Latest / Make Water Work Podcast / Damian Georgino: Rethinking Water | Make Water Work 032

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Damian Georgino: Rethinking Water | Make Water Work 032 · Make Water Work Podcast

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  Safety is safety is is vitally
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  important. We've had so much go wrong on
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  the infrastructure side. We have a major
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  water mane break every minute states,
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  something like that.
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  >> You got to do something different. You
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  know, you got a lot of systems that are
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  preWorld War I pipes.
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  >> Welcome to the Make Water Work podcast
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  where we dive into the people, ideas,
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  and innovation shaping the future of
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  water. I'm your host, Isaac Pelerin, and
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  alongside my co-host, Megan Glover, the
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  founder of 120 Water, we bring you
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  insights from hundreds of incredible
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  conversations we've had over the past 9
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  years with inspiring and energizing
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  leaders in the water industry. Each
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  week, we share those stories and
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  conversations with entrepreneurs,
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  community champions, and innovators who
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  are making water work for everyone.
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  Whether you're a water professional, a
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  curious innovator, or simply passionate
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  about our most precious resource, this
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  podcast is for you. Let's get started.
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  Sometimes you have a guest where the
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  conversation just takes off. You just
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  have amazing conversational chemistry.
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  That's what happened in this episode.
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  So, kind of forget to do some of the
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  basics like actually introduce them. So
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  today's episode is with Damen Georgino,
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  a partner at Dentons, one of the largest
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  law firms in the world, where he spent
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  more than 25 years advising some of the
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  biggest names in business, Fortune50
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  companies, financial institutions,
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  private equity funds on complex
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  transactions, everything from water,
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  energy, infrastructure, um, and
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  everything in between. So hundreds of
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  deals, M&A, capital market, he's done it
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  all. What makes him unique is that he's
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  not just a lawyer. He's been a managing
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  partner, chief legal officer, strategic
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  adviser to multi-billion dollar funds.
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  And he sat on all sides of the table.
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  And what was so amazing about this
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  conversation is we got a big chunk of
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  his time and focus in water. And so
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  that's the conversation that you're
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  going to get to listen into. Well, thank
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  you all so much for joining us on the
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  Make Water Work podcast where we get to
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  interview and talk to the leaders who
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  are shaping the water industry. Um, and
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  Megan, who do we get to talk to today?
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  >> Well, I think first we are very excited
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  to have our first instudio guest um who
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  I have a very um esteemed pleasure of
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  introducing, Damian Georgo. And Damian,
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  um, you've been a friend of 120 and a
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  personal friend of mine basically since
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  day one of starting 120 water and we met
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  uh, through the Imagine H2O network and
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  have kept in touch. Um, but Damen is a
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  veteran in in water uh in the water
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  industry, current partner at Dentons,
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  and we'll talk a little bit about that
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  that practice right now. But, um, you've
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  been in council, you've been in private
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  practice, but I mean, you've really been
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  in the forefront of uh, some of the most
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  impactful capital transactions in our
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  industry um, at a very high level. And
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  so, we are just very excited and honored
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  to have you in studio today to talk
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  about um, all of the things. So, welcome
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  D. Pleasure to talk with you guys.
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  >> Yes. So, we um we do have a kind of a
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  standard opening because we find it
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  fascinating um to hear everybody's
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  personal story about how water found
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  them. So, Damian, would you uh mind
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  sharing how did water find you?
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  >> It was forced upon me.
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  >> I think it's the best is the first time
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  I know and it it is intuitively
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  alluring. Right.
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  >> Okay. Uh I was a young lawyer doing
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  transactions
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  uh inside of a company called Elcoa.
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  >> Uh Elcoa had acquired a number of water
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  businesses uh under one platform and the
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  CEO came in and said get these off my
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  balance sheet. Elco he became a he
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  wanted Elco to become a vertically
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  integrated aluminum company you know
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  from
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  >> mining boxite to aluminum refinery to
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  aluminum to to downstream products from
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  there. And they had in the 80s had um
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  collected all these non-aluminum
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  businesses.
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  >> Sure.
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  >> And the CEO was Paul O'Neal who became
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  the secretary of treasury who said, "Get
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  these off my balance sheet."
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  >> And I was responsible for selling those
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  businesses.
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  >> And uh over 15 months, we sold all five
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  businesses
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  >> to an upstart company at the time called
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  uh US Filter. Mhm.
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  >> And uh the fellow who founded US Filter
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  uh the visionary for US Filter, Dick
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  Hecman, uh we kept a dialogue after the
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  transactions and shortly thereafter I
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  end up joining the company uh US Filter
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  in its early days.
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  >> Uh and when you start listening, when
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  you start learning about water back in
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  those days when the water space really
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  didn't exist,
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  >> Yeah.
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  >> Uh it is, as I said, alluring. It sucks
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  you in. It gets you to think about
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  things a little bit differently rather
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  than in the context of established
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  businesses, but in the context of a
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  segment
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  >> water
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  >> that is roughly estimated to be a
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  trillion dollar annual revenue
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  throughout the world, probably larger
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  >> growing at chip triple GDP rates
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  >> inside of an environment where itself
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  water is a fixed supply and
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  everinccreasing demand. Mhm.
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  >> So you just start looking at all that
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  and look at where people play in water.
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  >> And from my perspective as a transaction
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  person,
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  >> uh looking at where people want to get
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  invested.
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  >> That's right.
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  >> Where they want to sit on the right side
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  of the balance sheet, where they want to
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  sit as far as technology is concerned or
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  where they want to sit as far as energy
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  and and infrastructure is concerned. You
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  put that all together and it's a
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  >> multivariable formula.
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  >> Yeah. maybe a, you know, a a
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  simultaneous equation solving sort of
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  thing,
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  >> but it's for me it's intellectually
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  challenging,
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  >> alluring, you know, and you guys have
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  heard me say forever, you know, with you
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  can't have energy without water, you
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  can't have water without energy, and you
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  can't have economic development without
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  both. And so as you look at where the
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  world is right now,
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  >> water is is critical to uh the future of
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  of
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  >> not only life itself, which is kind of
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  nice way to say it, but really vital for
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  any business.
