Author: Dorothée Chabredier, Principal, Amane Advisors
Interest in stormwater is growing worldwide due to a number of consistent long-term trends. These trends include climate change and urbanisation – which are linked to increasingly severe floods and prolonged droughts – and more stringent environmental regulations.
The International Institute for Sustainable Development notes that “stormwater runoff refers to water that is not absorbed by soil (because the surface is saturated or sealed), and flows on impermeable land cover, such as roads.”
Traditionally under-financed, the stormwater market, which provides stormwater technologies and solutions, or sustainable drainage systems (SuDS), suffers from a number of restraints. These include fragmented local regulations, lengthy product certifications, resistance to innovation, outsized focus on upfront Capex rather than Totex, among others. The industry will need to overcome these hurdles to realise the full potential of stormwater as an untapped water resource.
In this article, we explore how to leverage the stormwater market potential, using the examples of Germany, France, and the UK – the three largest stormwater markets in Europe.
Europe’s stormwater market: dynamic despite COVID-19
The stormwater market, although traditionally underfunded compared to drinking water or wastewater treatment, continues to grow. In fact, it has been boosted by the COVID-19 pandemic.
Investment in stormwater is indeed supported by the dynamism of the construction market, national infrastructure and spending plans resulting from recovery strategies from the COVID-19 pandemic, and increasing enforcement of EU regulations and laws.
The UK budget, which initially, in Spring 2020, promised more than £640bn in housing development projects, transport, and climate change adaptation by 2025, was increased in Autumn 2021 by an additional £90bn per year.
In addition, Germany’s 2030 Federal Transport Infrastructure Plan invests €269.6bn to fund road and public transportation infrastructure upgrades and expansions. In France, water agencies have pledged a €450m investment from 2022 to 2024 into stormwater management.
Overcoming challenges, breaking barriers to entry
In spite of the market’s importance and continued growth, it faces certain challenges and barriers to entry. One of these is fragmentation due to the impact of local regulations and best practices, wide-ranging development types, and involvement in the decision-making process of various stakeholders – who often work in silos.
Stormwater regulation is diverse and can vary widely among different municipalities, which makes scaling up difficult for stormwater equipment providers. The greatest administrative power for stormwater rests at the municipal level. Local authorities are able to better tailor long-term land use planning to their local conditions while meeting compliance with high-level governmental regulations. Urban planning and more progressive building regulations, zoning codes, local ordinances and best practices have increasingly encouraged, or in many cases, required property owners to install SuDS onsite such as green roofs, subsurface infiltration pipe systems, and rain gardens. Moreover, many local authorities favour stormwater infiltration wherever local conditions make it possible as opposed to attenuation or direct discharge to nearby water bodies.
The greatest administrative power for stormwater rests at the municipal level
In addition, there are different water quality requirements for each development type from petrol stations to high traffic roads, commercial lots, urban pedestrian areas, and more. Sites in highly urbanised and industrial sites require targeted stormwater treatment solutions to mitigate runoff pollution – for instance, oil separators and filters. There is no one-size-fits-all approach to stormwater management at sites. However, the suite of SuDS offers variety to meet site-specific requirements and comply with local regulations.
The market is also quite fragmented among different players and thus, the respective responsibilities regarding stormwater management as well. Accountability is divided among the different stakeholders, and selling a solution requires intense lobbying. Both the public and private sectors are involved in the market – namely distributors, municipalities, water utilities, construction companies, engineers, landscape architects, and stormwater associations for research and knowledge sharing platforms. The market as a whole would benefit from increased collaboration and engagement.
Timing also matters. The largest window of opportunity to propose SuDS at a site is during the pre-construction planning and design phases. Specifically, SuDS (Sustainable Drainage Systems) apply best to drainage plans at new developments and road rehabilitations. Today inspection and maintenance costs are rarely taken into account during the planning phases of a site, which can create issues sometimes not identified until years after project completion.
What’s more, the stormwater market is conservative. Municipalities, water utilities, designers, and engineers can be reluctant to implement innovative solutions as flood liability is high, making the market more difficult to penetrate. In Germany, concrete-based stormwater solutions have been the preferred type among players, although plastic solutions are gaining traction. In the UK, plastic crate systems are widely used; however, microplastics are a growing concern. Drainage engineers and designers tend to provide detailed product type specifications in public tenders with limited flexibility to consider alternatives.
