to ship in potable water during the spring of 2008 because its local supplies were insufficient for basic requirements.5

Rich and poor are united by both the need for more water and the failure of current systems of water treatment management—and the resulting environmental costs. In some regions, shortages of water for human use and natural system viability are caused by specific management approaches that allocate and price water resources in ways that damage the core ecosystems that provide and purify water. At the same time, these approaches deter conservation and preservation.6 In other regions, critical water resources are threatened by contamination by industrial and agricultural chemicals, pharmaceuticals, or saltwater intrusion.7

As human demand for water resources increases, natural systems are increasingly vulnerable to long-term and potentially catastrophic shortages of water necessary to sustain human life and our planet’s ecosystems. The viability and sustainability of water resources and their efficient and effective use are becoming critical public issues.

Traditional water treatment approaches are not effectively meeting these growing needs. Fortunately, a new paradigm is emerging: an increase in localized, networked water treatment systems and a parallel rise in on-site energy generation systems, as both infrastructures move from large, centralized production to smaller, interconnected units that can respond to local conditions and demands. The energy sector has seen a surge in innovations and new market opportunities for a host of entrants and established companies, a pattern that can be expected to occur in water treatment as well. In the same way that clean energy is expected to produce new jobs, businesses, and markets, localized water treatment can provide the same opportunities in economic development, quality of life, and environmental regeneration. In some areas, there have been exciting combinations of water treatment and energy generation on the local scale.

Current Standard Approach to Water Treatment

Standard water treatment systems use large centralized facilities, where the demand for water services is aggregated over a large region and the planning horizon is often extended to 20–30 years. This approach maximizes the initial capacity of the treatment system to provide economies of scale during construction. However, it also requires that communities go into debt to build and operate them. Because these systems are sized to accommodate future demand, they necessarily have excess capacity for the majority of their functional lives, which cannot be equitably or efficiently covered by fees from current users.8 Communities that cannot afford the large initial investment or subsidize the water treatment cost may leave major portions of their populations only partially covered—or not covered—by this critical infrastructure service.

In addition, the large scale of these centralized water systems may impede quality improvements. The treatment of large flows of water does not always adequately target small concentrations of contaminants from a specific source or condition that can, nonetheless, have significant human health or environmental impacts.9 In addition, a centralized system often depends upon water brought in from an adjacent watershed but disposed of in a different watershed or ocean, thereby decreasing the capacity and resiliency of the natural systems at the water source.

Given the widely acknowledged need for water treatment, we would expect the industry to attract a constant stream of innovations that improve the quality of the service provided, the efficient use of resources, and the welfare of the individual or community. However, the large scale and long time horizon of these systems significantly reduce the opportunities for new technologies and processes that could achieve these improvements because there are too many perceived risks—financial, technical, system, and organizational—associated with introducing change into these systems. For instance, the standard components of these large-scale treatment systems are the rapid sand filtration system, which was developed in the late 1800s, and chlorine, ozone, and UV disinfection systems, which were commercially introduced in the early 1900s.10 New system approaches are needed to enhance the potential for wide-scale development and deployment of innovations in water treatment.

Emerging Solutions: Localized, Networked Water Treatment

The solution to this conundrum is twofold. First, communities can supplement the large-scale centralized systems with small-scale local treatment systems that provide a means to meet both changing demands and differing water quality requirements quickly and effectively. Second, the local nodes can be networked and linked to the central system (if one exists) to increase effective capacity by balancing the demand load across several nodes to cover variations in local use, and to improve the resiliency of the system to disruptions, including natural and manmade disasters.

More companies and communities are installing these localized systems, often to supplement centralized water systems.11,12 In addition, government agencies responsible for environmental protection and restoration are increasingly supporting on-site systems to improve water quality and ecosystem health; for example, the U.S. Environmental Protection Agency has formed the National Decentralized Water Resources Capacity Development Project ( to support research and development in this area. Other national and international agencies are initiating funding programs focused on localized and point-of-use systems as a means to increase equitable access to potable water. The World Bank, the World Health Organization, USAID, and other organizations are funding specific programs to develop and utilize on-site systems, such as the World Bank projects in Pernambuco, Brazil, to design and implement localized residential and industrial water treatment systems—particularly to handle wastewater, reduce environmental impact, and improve local water resource quality.13



The increasing attention to localized water treatment systems can strongly encourage the development and diffusion of innovations in several ways. First, each small-scale treatment node entails a smaller financial commitment, thereby reducing the financial risk. Second, the localized systems, particularly if they are interlinked to create a network, significantly reduce, if not eliminate, the prospect of total system failure, since each unit can continue to function independently and as part of the network even if several nodes cease to function.