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  >> Business. Yeah.
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  >> Yeah. You um I credit you because you
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  have one of my favorite quotes that I've
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  ever heard in water, which is I can make
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  a justification that any business is a
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  water business.
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  >> That's right. That's right. somehow or
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  another there are a couple of
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  interesting companies out there um uh
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  that are looking at
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  valuing water.
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  >> Yeah.
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  >> Uh how do you how do you value water
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  something? Is it is it of infinite
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  value? Is it is it equal to the value of
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  life itself
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  >> or should it be free?
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  >> And so figuring out where the value is
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  and where it fits inside of your
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  business is is uh something that
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  everybody has to consider. It's part of
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  sustainability. It is the resilient of
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  resiliency, right?
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  >> Um, it really is,
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  >> and I don't I'm obviously uh biased, but
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  it it really is something that you have
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  to consider. We look at citing new
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  businesses,
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  >> whether they're, you know, hyperscalers,
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  >> y
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  >> whether they're um uh chip plants,
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  >> right?
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  >> Uh a a a a very large piece of the
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  consideration of where you locate and
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  how you operate revolves around water.
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  >> Yeah, that's right. And we have, you
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  know, 150 years we've had centralized
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  water treatment systems. We've had
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  chlorine saved millions of lives.
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  >> It's now becoming maybe obsolete.
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  >> Yeah, I would love to pull on that
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  thread a little bit as you think about
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  the evolution of water. You mentioned
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  chlorine.
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  um how has that evolved to go from
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  treatment centralized and then we've had
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  other conversations about how do you
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  move into decentralized
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  um water and and kind of the value of
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  that and where you're seeing that um in
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  different places across the world.
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  >> So um I kind of go back to looking at uh
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  whenever um energy
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  >> was deregulated and the the big scary
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  ghost was um
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  >> you know prices are going to go through
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  the roof. uh we're going to have
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  monopolies.
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  >> It never happened. In fact, we ended up
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  with
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  >> energy prices kind of stabilizing, maybe
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  actually flat
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  >> uh on an on a uh a valuation standpoint.
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  And we moved from if we needed more
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  power to building bigger power plants or
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  newer power plants with bigger
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  transmission distribution lines, new
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  transmission and distribution lines to
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  something where we started creating the
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  electrons locally,
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  >> whether that was, you know, cogen,
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  >> whether it was something else, solar or
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  otherwise. But we moved to a model that
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  was a decentralized energy model where
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  the the energy doesn't get created
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  centrally get it move it moves elsewhere
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  and that helped with a lot of new
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  technologies came in vogue and so you
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  move to this decentralized energy model
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  >> I think that's where the where the um
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  water market is heading
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  >> now 75% of the cost of moving water from
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  a centralized
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  >> uh uh creation whether it's wastewater
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  moving it to wastewater or taking it out
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  of A portable water system is energy.
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  You have water weighs 8.33 pounds per
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  gallon. You got to pump it.
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  >> And then you go to a building, you go
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  downtown, you got buildings, they're
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  small cities.
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  >> Yeah.
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  >> You know, and and it makes a lot of
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  sense to start thinking about why don't
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  we just keep the water local?
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  >> Exactly.
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  >> Why don't we do recycle, recirc reuse?
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  >> Absolutely.
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  >> Um and then you you avoid all that
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  stuff. The technologies exist. Um but
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  more more importantly you start looking
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  at
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  recycling water rather than getting new
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  water.
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  >> It's more it is certainly easier to a
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  certain extent for businesses
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  manufacturing and otherwise to look at
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  it that way because water has a cost to
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  them. Water is used in their systems
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  >> and it's a lot and with a lot of their
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  ESG uh goals it's easier to keep things
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  in place. Mhm.
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  >> You become a good corporate citizen.
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  >> Yeah. You don't have to tug on the local
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  water uh municipal water systems. You
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  don't have to worry about what's in your
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  outfall going back to the municipal
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  system.
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  >> Um and and it becomes a a much different
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  play for for industrial users rather
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  than municipal. And it also now with the
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  advent of a lot of the infrastructure
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  funds that are coming out there, they
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  like those long-term contracted revenues
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  >> uh with businesses where they can go and
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  and finance it and get a uh maybe not a
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  20% IRRa, but a lot of the
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  infrastructure funds are perfectly happy
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  with with mid- teens. They love 20%.
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  Everybody wants to get to the magic 20%.
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  Mhm.
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  >> But it makes sense for them because it's
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  a predictable market and you can have,
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  you know, different technologies come in
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  to make the system more efficient. You
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  can have a collaborative um working
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  arrangement with the manufacturer so
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  that you have this constant feedback.
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  Hey, you know, I'm getting an excursion
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  that's coming out of here. Do you want
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  to check up your pipe, if you will, in
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  your manufacturing pipe in your
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  manufacturing system?
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  >> Is there something going on in there
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  that's out of control? One of your
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  systems. Yeah.
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  >> So it it has a lot of benefits and and
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  more immediate um uh ability to
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  implement in the industrial side
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  >> and and I think you know maybe for some
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  people listening that may be a little
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  bit adjacent to water say oh that sounds
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  like a very futuristic uh novel idea but
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  this is actually being put into
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  practice. I mean Damian, when we were in
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  New York in climate week and with the
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  science capital event, you know, we
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  heard from the uh person in um San
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  Francisco, I believe that they've
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  started permitting a lot of the permits
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  for this kind of circular type of water
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  economy for uh commercial use. Right.
