Survey: Poor Economy to Affect Water Projects

Spending on water projects over the next 12 months is increasing but not at the extraordinary levels of recent years, according to a ChangeWave survey of 147 professionals working in the water industry.

The results show two-thirds (67 percent) of respondents think water industry spending will increase. And while that's still a strong number, it is a substantial 14-point decline from the previous water industry survey in June 2007.

According to the survey, there are clouds looming over the water industry that could drive down spending numbers -- and they're focused on the United States.

Analysts have recently reported that 40 percent of freshwater consumption in the United States is from industrial applications, but those levels normally decline during an economic recession. Notably, the stock prices of many U.S. water utility companies have fallen due to fears of a recession.

At the same time, the survey results show a reduction in the percentage of U.S. industry respondents who think water project spending will increase over the next 12 months within the private, federal and local government sectors.

What is the main reason for these more conservative growth projections? By better than a 2-to-1 margin, industry respondents believe a U.S. recession would lead to a decline in spending on water projects.

"Investors in water should keep a close eye on water project spending during a recession," says Josh Levine, co-editor of ChangeWave Investing. "But our survey also shows there are still plenty of opportunities out there. In particular, industry respondents are most excited about two sectors right now -- Wastewater Treatment and Water Infrastructure Repair and Replacement. That's where we are focused."

Regarding the top water companies, respondents ranked conglomerate General Electric (42 percent) as the leader. Other industry notables included American States Water, Flowserve, Gorman-Rupp, Calgon Carbon and Nalco Holding Co.

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