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Market Map: Climate Adaptation Tech - Water Risk

Updated: Dec 12, 2023

Mazarine is pleased to announce the completion of our 1st annual Market Map: Climate Adaptation Tech - Water Risk. This sector survey is the culmination of 18 months of research and analysis of key segments, the competitive landscape, headwinds/tailwinds, market size, market leaders, the early-stage landscape, M&A activity, and long-term forecasts.

As venture investors in Climate Adaptation Tech with an impact mandate, Mazarine welcomes the opportunity to share this research and analysis with our investor syndicate focused on the adaptation 'side' of Climate-tech. An Executive Summary is available for friends outside of our syndicate.

2023 Market Map - TClimate Adaptation Tech (CAT) Water Risk Vertical

The water risk vertical in Climate Adaptation Tech ('CAT') global market size was estimated at USD 150 billion in 2022 and is expected to grow to USD 343 billion by 2030.

NOTE: Our research and analysis only focused on the water risk vertical in CAT. Our friends in fire, heat, and wind are undertaking their own research endeavors.

Leaders of public and private sector entities in sectors as varied as agriculture, finance, insurance, real estate, mining, and public health & safety are increasingly recognizing that while efforts to stop/slow GHG emissions need to continue, the effects of a warming atmosphere are already being felt.

Fire, heat, and wind are clearly risks of growing concern; however, many are pointing to water risk as the most damaging, and already bringing industry and society to their knees. Whether too much water, too little water, or compromised water quality, the market for technology innovations that enable industry and society to adapt to our new climate reality is a sector in and of itself. Welcome to Climate Adaptation Tech, or as Mazarine refers to it "CAT".

The water risk vertical in CAT includes thousands of companies with IP rooted in data science, software, materials science, chemistry, biology, and process engineering, each with a mission to help their customers deal with whatever water risk is expected to come their way in the coming decades as a result of a warming atmosphere. While some of these customers include water/wastewater utilities, most of the market opportunities in CAT are ironically outside of the 'water industry' or 'water space'.

The water risk tech stack in CAT spans three verticals, including:

  1. Companies with technologies that allow us to measure, monitor, and SEE how the physical world is changing. This vertical offers a toolbox of ‘data collection’ innovations that observe, quantify, and digitize anything related to water quality and quantity and send the data to the cloud.

  2. Technologies that help us interpret and UNDERSTAND trends and risks in the physical world. This vertical offers a toolbox of data science solutions that convert data from disparate sources into actionable insights and strategies.

  3. Technologies that enable us to DO SOMETHING to manage climate-induced water risks. Companies with solutions in engineering, process, consumables, and business innovations that address the challenges of our new “water reality” in the most effective and cost-efficient way.

What exactly is Climate Adaptation Tech (CAT) and why have I not heard of it?

Climate Adaptation Tech (‘CAT’) refers to innovations that help industry & society deal with the effects of an already changed climate. Whilst government legislation, non-profit studies, and climate finance initiatives are important, many agree that we need to leverage technology to address the risks that present the biggest risks to lives and livelihoods. Water risk is Mazarine's entire focus.

The companies in the water risk vertical in CAT are bringing to market a wide range of hardware and software technologies, as well as business model innovations, that help their customers adapt to water risks in our new climate reality. The water risk vertical in CAT was estimated to be a $150B industry in 2022, and expected to hit $350B by 2030. This is a newly 'branded' sector with aspirations to be regarded with the same degree of importance as mitigation (decarb/netzero).

If this is Climate-tech, where is the Netzero and Decarb element?

The mitigation 'side' of Climate-tech is focused on 'winning the war' on carbon and helping 'transition' to a low-carbon future. These efforts must continue. However, assuming that targets are not met - for any number of reasons, we need to start dealing with risk in our new climate reality, which is the adaptation 'side' of Climate-tech See the water risk-centric Venn diagram below, and note the investment opportunities at the Venn intersect.

Water risk-related CAT investment opportunities can be found in the right-side circle above.

Many of the companies look like water-tech and/or ag-tech. Why do we need a new sector?

Mazarine is not forcing anyone to 'be in the CAT sector. Companies are welcome to continue their course in 'water' or 'agriculture'. Climate Adaptation Tech, in our opinion, is a more appropriate sector for many 'water-tech' and 'ag-tech' companies who are essentially helping their customers manage water-related risks in our new climate reality. For example: a) Drip irrigation, b) Desalination of seawater, and c) Remediation of harmful algal blooms, to name just three, are all Climate-tech, just not on the decarb/net zero 'side'.

The warming atmosphere spells trouble for these industries

While almost every industry will need to adapt to water risk in our new climate reality, the Finance, Insurance, and Real Estate sector (aka "FIRE") is on the very front lines of water risk in the coming decade, followed by agriculture and aquaculture. Beyond these two, water-supply-dependent power gen (eg: thermoelectric, hydro) and extractive industries (eg: mining, O&G) will need to adapt to the realities of an unpredictable water supply.

A warming atmosphere will likely result in many surface water assets (eg: lakes, rivers, estuaries) becoming blanketed in harmful algal blooms (HABs) during the summer months, which creates a public health & safety crisis equal to floods and sea-level rise. Drinking water utilities will also need to adapt to source water stress, the public health and safety effects of urban flooding, and in-system bio-stability risks as temperatures rise.

What is the CAT 100?

A list of 100 early-stage companies that Mazarine has determined is representative of early-stage and lower-middle market companies with innovations that will help industry and society deal with water-related risks in our new climate reality. Note: One could also create a CAT 100 for fire, heat, or wind. Mazarine created The CAT 100 in order to generate interest in CAT amongst our syndicate of investors. This list is not exhaustive, new companies crop up some go out of business, and companies are acquired. The CAT 100 is dynamic and will be updated quarterly and shared with our investor syndicate. Important: While these companies have innovations that address water risk, they are not necessarily in the “water industry” or the so-called ‘water space’. They are in Climate-tech, on the adaptation 'side'.

The CAT 100 represents Mazarine's efforts to organize deals in this incipient industry

Why is Mazarine publishing this Market Map and CAT 100?

Mazarine recognizes that the concept of Climate Adaptation Tech (CAT) is still so new that many in our investor network may not quite fully grasp the size and shape of the CAT sector. As impact investors, we welcome opportunities to catalyze sharing and learning opportunities.

"Corporations, the public sector, non-profits, consultants, and climate adaptation finance using terms like "Climate Investing" and "Climate-tech" are increasingly starting to recognize that 'technology' has a significant role to play in helping industry & society prepare for, adjust, and adapt to water risk in our new climate reality."

~Anders Hallsby, PhD, Partner, Mazarine

How do I get this Market Map and the Water Risk CAT 100?

Contact Mazarine to request via email.


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