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  Right. And I think there are many
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  benefits that and it's a wonderful
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  program that I think they're kind of
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  yielding some really great not only
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  sustainability goals but um it just it
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  just seems that that's the natural
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  progression of the way that we need to
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  >> the technologies do exist right
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  >> um and the technologies I mean even you
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  know the there's the sayings that go
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  around that you know the water we're
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  drinking right now you know has been
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  through dinosaurs right
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  >> and you know you look at the Colorado
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  River and people at the tail end of the
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  Colorado River um that water's taken out
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  and put back in. You know, I saw one uh
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  stat that said that by the time it gets
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  to San Diego, it's been through another
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  human being 274 times.
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  >> Fascinating.
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  >> And the reality of the situation is that
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  the technology already exists to make
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  the water that goes back into the river
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  cleaner than one that comes out of the
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  river.
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  >> So, the technologies exist. It's just a
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  will and a desire and to get to the
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  economics
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  >> that that makes sense.
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  >> Okay. So, let's unpack that. So, it's
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  the economics. Is it um the need for
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  capital? Is it the need for more
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  businesses to exist? What you know, what
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  do you think's going what do you think
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  it's going to take, you know, to that's
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  a great question. So, I think it is
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  happening. Um I think there's a lot of
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  Let me back up a little bit. I think
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  there's a lot of investors, particularly
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  limited partners, uh that that are
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  invested in private equity,
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  >> um who want to be in water. But as we
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  started the conversation, it's it's so
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  huge, they just don't know where to
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  where to tip their toes into,
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  >> so to speak.
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  >> But I think I think the reality is
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  >> you have to recognize your check size.
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  You have to recognize your risk profile
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  >> and there are plenty of opportunities
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  inside of that. So for example,
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  infrastructure investors, a lot of
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  infrastructure investors, they like
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  contracted revenues, they like derisked
• 13:47
  transactions, uh they like counterparty
• 13:50
  creditworthiness. M you put all that
• 13:52
  together and that focuses you more
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  probably on industrial than anything
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  else.
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  >> Um versus where I think one of the
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  bigger needs is the younger companies,
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  the technology companies, the the not
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  >> on the water industry is it takes so
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  long
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  >> to develop up the the the technologies
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  to get them adopted on the municipal
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  side.
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  >> That's right.
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  >> Um and there's not a whole lot of um
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  institutional venture capital. You mean
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  there's not patient capital out there
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  abounds? That is not patient.
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  >> There's no such thing as patient
• 14:23
  capital.
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  >> I don't patient capital. I'm not I'm not
• 14:28
  certain about that.
• 14:30
  >> Yeah. Yeah. I mean, there's no such
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  thing as patient capital period, but
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  then you layer on selling into the
• 14:35
  municipal market, which is not only not
• 14:37
  not, you know, uh known for its um uh
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  >> speed,
• 14:42
  but uh almost this fear of innovation.
• 14:46
  this, you know, innovation's a naughty
• 14:49
  word, you know, because they are they're
• 14:51
  bonused on security and we've done it
• 14:54
  this way for 20 years. Why would we
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  change?
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  >> So, so I I I agree with you. There is
• 14:58
  that notion. I think I look back and
• 15:00
  when we talked started talking about
• 15:02
  chlorine,
• 15:03
  >> you know, chlorine ubiquitous, everybody
• 15:06
  uses it, everybody hates it, right? It
• 15:07
  it's it's nasty. It's hard to handle it.
• 15:10
  It it if you have rain out here in
• 15:12
  Indianapolis,
• 15:14
  >> you're you're taking a shower. It smells
• 15:15
  like chlorine sometimes, right?
• 15:17
  >> Y
• 15:17
  >> um so nobody likes chlorine, but I 25
• 15:20
  years ago
• 15:21
  >> um the new innovation was was UV.
• 15:25
  >> Yes. Right.
• 15:26
  >> That's right.
• 15:26
  >> The efficacy was is much better than
• 15:29
  chlorine. You don't have the same
• 15:30
  issues. You have a little bit more
• 15:32
  energy cost associated with UV. Um but
• 15:35
  the efficacy is much better than
• 15:37
  chlorine.
• 15:38
  >> Uh how long did it take to get that into
• 15:40
  the market? It was a long period of
• 15:42
  time,
• 15:43
  >> but now it's kind of like everybody has
• 15:44
  UV. M
• 15:45
  >> you know it's accepted.
• 15:46
  >> Mhm.
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  >> How do you cycle that down? And and
• 15:49
  you're correct. It's getting
• 15:51
  >> whether it's a municipal operator or an
• 15:54
  industrial operator, getting them to
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  understand
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  >> the technology. Getting somebody there
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  are some change leaders out there
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  >> uh on the municipal side
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  >> like who?
• 16:03
  >> Yeah, let's talk.
• 16:04
  >> U county sanitation.
• 16:06
  >> Oh, sure. Yeah.
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  >> Um DC water. Um, you know, I think those
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  types of of companies, uh, large
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  organizations, granted,
• 16:16
  >> that have adopted or early adopters of
• 16:18
  some of these transa or some of these
• 16:19
  technologies and are willing to look at
• 16:21
  it that way.
• 16:22
  >> So, there there are some change leaders.
• 16:24
  >> Yeah.
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  >> Um, but I think your your adoption rate
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  is quicker on the on the industrial side
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  than it is on the municipal side.
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  >> Oh, absolutely. Side note, and shout out
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  actually to one of u my friends that I
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  went to college with. They um they
• 16:37
  started this company called Ply. This is
• 16:39
  we're taking a total sidebar, but your
• 16:40
  UV is here's an here's an interesting
• 16:42
  application of UV UV and sanitation.
• 16:45
  They actually are revolutionizing um
• 16:48
  child care products because they are
• 16:49
  putting UV into those dirty changing
• 16:52
  tables in all public spaces and they
• 16:54
  they're leveraging UV technology. So
• 16:56
  every time you close the changing table
• 16:58
  drawer, the UV light comes on, kind of
• 17:00
  sterilizes it, and then it's ready for
• 17:01
  the next person. Like how brilliant how
• 17:04
  brilliant and cool, right? Well, but but
• 17:05
  take it take it to the municipal level.