Last but not least, stormwater equipment providers need the appropriate national and local product certification to win bids in public tenders. Each European country has its own national certificate: the British Board of Agreement (BBA) certification in the UK, Scientific and Technical Centre for Building (CSTB) certification in France, and the German Institute for Building Technology (DIBt) technical approval in Germany. Acquiring a certification can be a long and costly process and may pose a barrier to entry for new players. Certification processes generally require roughly a year to three years to complete. Fees cost thousands of euros, and certification renewals are required every three to five years.
Applying creative solutions
A number of actions could promise more opportunity to implement SuDS and grow the market.
- Local authorities and public water utilities overseeing stormwater management are often resource-strapped. Lobbying local or national government and environmental bodies to increase financial availability is one possibility for municipalities to receive reliable funding streams.
- An alternative funding mechanism is the introduction of a separate local stormwater fee. In Germany, most municipalities and larger water utilities charge property owners a stormwater fee to budget sewer rehabilitation, drainage projects, and other water management projects. Private property owners and municipalities are incentivised to lower or even eliminate their stormwater fees by installing decentralised SuDS onsite and thereby disconnect stormwater runoff from entering existing sewerage networks entirely.
- Procurement processes would need to be adapted. Currently, Capex is a key purchasing criterion for stormwater products with lesser consideration for Totex, bearing in mind that Totex encompasses both construction and post-construction costs, with the latter concerning inspection and long-term maintenance cycles of products. More experienced end customers are more often aware about ease of access to maintain SuDS and cost of maintenance as well. In addition, non-measurable benefits (biodiversity, CO2 capture, decrease of temperatures in cities, water reuse, etc.) represent both a challenge, and an additional cost, to be assessed.
- The development of an alternative and powerful European certification such as the CE marking would ease scaling of innovative solutions and reduce development costs.
- Developing partnerships among stakeholders would also benefit the stormwater industry. Specifically, established partnerships between stormwater equipment providers and developers can ensure end-to-end solutions and thus develop accountability and reassurance for end customers. A partnership between providers yields opportunity to close a gap in a company’s product portfolio, such as offering advanced stormwater filtration systems. Lastly, partnerships can develop and test an innovative product by showcasing its effectiveness through pilot projects. Pilot projects could serve as a critical step in the approval process by municipalities and design engineers as well.
When dealing with stormwater, municipalities are transitioning away from the conventional “out of sight, out of mind” approach where stormwater is funnelled into centralised sewerage systems, and instead are moving towards managing stormwater onsite through decentralised SuDS.
Ultimately municipalities approach SuDS as key to “slow the flow” of rain to improve water quality and quantity issues, while benefiting biodiversity and quality of life of the local catchment.
Under this context, SuDS can be viewed as fostering additional environmental and social benefits. In Germany, for instance, net zero carbon lifecycle products, cradle-to-cradle solutions, and water reuse practices are gaining traction. Concerns regarding microplastics are pushing the UK market towards more green and environmentally friendly solutions as well. Municipalities and property owners can continue to develop reuse, infiltration, and integrate sustainable stormwater management into urban green landscaping.
Looking ahead
While the European stormwater market presents an untapped opportunity, taking advantage of its growth potential will require further research, collaboration, and relationship-building among players across the private and public sectors.
Procurement processes would need to be adapted to better take into account whole lifecycle costs as well as additional benefits (biodiversity, decrease of temperature in cities, CO2 capture, insurance risks decrease, water reuse, etc.).
In addition, consistent and sufficient funding streams for stormwater management would need to be secured, beyond current 2025 infrastructure plans to ensure climate change adaptation.
About the author: Dorothée Chabredier is Principal and ESG lead at Amane Advisors, a premier global advisory firm focused on the water industry and circular economy. Through 15 years experience in strategic consulting, she has led over 100 projects worldwide, ranging from strategy definition, commercial due diligence to fund raising and commercialisation. Her clients include multinationals, technology start-ups, private equity firms, utilities and not-for-profit organisations. She can be reached at dchabredier@amaneadvisors.com.