Third, the parallel operations of the local systems eliminate the constraint of continuous operations, making it safer and easier to take a unit off-line for repair, replacement, or upgrades. While the addition of multiple smaller-scale units may entail additional training and the acquisition of expertise by the operating agency, the organization can take advantage of economies of scope, whereby similar functions can be performed across a geographically distributed area, with the costs reducing as the number of similar units increases.14 Finally, the innovations themselves can be sized to maximize their technical performance rather than being pre-selected for only large-volume processing.

A localized water treatment system can have a shorter “proof of performance” period, since the risk of technical system failure is reduced, thereby lowering the barriers to entry for new technologies, systems, and processes that lack in-service records. In addition, smaller-scale units entail a revocable commitment—if the unit doesn’t work, it can be taken off-line and replaced, thereby increasing the “trialability” of the innovations.15 Since the system is sized to meet current demand (without excess capacity), there will be more frequent buying decisions, increasing opportunities to consider new alternatives and therefore to develop the in-house competency to assess and select appropriate treatment systems.

Future Research and Innovation Needs for Localized Networked Water Systems

The shift to localized water treatment networks can provide significant opportunities for further innovation developments. For instance, each water source (e.g., surface, ground, rain, or waste water) has its own specific characteristics in terms of turbidity, contaminants, dissolved chemicals, acidity, etc., and the innovations will need to specifically address these characteristics to improve quality, taste, and other attributes.

As the localized treatment nodes proliferate, communities may move toward customizing the water treatment to specific uses, separating the residential, industrial, agricultural, energy, and other water use segments. Currently, communities treat all water to the same standards, regardless of use; for instance, landscaping water meets drinking-water standards. Innovations in treatment at the point of use can significantly improve the cost and performance effectiveness for each use category. In addition, the geographical specificity of each locale (including climate factors such as rainfall, evaporation rates, temperature, and availability) and the interdependence with existing social, political, environmental, and infrastructure systems will require different water treatment innovations.

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Innovations can also directly increase the economic efficiency of capital and the efficient use of resources, including power and chemicals. Localized systems require less power for pumping because the distances are shorter, and smaller batches of water with finely tuned treatment processes can use fewer chemicals. New treatment strategies can allow systems to be sized and located to meet current demand so they can respond more quickly and effectively to increased or decreased load requirements and meet social objectives, including equitable access to potable water.

There is also a potential complementary relationship between the development of on-site power and water systems. Large-scale centralized water systems use large amounts of energy to pump the water from remote locations, move it through the treatment stages, and distribute it to the use points. Pumping water accounts for over 30 percent of southern California’s energy use.16 With emerging on-site energy generation systems, small water treatment facilities could be powered locally, reducing energy costs through the reduction of pumping distance, increasing efficiency by eliminating transmission loss from the central power grid, and reducing greenhouse gas emissions through the use of alternative energy generation technologies.

Innovative processes, technologies, and systems can also focus on improving local water resources and ecosystems by recharging the watershed. On-site facilities that use local water resources (including wastewater, surface water, groundwater, and rainfall) within the watershed can protect and enhance ecosystem services and viability and reduce new water use overall.

Localized water systems will need to address several quality, life safety, and system considerations to ensure successful implementation and performance. Currently, all water utilities in the U.S. that provide potable water must meet the U.S. Environmental Protection Agency (EPA) Clean Water Act standards,17 which require periodic testing and reporting, and remediation and public notification when the standards are not met. Any localized system will have to meet these same requirements—and respond in the same ways—to protect public health.

In addition, if the localized nodes are networked with the main water system, they will have to ensure that there is no possibility of cross-contamination or other degradation of the system’s water quality from any one node. The innovative developments in quality control and network assurance that are currently used in energy systems may be directly incorporated into the development and commercialization of emerging new water-treatment systems.

The emergence of localized water treatment systems can spur the quantity and variety of water innovations, which in turn can provide significant social, economic, and environmental benefits. The trend toward on-site energy production has led to a resurgence of innovative activity, and the same trend can be expected for water system innovations.

Examples of Promising Innovations

An encouraging number of innovative technologies, systems, components, processes, and management approaches in localized water treatment is emerging. Recent developments include new filtration technologies, such as “micro-membranes” and “ultra-filtration” that can filter water up to several microns—enough to exclude most pathogens.18 Nanoparticles and nanomembranes offer promise for the directed treatment of specific conditions or contaminants, although the long-term impacts of nanoparticles are still under examination.19 New disinfection systems, including those using the visible light spectrum20 and ultrasound,21 are also being developed; these might be particularly efficient and cost-effective for localized treatment nodes.