• 17:07
  20 years ago, 25 years ago, okay?
• 17:10
  >> Um and don't call me old.
• 17:12
  >> I I would never.
• 17:14
  >> But uh take it take it 25 years ago.
• 17:17
  You're going into Indianapolis. Okay.
• 17:20
  >> You hear UV? Okay. What's UV? UV is a
• 17:23
  black light. Right. Right. And so you go
• 17:26
  to this guy and say, "You've been using
• 17:27
  chlorine forever." "Yes, it works."
• 17:29
  "Yeah, it works. We've been doing it
• 17:31
  forever." Um, do you like working with
• 17:33
  Oh, can't stand working with it. You
• 17:35
  know, it's dangerous. yada yada yada
• 17:37
  yada.
• 17:37
  >> Well, I've got something for you. What's
• 17:39
  that? Uh, I'm going to wave a black
• 17:42
  light over your efflu and disinfect it
• 17:43
  that way.
• 17:45
  >> Hey, look what time it is. I got to go.
• 17:47
  You know, that's kind of cuz cuz a lot
• 17:50
  of these, you know, let's face it, there
• 17:52
  was how many thousands? Tens of
• 17:53
  thousands of systems. A lot of them are
• 17:57
  are not
• 17:58
  >> don't have the resources.
• 17:59
  >> That's right. to to evaluate
• 18:01
  technologies and you know they look at
• 18:04
  the state
• 18:05
  >> to give them what they have to do state
• 18:07
  and federal as far as regulatory
• 18:09
  environment is concerned
• 18:11
  >> and it ends up being a minimalist
• 18:14
  >> uh I only do that which I can do because
• 18:16
  I don't want to do something wrong for
• 18:18
  my constituents
• 18:20
  >> but I don't want to increase my cost
• 18:22
  because everybody's rate
• 18:23
  >> and is rate conscious
• 18:25
  >> and maybe that's an issue in and of
• 18:26
  itself maybe the issue is healthy
• 18:28
  opportunity
• 18:29
  How do we how we calculate rates? Yeah.
• 18:32
  How how we calculate rates based on
• 18:34
  return on capital deployed? Is that the
• 18:36
  right measure?
• 18:37
  >> And how we better understand the data of
• 18:39
  the supply chain of our chemicals and
• 18:41
  how are we optimizing
• 18:43
  um treatment to be um as optimized as
• 18:47
  possible. I think there's there's a lot
• 18:49
  of opportunity um a lot of opportunity
• 18:52
  there too. And and then the fear of
• 18:54
  raising rates again I go back to what
• 18:55
  happened in the energy grid that didn't
• 18:57
  really happen. when you get a profit
• 18:59
  motive to sit on top of all of this and
• 19:01
  I'm not you know I understand the
• 19:02
  counterarguments to all of this
• 19:04
  >> but when you have somebody who's not
• 19:07
  >> reactive and saying tell me what to do
• 19:10
  but more in front of things and saying
• 19:12
  here's what I can do I have to get a
• 19:14
  fair return for my capital and but
• 19:16
  that's true in any nonprofit even you
• 19:17
  know we we you know the the American
• 19:20
  Society of Civil Engineers rated our
• 19:22
  water infrastructure Dminus out of all
• 19:24
  the infrastructure so that includes
• 19:25
  airports highways
• 19:27
  >> yeah uh broadband systems. It was it got
• 19:29
  the worst
• 19:30
  >> of all those of all those uh um
• 19:34
  infrastructure assets, there's only one
• 19:35
  you cannot live without
• 19:37
  >> and it got D minus.
• 19:39
  >> Maybe we're looking at it wrong.
• 19:40
  >> Yeah.
• 19:41
  >> So, speaking of uh looking at it wrong,
• 19:44
  >> you also hold my second favorite quote,
• 19:47
  which uh I know I'm going to you're
• 19:48
  going, what is this? Uh in water, which
• 19:51
  is um the tap is actually not where
• 19:54
  water happens.
• 19:56
  >> Ah, okay. Yes, that's right. Right.
• 19:58
  >> Right. Uh and and when you think about
• 20:00
  it, uh that's actually the finished
• 20:02
  product. There's a whole value chain and
• 20:06
  multiple economies that lead to us as
• 20:10
  consumers going and turning on the tap
• 20:13
  and benefiting from this finished
• 20:14
  product, right? And I think um you know
• 20:17
  for the average person listening who may
• 20:19
  not be
• 20:21
  uh familiar with what it all takes you
• 20:23
  know to go in to turn on that tap you
• 20:25
  know educate us. Why do you say that
• 20:28
  that's not the finished product?
• 20:29
  >> I'm sorry that's not the uh that's not
• 20:31
  actually where where it happens.
• 20:32
  >> Well I a lot of reasons. Number one um
• 20:36
  if you look at that trillion dollar
• 20:37
  spend you know it's everything from
• 20:39
  water as a natural resource
• 20:41
  >> to you know the point of use.
• 20:45
  I think everybody gets used to just
• 20:47
  turning on their spigot and the water
• 20:49
  shows up. You know, flushing your
• 20:50
  toilet, the water shows up. Filling my
• 20:52
  pool, the water shows up.
• 20:55
  >> But you never really appreciate where it
• 20:57
  comes from,
• 20:58
  >> what it takes to get it there and how
• 21:00
  many different draws there are on that
• 21:03
  water. M
• 21:04
  >> you know it's not you know I think if I
• 21:06
  have my stats correct if you look at the
• 21:08
  state of California
• 21:10
  >> um state of California and you hear a
• 21:12
  lot about residential users you know
• 21:14
  their rates going up uh over time of all
• 21:17
  the by volume only eight we California
• 21:21
  is what 50 million people close to 50
• 21:23
  million people
• 21:24
  >> um of all the water that's used in the
• 21:27
  state of California only 8% goes to
• 21:29
  residential use
• 21:30
  >> let's pause on that only 8% of all the
• 21:32
  water use in California.
