Making the Desert Bloom: Israeli Startups and the Water Crisis

How can countries work to guarantee ample, drinkable water for their citizens? Water shortages are already a fact for some countries, and an increasing fear for the globe at large.

Israel has been successfully tackling water management challenges for decades, so much so that the country now boasts a water surplus despite low annual rainfall and significant population growth. How does Israel do it?  We interviewed Fredrik Liljedahl, CleanTech head at Start-Up Nation Central, to find out more about Israel’s secrets to success in water management.  Below is the interview transcript.

1- What is special about Israeli expertise? What is the competitive advantage?

While Israel spawns technological innovation in everything from filtration membranes to sensors, it is not a single technology but rather the strength of the whole water ecosystem and its ability to support innovation that sets Israel apart.

Given natural water resource constraints, Israel has been forced to put water management on the top of the agenda and coordinate its national efforts ever since its infancy. As a result, Israel has one central Water Authority, several prominent water research institutes and effective water policies that promote efficient water usage and stimulate innovation. Well aware of the public benefits of investments in water technologies, Israel supports innovation in the private sector through public-private partnerships. An example is the Israel Innovation Authority that offers conditional grants of up to 50% of approved R&D expenditures. Another is Israel’s NewTech program, which, among other activities, offers grants to support first commercial installations in water utilities.

With strong support from the public sector, the possibility to partner with municipal utilities or well-established water companies to run pilots, Israeli WaterTech start-ups are well-equipped to innovate at all stages of the water value chain.

2-What are the major challenges this sector is facing? 

As is the case for cleantech globally, financing is one of the biggest challenges for Israeli WaterTech start-ups. While funding for R&D and pilots is relatively accessible in Israel, securing the investments start-ups need to commercialize and achieve significant scale-up is a different story. VCs are more hesitant to invest in clean technologies, after earlier start-ups have failed to show the hoped-for financial returns. Given existing financing models and current market conditions that favor a shorter path to money generation, it is difficult for WaterTech to compete with other investment opportunities.

Another challenge is that of regulation and water policy, an issue in which most countries are lagging behind Israel. All around the world, even in developed countries like the United States, water is not properly priced, or not priced at all. Despite a growing global water crisis that inevitably affects everyone—UN estimates that only 60 percent of global water demand will be met in 2030—the people and organizations that use water rarely carry the costs of their water consumption, making it difficult to sell them water-saving technologies. Only when faced with an immediate crisis, such as the drought in California, the need for and opportunity of WaterTech solutions is realized.

3-What unique technologies or companies come from Israel?

A field that Israel really dominates is that of wastewater treatment and reuse. Israel treats 95% of its sewage, and 80% of treated wastewater is available for agriculture. Even though the purpose is the same, the actual technologies used to treat wastewater vary and include everything from algal-based systems to polyethylene biofilm carriers.

We are also witnessing a surge in IoT and other data-driven technologies in the WaterTech sector, fueled by positive spillover effects from Israeli prowess in advanced information technology. Start-ups are making use of existing technologies, like sensors and data management software, and applying them in innovative ways to create unique WaterTech solutions, for example in the areas of water network security and smart cities.

However, it is impossible to talk about WaterTech without mentioning the single biggest water technology to have come out of Israel: drip-irrigation, a form of irrigation that allows water to drip directly to the root. Despite having been around since the 60s and despite the significant water savings and increase in yields resulting from its use, it has achieved limited traction outside of Israel, mainly because of the worldwide failure to price water according to its real cost and value. In Israel, where water is properly priced, 75% of crops are drip irrigated, compared to the global average of 5%.

4-How do you predict the sector will develop and where will it lead to in twenty years?

In the coming years, established system integrators will lead the way in foreign markets like India and sub-Saharan Africa. Their expertise and experience in managing large-scale, turnkey water and energy projects will help younger start-ups get a foot in the door. Individual water technologies, like smart meter readers and data management software, will be integrated and offered as part of wider solutions.

With the effects of the global water crisis becoming increasingly evident, we will also see new project and start-up financing models to support the need for rapid development and expansion of water innovation. Israel NewTech will continue to work closely with its local ecosystem, and go abroad to export the Israeli water model, including the Israeli approach to water policy and public-private partnerships, thereby facilitating the development of more favorable international market conditions for growing Israeli start-ups.

Twenty years from now, Israel will be known internationally as the go-to place for WaterTech innovation and holistic water management practices, attracting companies, investors and governments alike. Many Israeli start-ups will have made the leap to becoming multinational corporations, while maintaining a strong R&D presence in Israel and utilizing the country as a development site and testing ground for new water technologies.
When it comes to water management, Israel’s approach can be emulated throughout the world. Its wastewater treatment, desalination, and drip irrigation systems, as well as its insistence on water pricing, all exemplify reasons why Israel is poised to become a model for water usage and innovative WaterTech, globally.


To find out more about how Israeli innovations are impacting WaterTech, check out this infographic.


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