From fish to pipes, Minnesota firms see opportunity in growing water challenge

Thousands of tilapia fish are swimming in huge blue tanks here in the old Hamm Brewery on St. Paul's East Side. Overhead, steel racks hold planters sprouting kale, cilantro and Swiss chard, their roots immersed in water pumped from the fish tanks.

But what is most compelling about the effort to create an indoor aquaculture operation in the old brewery is, oddly enough, that it uses surprisingly little water.

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Most operations like it lose up to a quarter of the water they bring in. This one loses just 2 percent, said Fred Haberman, one of the backers of the company launching the effort, Urban Organics. "It's all about water," said Haberman. "The efficient use of water is what makes this work. This will be a key component of re-imagining a new agricultural system."

"There's a crisis looming. Water is going to become big. Big business."

Making better use of water is a lesson dawning on lots of people, from Minnesota to drought-stricken areas like California and Texas to parts of the world chronically short of water. Urban Organics is an example of how that is becoming increasingly recognized as an opportunity for Minnesota businesses.

The Twin Cities is one of many metropolitan areas vying for a lead in what seems likely to become one of the most important businesses in coming decades: supplying and conserving clean water.

In many parts of the United States water shortages are having an increasing effect on everyday life and development.

"It's beginning to be a constraint on economic growth," said Steve Maxwell, managing director of TechKNOWLEDGEy Strategic Group, which provides consulting and services to the environmental and water resource industries.

"We're beginning to reach a situation where the amount of water owned or allocated to users is less than the demand. And we're going to be paying more for it. We need to wake up to that fact."

Worldwide by 2025, the United Nations estimates nearly two billion people will live in regions where there is not enough water. Billions more people will experience off and on water shortages or have tainted water of limited value and use.

At Urban Organics, nutrients from fish droppings fertilize the plants, which in turn clean the water so it can be returned to the fish. When fully operational, the company hopes to grow over 720,000 pounds of vegetables and 150,000 pounds of fish a year. Haberman said Urban Organics can be a proving ground not just for urban farming but also for water conservation technology that will be critical to the success of agriculture in water-starved parts of the world.

"The efficient use of water is what makes this work."

The company behind the water technology is Golden Valley-based Pentair. Based in Schaffhausen, Switzerland, with main U.S. offices in Golden Valley, Minn., the company has made a series of key acquisitions in recent years, and become a leading player in the water business.

The former maker of power tools now focuses on the filtration, treatment and movement of water. Pentair's technology recycles millions of gallons of water a year at Target Field and provides 11 monster pumps that protect New Orleans from flooding.

The Twin Cities could emerge as a leader in the water business, said Pentair senior vice president Todd Gleason.

"We've got heavy hitters," he said. "Pentair. Ecolab. GE, with their purchase of Osmonics locally. You have 3M. You have some real global leaders all based here."

Ecolab helps power plants, beverage bottlers, oil and gas companies and other heavy water users treat, conserve and reuse water.

"A lot of companies now have some very aggressive goals now to reduce the use of water, and that's what we do," said CEO Doug Baker.

Osmonics, acquired by General Electric in 2003, also produces devices that allow industrial customers to recover and reuse water.

3M sees opportunities underground, helping cash-strapped cities replace leaky water mains. 3M's solution: line pipes with a coating that seals them.

"You dig an access pit on each side of the pipe main you want to rehabilitate and you spray in a two-part polyurea that's fully cured within an hour," said 3M manager Ryan Rogers. "If you took a look down the barrel of that pipe you'd see this spray head casting this liner inside that pipe."

Maxwell pegs the market for water equipment and technology at roughly $45 billion a year. No one dominates.

"It is a very fragmented business," Maxwell said. "It's really a conglomeration of lots of different industries that are kind of gradually coalescing into more of single industry.'' But Richard Phillips, a senior index analyst with S Network Global Indexes, said there will be plenty of opportunity.

"There's a crisis looming," he said. "Water is going to become big. Big business. Long-term, water technology companies should be in for a long-term bull market."

The bulls have already found Pentair and Ecolab. Both companies have seen their stocks about triple over the past five years.

A 2013 Dutch study found water technology sectors developing in Boston, Milwaukee, Colorado, Las Vegas and 14 other markets. Not Minnesota, however, even though about 16,000 Minnesotans already work in the water technology business.

But Steve Riedel of the Minnesota Department of Employment and Economic Development said it's not too late if industry players, the University of Minnesota and state government collaborate.

"If all of those players agree to work more closely together than they are already and treat it as a true industry cluster, our state has a very good chance of positioning our water technology industry as worthy of the rest of the world's attention," he said.