• 21:34
  >> That's and and and tying it in because
• 21:36
  we we talk about the water, energy, food
• 21:38
  nexus.
• 21:38
  >> Sure.
• 21:39
  >> Um and infrastructure, you got to throw
• 21:41
  infrastructure on top of that.
• 21:42
  >> Um something on the order of 27%
• 21:45
  of the energy
• 21:47
  >> uh that's produced in the state of
• 21:48
  California goes to uh pumping, treating,
• 21:53
  uh delivering water. It weighs 8.3 lbs
• 21:56
  per gallon.
• 21:56
  >> Wow. And if you think about the energy
• 21:58
  draw with all the energy that California
• 22:01
  needs and including data centers and
• 22:03
  chip plants and things like that,
• 22:05
  >> you start to understand that
• 22:07
  >> water from an aquifer, the ocean, del, a
• 22:12
  river, wherever when it comes out, then
• 22:15
  you get in the middle of the bell curve
• 22:19
  where it starts people start drawing on
• 22:21
  it and it comes
• 22:23
  >> into your home after somebody else has
• 22:25
  tugged on it or you need it for
• 22:27
  something else. It's about choices, I
• 22:29
  guess, at the end of the day when you
• 22:30
  look at that bell curve.
• 22:31
  >> But we're we're at the end whenever we
• 22:33
  open the faucet when you have everything
• 22:35
  in between where
• 22:36
  >> industry needs the water.
• 22:38
  >> Um
• 22:39
  >> agriculture needs to learn. Yeah.
• 22:41
  >> Yeah.
• 22:42
  >> Um our friends at Bluefield Research uh
• 22:45
  had a chart that I thought was
• 22:46
  fascinating. uh I think it was last week
• 22:48
  or week before where they they showed
• 22:51
  that like 47%
• 22:52
  of the water used I can't remember if it
• 22:54
  was California or just the desert
• 22:55
  southwest um was for agriculture
• 22:59
  >> right yes
• 23:01
  >> and most of that was for feeding
• 23:04
  >> animals you know that was fascinating
• 23:06
  >> when when we lived in Southern
• 23:08
  California you grew alalfa
• 23:10
  >> a lot of that alalfa went to Japan to
• 23:12
  make wagyu beef it's water exporting
• 23:15
  we're exporting our water Mhm. So,
• 23:17
  >> uh that that that's my point. I try
• 23:18
  >> I love it.
• 23:19
  >> I try to get people to think about, you
• 23:21
  know, what it takes to deliver that
• 23:23
  water to never look at water the same
• 23:25
  way.
• 23:26
  >> Uh because if you look at it as Oh,
• 23:28
  yeah. It's like air.
• 23:29
  >> Yeah. Exactly.
• 23:29
  >> You know, and and air there's a cost
• 23:31
  associated with air. We have, you know,
• 23:33
  pollution standards. There's a cost
• 23:35
  associated with it, but you just breathe
• 23:37
  it in.
• 23:38
  >> You just breathe the water.
• 23:40
  >> Yeah. Yeah. It's almost devaluing the
• 23:42
  the actual good. You know what I mean?
• 23:44
  And uh
• 23:44
  >> so Ben Benjamin Franklin said it best.
• 23:46
  You know, you'll know the worth of value
• 23:48
  when the when the uh you'll know the
• 23:49
  worth of water when the well is dry.
• 23:52
  >> Yeah.
• 23:53
  >> Mhm.
• 23:54
  >> So let's speaking, you know, we we you
• 23:56
  went there, so you mentioned it. Well,
• 23:59
  yeah, let's let's talk about um bleeding
• 24:01
  the well dry and another draw on water,
• 24:03
  which is all we can talk about right now
• 24:05
  in our industry, which is AI
• 24:08
  >> and data centers. Um where where are you
• 24:13
  in the continuum of this is going to be
• 24:15
  a good thing for the industry, this is
• 24:17
  going to kill um you know the industry.
• 24:19
  Where do you sit on
• 24:20
  >> for AI or for data centers?
• 24:22
  >> Okay, let's start with data centers.
• 24:23
  They're both they're both. Let's do data
• 24:24
  centers.
• 24:25
  >> Yeah, data centers.
• 24:26
  >> AI is not going away.
• 24:27
  >> So data centers there there's um they're
• 24:30
  um there are a couple of ways of looking
• 24:32
  at data centers. Excuse me. Um the first
• 24:35
  is that they use a lot of water direct
• 24:37
  directly use a lot of water. Uh I saw a
• 24:40
  report that said by 2028 or something
• 24:43
  like that uh the the use of water and
• 24:47
  that's for cooling.
• 24:48
  >> You use it to cool the you know these
• 24:50
  these servers get hot you have to cool
• 24:53
  them. So the direct use of water is
• 24:55
  >> is going to be something like 1 and a
• 24:57
  half trillion gallons a day.
• 24:59
  >> Wow.
• 24:59
  >> Um and I think that might be just for
• 25:01
  the US.
• 25:02
  >> Do you know where we are now? I mean in
• 25:04
  order Yeah. Yeah. Yeah. Yeah.
• 25:06
  >> So we're getting there. We're getting
• 25:07
  there. But you saw uh Oracle came out
• 25:09
  and said we'll need 2,000 more
• 25:12
  >> uh data centers uh by 2030 or some such
• 25:15
  number. It's a it's a massive amount of
• 25:16
  water. That's just the direct usage. Now
• 25:19
  there are a lot of people that are
• 25:20
  saying look we we we can recycle reser.
• 25:23
  You don't just draw and send it out cuz
• 25:25
  heat is a pollutant under EPA rules.
• 25:28
  >> Um
• 25:30
  >> and you're now looking at taking water
• 25:32
  to the chip with some of the more
• 25:33
  advanced chips.
