기후변화 대응을 위한 물산업육성 정책방안

Abstract

Policy for Development of Water Industry: Response to Climate Change The Global water industry, which was formed after provision of water and sewage services, has shown continuous growth since the late 19th century because of population growth, urbanization, and industrialization. As private companies, such as Veoila Environment and Suez Environment, began to participate in the water and wastewater sector in mid-1980s, it led to form a water market in Europe. In recent years, private sector participation scheme in the water and wastewater sector has become widespread in other regions and regional water markets have been formed. The water industry is growing, driven by growth of the water and wastewater industry, worth an estimated US$ 3,630 in 2007. Countries in East Asia, Latin America and Eastern Europe are expected to be key water markets, accompanied by continuously growing water markets in Western Europe and North America. Ten major multinational water companies were dominant in the water and sewage industry, a major part of the water industry, as they had a 80 percent market share. They became competitive through strengthening their abilities to deliver integrated water and wastewater services. They expanded their business through aquisition of local companies with having more open markets. However, the market share they enjoyed has declined due to global competition intensified by the emerging water companies, which represents a shift away from a monopolistic structure of the water industry. The Korean water industry mainly involves multi-regional water supply, municipal water supply and wastewater treatment, which 164 municipalities have primarily focused on expansion of infrastructure for those. There are public companies, such as Korea water resource corporation, Korea Environment corporation, the office of water works of Seoul metropolitan government, and the Busan water authority, in the water sector. Private In the water sector, private companies, such as Samsung Engineering, Hyundai Engineering, Hyosung Ebara Engineering, Taeyoung Engineering & Construction, and Hanwha Engineering & Construction, moistly provides construction and operation of domestic wastewater treatment plants. In the late 1980's, the desalination market in Korea emerged to supply industrial water as well as domestic water for islands and costal areas having lack of water resources. However, high operation and maintenance costs of facilities made low utilization of them or facility shutdowns. In Korea, the water reuse system has been developed not only to reduce pollutions caused by wastewater discharges into water bodies, but to satisfy an increasing demand for water. There is increasing trends in the amount of reclaimed wastewater and the number of treating wastewater plant producing treated wastewater are increasing, but the potential for water reuse is still huge. The bottled water industry in Korea has been growing steadily, from worth estimated 163 billion Won to worth an estimated 300 billion Won. There are about 70 domestic manufacturers of bottled water and about 100 bottled water brands sold in the domestic market. Large firms, such as Jinro, Hite, Nongshim, Lotte, Donwon, and Pulmuone, are having a 50% market share. Although foreign brands of bottled water have increasing market shares in the domestic market, domestic brands are dominant. A key issue related to the water market structure is the price of water. It has been pointed out that the price of water in Korea is quite lower than the production cost of water. According to the Organization for Economic Co-operation and Development (OECD), prices of water and sewage services in Korea are relatively lower than other OECD member countries, except for Mexico. In order to develop the water industry, the price of water should be able to cover at least the production cost of water, further be determined by the market mechanism, which requires to set up a rational water pricing system. Since reflecting concerns about price inflation and a deterioration in wealth distribution are not significant, bringing a price mechanism into the water market should be set up as a long-term goal. Setting up a rational water pricing system should be the first step for achieving the goal. The industrial restructuring is an another key issue related to development of the water industry, which involves several options, such as integration of municipal water facilities (horizontal integration), integration of water and sewage services (vertical integration), specialization, privatization, etc. Integration of municipal water facilities for economies of scale, and of water and sewage services for economies of scope are right for the water industry's progress. Promoting water companies is required as well, but companies do not have to be private companies. That is, the most important thing for now is not privatization, but bringing a price mechanism into the water market through setting up a rational pricing system as well as achieving economies of scale and of scope through vertical and horizontal integrations. After those options are achieved, privatization can be considered. Therefore, there should be efforts to make effective competitions and cooperations between public and private water companies at this moment. Regarding to overseas expansion, industry failure rates of the water industry (about 30%) are higher than them of both the electricity and communication sectors. It should be considered that some of multinational companies have experienced failures of overseas expansion as well. Since the domestic water industry has lack of global competitiveness, it needs to adopt effective strategies for overseas expansion. Recently, there is an increase in number of cases that a single company provides construction, design, operation and maintenance of facilities, related to water and sewage services. Korean construction & engineering companies have shown competitiveness in the construction sector, but have not met global standards for operation and maintenance due to separated water and wastewater services in Korea. Therefore, private and public water companies need to build cooperation systems in order to meet the global demand for integrated solutions for water and wastewater services. As expanding the scope of water industry, Korean water companies can enhance their competitiveness by having a strategy of integrated management, which covers water quantity, water quality, waterfront, ecological environment and Urban areas. In terms of technology, a Korea's level of technological achievement is still lower than them of advanced countries, which represents that Korea needs about 6.1 years to catch up advanced countries' levels of technological achievement. The report, "Strategy for Development of the Water Industry" published in 2010, proposes detailed and advanced plans for technology development. The plans involve technological developments for IT-based eco-smart water systems, advanced membrane materials, operation and maintenance, and reverse osmosis technology of seawater desalination. The Korean water industry could satisfy global needs for technology through those technological developments as well as utilizations of its manufacturing technology, seawater desalination technology, and Information technology. Securing test beds for new technologies will contribute to the technological developments and to commercialization of new technologies. Therefore, in order for the plans to be pursued, adequate budget and cooperations between authorities will be in need.