New technologies can also specifically focus on most of the significant health threats to water systems. For example, arsenic naturally occurs in groundwater in several parts of the world, including Pakistan and the southwestern U.S. Arsenic is poisonous to humans, creating sores that don’t heal and eventually lead to death. The Water Initiative has developed an innovative way to completely remove arsenic from water through a chemical reaction in a household water container system. The centralized water system treats for microbial contamination, and the household system complements it by removing arsenic from the water used for cooking and drinking.

Organizations are pursuing not only new technological solutions but also new business models and the creation of new markets. For instance, WaterHealth International combines a proprietary water treatment system, which utilizes ultraviolet (UV) light, with an innovative business model that offers upfront capital financing to the community, allowing it to pay off the loan over time through user fees, and trains local personnel to operate, maintain, and upgrade the facility. Unlike large, centralized systems, WaterHealth’s treatment facilities are modular units that can be installed to accommodate the current demand and financial capacity of a community; more units can be added later as the community accumulates financial resources for expansion. Recognizing that many communities do not have piping to distribute the treated water, and instead rely on the periodic arrival of trucks that pump water into individual household containers carried by members of the community, WaterHealth has opened a new water-distribution market by creating “water stores.” Combining new technologies, business models, and market development strategies has allowed the company to establish operations in several regions with severe potable water needs, including India, the Philippines, Mexico, and Sri Lanka.

Another area of rapid innovation development is water-resource monitoring and control systems, which focus on real-time information about water quality, quantity, and flow rates among supply and use points. For instance, IBM is developing integrated water monitoring and management systems for joint use by public agencies, industry, and nonprofit organizations to enable an effective balance between direct use and resource management. In addition, other governmental agencies, companies, and nonprofits are partnering to develop new systems for regional monitoring and control to meet human needs while maintaining the viability of natural ecosystems.

Need for Changes in Regulation, Policy, and Procurement

Recognition of this shift in water treatment models by government agencies responsible for public health, safety, and welfare and for protecting natural ecosystems can ensure the successful development and deployment of localized water treatment systems. As public water (and wastewater) utilities contemplate the repair, replacement, and upgrade of their existing water systems, and as communities develop new water treatment systems, they can explicitly evaluate and adopt localized treatment nodes to improve economic efficiency and overall system performance—a move that may require different funding mechanisms as well as changes in procurement policies, regulations, and monitoring procedures.



The challenge for innovative water treatment systems is the need to restructure the water industry to effectively deploy and implement innovations. The utilities that currently operate water treatment systems, which are often either public entities or regulated by public boards, need to understand the system-level benefits of localized water treatment networks, either as new systems or as complements to centralized systems—specifically, the opportunity to more cost-effectively meet changes in demand and upgrade water quality while increasing the robustness of the system as a whole. During innovation deployment and implementation, these utilities will need to change their procurement processes and their management techniques to ensure quality and continuity of critical service provision.

For international development and aid organizations, localized water treatment systems present a significant shift away from the concentration on large projects and toward a more effective bundling of smaller systems for widespread implementation across communities. The communities (or neighborhoods) will need to develop the capacity to develop, operate, maintain, and repair these localized systems, which can be enabled through existing or new community development programs. These community-based systems will create jobs and improve the quality of life through increased access to potable water and its subsequent health benefits, and therefore may span across the organizational structures of international development or aid agencies. There is some risk associated with the innovations and the shift to smaller-scale systems, but the benefits to the community could be significant, as could the opportunity for rapid scale-up across the world.

International financial and development organizations must develop explicit guidelines to ensure that the beneficiaries of these localized treatment systems include not just the members that can most easily afford the units, but all members of the community, especially the most vulnerable segments of the population. Strategies could include specific programs to encourage the development and commercialization of innovations that reach these vulnerable populations, as well as the continued use of public utilities to own, operate, and maintain the localized treatment networks, or oversee privately owned systems, to ensure that the public benefits and the objectives are met.

Potable water is a fundamental requirement of survival, but until governments encourage innovation in water treatment and the public and private sectors develop and implement these innovations, almost a fifth of the world’s people will continue to do without it.


Sarah Slaughter

Dr. Sarah Slaughter is Senior Lecturer in the MIT Sloan School of Management and co-founder of the Sloan Sustainability Initiative, and manages the Sustainable Business Laboratory (S-Lab). Her current...

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