• 25:34
  >> That's right. um taking the water right
• 25:36
  to the chip, but there's a direct usage
• 25:39
  and that's not going to go away. It's
• 25:40
  not like these data centers come up with
• 25:42
  new technology and the existing data
• 25:43
  centers don't go away. They stay in
• 25:46
  place. So, you'll have that new draw
• 25:48
  that we never had before. We never had
• 25:50
  that draw on that water usage and a lot
• 25:53
  of the data centers are going into water
• 25:55
  short areas.
• 25:56
  >> That's right.
• 25:57
  >> Um Reno above Reno
• 25:59
  >> here in Indianapolis, you know, there
• 26:01
  there's all over that. Yeah. Yeah. Um,
• 26:05
  so no matter where you go, it's an
• 26:07
  additional draw on water.
• 26:08
  >> Uh, can they get to a point where you
• 26:11
  reduce the amount of water? Yes. There's
• 26:12
  a lot of uh the the hyperscalers as well
• 26:16
  as the the offtakers um the mag seven
• 26:19
  and things like that that are talking
• 26:21
  about a net zero. They're talking about
• 26:23
  net positive.
• 26:25
  >> Um not certain you'll ever get there
• 26:27
  because
• 26:28
  >> the other side of it is the energy piece
• 26:31
  of it.
• 26:31
  >> Yeah. the indirect use of water on the
• 26:34
  energy side which can be as much as 40%
• 26:38
  uh more uh just because well 40% of the
• 26:41
  cost of energy is is is in water.
• 26:44
  >> Yeah.
• 26:44
  >> Uh and so I think you have for a lot of
• 26:46
  these technologies other than solar but
• 26:49
  >> you do have to use water to clean the
• 26:51
  clean the mirrors and things like that.
• 26:53
  >> Um
• 26:53
  >> everything comes back to water, right?
• 26:55
  You need water.
• 26:55
  >> I can make anything water. Yeah. So you
• 26:58
  know I think that there's the direct and
• 27:00
  indirect use.
• 27:02
  >> It's going to be an issue. It's going to
• 27:03
  be there. We do a lot of economic
• 27:05
  development and uh for hyperscalers and
• 27:08
  for chip manufacturers for a lot of
• 27:11
  other industries that come in. One of
• 27:13
  their first questions is now what's the
• 27:15
  availability of water? Mhm.
• 27:17
  >> Yeah. We did a project uh in uh uh in
• 27:20
  North Carolina where it was a a you know
• 27:25
  the I tend to not disclose uh clients
• 27:28
  only because there's an ethical issue
• 27:29
  around that
• 27:30
  >> but um you know they came in and said we
• 27:32
  want to be uh we don't want to be tied
• 27:35
  to the municipal system.
• 27:38
  >> Um and so they they instituted a recycle
• 27:41
  re reuse system. They had pull
• 27:46
  back to the system because they wanted
• 27:48
  to be a good corporate citizen.
• 27:51
  >> So
• 27:52
  economic development which includes data
• 27:54
  centers and needs water.
• 27:56
  >> Okay. And and managing and developing
• 27:59
  those relationships, understanding how
• 28:01
  it's used, I think is vitally critical.
• 28:03
  >> So that's that's the the data uh center
• 28:06
  side. It's not going away. It's only
• 28:08
  going to get bigger. You go around the
• 28:10
  world, it's exacerbated in places like
• 28:13
  the Middle East. Uh but
• 28:16
  >> where you're here in Charlotte or excuse
• 28:18
  me,
• 28:18
  >> Indianapolis.
• 28:19
  >> Indianapolis. Yeah, it doesn't matter.
• 28:20
  Um
• 28:22
  >> um
• 28:24
  >> there's only a certain amount of water.
• 28:25
  >> That's right.
• 28:26
  >> And uh you have to there isn't a you
• 28:30
  aren't water rich necessarily. You do
• 28:33
  have water,
• 28:34
  >> but is it water rich is is a different
• 28:36
  issue. You still have to be sustainable.
• 28:38
  still have to be considerate.
• 28:40
  >> AI in water in water technology
• 28:44
  >> I think is is absolutely um
• 28:47
  >> uh critical to the future success.
• 28:50
  >> Uh it's an intelligence that right now
• 28:53
  uh I think we're just getting uh
• 28:55
  familiar with.
• 28:57
  >> I think there are lot of really nifty
• 28:59
  applications
• 29:01
  >> um for AI. So, um, a couple of the
• 29:05
  companies that I work with have these
• 29:07
  new a IML, I guess, is a better word.
• 29:11
  >> Where you've got all these sensors out
• 29:12
  in the field, you've got an ERP back
• 29:14
  here.
• 29:15
  >> Yep.
• 29:16
  >> They bridge the gap.
• 29:17
  >> That's right.
• 29:18
  >> They read the sensor, turn it into
• 29:20
  actionable information.
• 29:21
  >> It's a brilliant application.
• 29:22
  >> Take it back into the into the ERP and
• 29:25
  things happen, right?
• 29:27
  uh and those things that happen make the
• 29:29
  system more efficient, but also you're
• 29:32
  not adding a bunch of capex, which again
• 29:34
  goes back into the rate structure,
• 29:35
  >> but it's more of an operating model and
• 29:38
  it's an inexpensive model. And uh some
• 29:40
  of the great stories um uh around that
• 29:43
  are taking a a a large city on the on
• 29:47
  the um on the Mississippi
• 29:50
  >> actually was the Ohio that um uh had a
• 29:53
  problem where they were uh 80 plus%
• 29:56
  non-compliant their outfalls. It was
• 29:58
  largely because it would rain and things
• 29:59
  would go in
• 30:01
  >> um and they were looking at a $2 billion
• 30:03
  spend.
• 30:04
  >> Mhm. and they spent $750,000
• 30:07
  on uh these little wavelets and uh
• 30:11
  within a short period of time they they
• 30:13
  were more than 90% in compliance and
• 30:16
  they avoided $2 billion worth of capex.
• 30:19
  >> Oh my gosh.
• 30:20
  >> Little things like that, little success
• 30:22
  stories like that. Now, that was an EPA
• 30:24
  forced result.
• 30:26
  >> But um that's where I think the power of
• 30:28
  of AI comes in. It it takes your
• 30:31
  infrastructure, makes it more efficient.
• 30:33
  back to what we were talking about
• 30:35
  capital
• 30:36
  >> but then makes you rethink how you're
• 30:38
  looking at how you're looking at your
• 30:40
  system.
• 30:41
  >> Um and I think there's a lot of good
• 30:42
  intelligence out there. Um it's just how
• 30:45
  do you you know a lot of these systems
• 30:47
  and and again it works easier in inside
• 30:50
  of industry where you actually have
• 30:53
  people who are looking for AI solutions
• 30:55
  who actually can deal with AI solutions
• 30:57
  who actually have control
• 31:00
  >> and the bandwidth to do it versus
• 31:02
  sometimes a municipality that just
• 31:03
  doesn't have that.
• 31:04
  >> I know. Yeah. Yeah. That that worries me
• 31:06
  a little bit in in the municipal market.
• 31:09
  Um just the does the divide get bigger?
• 31:12
  um the innovation divide get bigger just
• 31:15
  because of existing processes or quite
• 31:18
  frankly legal legal ease that prevents
• 31:20
  them from adopting things like AI like
• 31:22
  so for example just as an you know we're
• 31:24
  starting to see um AI pop up in contract
• 31:29
  language and that my data cannot in any
• 31:31
  way be associated with and and it's just
• 31:33
  you know putting these blanket clauses
• 31:36
  in contracts I feel like is just very
• 31:38
  limiting uh you know potentially
• 31:40
  limiting for the adoption of you know
• 31:43
  use cases that can actually help them.
• 31:45
  Do you have any advice in terms of like
• 31:47
  what may need to happen in order to
• 31:50
  allow municipalities to adopt AI
• 31:53
  technologies?
• 31:54
  >> Um with your attorney well my attorney
• 31:57
  hat. Yeah.
• 31:58
  >> Um
• 32:01
  >> I think it really starts with
• 32:04
  >> the way the way the system is set up
• 32:06
  right now. It's it's it's a reactive
• 32:08
  system. Correct. You know, I'm told what
• 32:10
  to do. You have to have people who are
• 32:12
  willing to say, "Okay, it's time for a
• 32:14
  change."
• 32:15
  >> Uh, and and you know, I I get a lot of
• 32:18
  criticism. Uh, you I was on the
• 32:20
  president's National Infrastructure
• 32:21
  Advisory Council. We came out with a
• 32:24
  with some a report and there'll be
• 32:26
  there's a piece in there that talks
• 32:28
  about the need for uh private capital to
• 32:30
  come in. Call it P3.
• 32:33
  >> Call it infrastructure partnerships.
• 32:36
  I think those those terms have been so
• 32:37
  overused right now. You got to find
• 32:39
  different terms for that. The old term
• 32:41
  was privatization. Nobody wants to talk
• 32:42
  privatization.
• 32:43
  >> It works around the rest of the world.
• 32:45
  Aphroage and everything. The rest of the
• 32:46
  world works really well. We have a we
• 32:48
  have a little bit of a a negative
• 32:51
  >> connotation associated with it that I
• 32:53
  don't I don't know is the right way to
• 32:55
  look at it.
• 32:55
  >> But it it starts with rethinking how
• 32:58
  these are owned. um where the value
• 33:03
  comes in
• 33:04
  >> and um where at the end of the day it's
• 33:07
  not just reactive. It's an active
• 33:09
  >> actively managed system
• 33:12
  >> with that you do with every business.
• 33:15
  >> That's right.
• 33:16
  >> And I'm not I'm not casting dispersions
• 33:17
  on the municipalities. They do a great
• 33:18
  job. I mean it's it's but you're you're
• 33:20
  wrapped inside this environment that
• 33:23
  needs to reconsider what it's doing. You
• 33:25
  know could not agree more. You know, we
• 33:27
  we at Dentons uh we sponsor the
• 33:29
  rethinking water conference.
• 33:31
  >> We have a an infrastructure think tank
• 33:34
  group
• 33:34
  >> uh that looks at uh at looks at all
• 33:37
  these things differently. I think having
• 33:39
  those sorts of approaches goes back to
• 33:40
  what you and I were talking about
• 33:41
  before. I don't want you to look at at
• 33:43
  the water coming out of your tap the
• 33:45
  same way. Yeah. You need to to to think
• 33:47
  about it alternatively to where you
• 33:50
  actually talk about efficiencies.
• 33:52
  >> That's right.
• 33:53
  >> Safety is safety is is vitally
• 33:55
  important. absolutely vitally important
• 33:57
  table
• 33:57
  >> stakes
• 33:58
  >> but we've had so much go wrong on the
• 34:01
  infrastructure side you know what is it
• 34:04
  a major we have a major water main break
• 34:07
  every minute in the United States
• 34:08
  something like that
• 34:10
  >> you got to do something different you
• 34:11
  know you've got a lot of systems that
• 34:13
  are preWorld War I wooden pipes
• 34:16
  >> um and to say that's good enough
• 34:19
  >> um not the right answer
• 34:20
  >> that's I've um with one of our previous
• 34:23
  guests too I was talking The the
• 34:27
  difficult part with the IIGJA act was
• 34:30
  that so much of its focus was on water
• 34:32
  quality which is good. Lead POS those
• 34:36
  kind of things. But the next bill
• 34:38
  whatever comes next I I believe
• 34:41
  personally has to be built on the data
• 34:43
  set of assets what what are the critical
• 34:45
  assets? What's the consequence of
• 34:47
  failure? Um but to get there we really
• 34:49
  need to standardize the way that we um
• 34:53
  measure um and report that so that we
• 34:57
  can actually yeah so we can actually say
• 34:59
  hey
• 35:01
  >> the cost of not doing something is this
• 35:03
  and here's how much it will take to
• 35:05
  invest where it's not as much of a guess
• 35:08
  and it's it actually comes becomes
• 35:11
  actionable to say where would you
• 35:13
  prioritize the action.
• 35:14
  >> So so you know two different things. So,
• 35:16
  first of all, we've got to get away from
• 35:18
  headline news.
• 35:19
  >> You know, the headline news, Flint,
• 35:21
  Michigan,
• 35:22
  >> you know, Jackson, Mississippi,
• 35:25
  >> um, Cape Town, South Africa,
• 35:28
  >> Baghdad, you know, moving moving away
• 35:30
  from where they are right now.
• 35:33
  >> Those are real headline grabbers. Mhm.
• 35:36
  >> Um but I think you need to move in a
• 35:39
  direction that is away from headlines
• 35:42
  and and bringing it back to how do I
• 35:44
  actually resolve the issues, right?
• 35:47
  >> And um that's a big discussion. We
• 35:49
  talked,
• 35:50
  >> you know, at the the um at the
• 35:53
  president's infrastructure advisory
• 35:55
  council about the role of capital.
• 35:58
  >> Okay.
• 35:59
  >> Um we talked about the role of
• 36:02
  infrastructure investors. You go to the
• 36:04
  I I whatever I
• 36:08
  abc whatever. Yeah.
• 36:10
  >> Yeah. Um and you were saying, "Oh my
• 36:12
  look, look at what we looked at from a
• 36:14
  regulatory standpoint." That was a $ 1.9
• 36:17
  trillion spend. How much of that was in
• 36:19
  water,
• 36:20
  >> right?
• 36:21
  >> 55 billion.
• 36:22
  >> I was going to say, yeah.
• 36:25
  >> Which one of the again, which one of the
• 36:26
  infrastructures can you live
• 36:28
  >> right
• 36:28
  >> without all of them except water? So,
• 36:31
  it's we're still even at the at the top
• 36:34
  level lacking the the quality of funds.
• 36:37
  We have yet we used to do
• 36:38
  >> and I'm with you on the headline piece
• 36:40
  cuz the headline was this is the biggest
• 36:42
  investment we've ever made in water, but
• 36:44
  it's
• 36:45
  >> it's not
• 36:46
  >> not even I don't even think it's a down
• 36:47
  payment.
• 36:48
  >> It's not even close to what's needed.
• 36:50
  >> EPA itself says there's what 800 billion
• 36:53
  >> in immediate need for infrastructure
• 36:55
  improvements in water. um
• 36:58
  >> spread 55 billion out and call it
• 37:01
  >> Yeah.
• 37:02
  >> You've had
• 37:02
  >> call it done.
• 37:03
  >> You look at presidential candidates and
• 37:05
  and you know they say it's a trillion
• 37:06
  dollar splend.
• 37:08
  >> You know I I've seen reports that
• 37:10
  Southeast uh the ACON countries.
• 37:12
  >> Yeah.
• 37:13
  >> Um by the year 2050, I believe it is,
• 37:17
  >> they're going to need 50 trillion
• 37:19
  dollars in infrastructure for water
• 37:21
  infrastructure.
• 37:23
  Um it's it's it's a case for large
• 37:25
  infrastructure investment,
• 37:27
  >> but it's also a case in the US at least
• 37:31
  at looking at how we're how we're doing
• 37:33
  these sorts of things and and there is a
• 37:35
  role I believe for not just government
• 37:38
  can't fix everything. It's too big. The
• 37:40
  issues are just too big for governments
• 37:42
  to do it.
• 37:43
  >> If you look at it by volume, industry
• 37:45
  uses what 10x
• 37:46
  >> residential by volume.
• 37:48
  >> Yep. If you're going to spend money on
• 37:50
  it, maybe industry needs to spend the
• 37:53
  money on infra and it's for their infra,
• 37:55
  you know, maybe they maybe they look at
• 37:56
  water differently. You know, what is it?
• 37:58
  >> I I was I was giving a uh um a
• 38:02
  presentation the municipal bond
• 38:03
  infrastructure finance presentation and
• 38:07
  um after the uh uh after the
• 38:10
  presentation, this woman came up and
• 38:11
  grabbed my arm and pulled me aside and
• 38:15
  she introduced herself. She she was a
• 38:17
  CFO of a of a large municipal system
• 38:20
  >> where they had just announced that there
• 38:22
  was a $30 billion chip plant coming in
• 38:26
  >> and she explained to me, you know, hey,
• 38:28
  I want to talk to you.
• 38:29
  >> Yep.
• 38:29
  >> What's that about? Well, you know, I'm
• 38:31
  I'm the CFO of this water system. You
• 38:34
  heard that this company is coming in
• 38:35
  spending 30 billion. We people think
• 38:37
  we're we're water rich. We don't have
• 38:39
  the water.
• 38:40
  >> Yeah.
• 38:41
  >> Right.
• 38:41
  >> Okay.
• 38:41
  >> Yep. So it's and it's industry and the
• 38:45
  chip plants are a big piece of that as
• 38:47
  well. We talked about hyperscalers. Chip
• 38:49
  plants use a ton of water.
• 38:50
  >> Yeah.
• 38:51
  >> You know they they make the cleanest
• 38:52
  water on the face of the earth.
• 38:53
  >> That's right.
• 38:53
  >> Yet they have some of the most
• 38:55
  >> complex waste on the back screams for
• 38:58
  recycle reser but also
• 39:00
  >> the use of that water is taking away
• 39:02
  from from other considerations. But
• 39:04
  industry I think is like I said is 10x
• 39:06
  volume.
• 39:07
  >> Yeah. So, okay. So, we could actually
• 39:10
  talk about 10x 10x our time together.
• 39:12
  Um, but I I always, you know, I want to
• 39:15
  end on a a wildcard kind of question
• 39:17
  that makes us think very big and think
• 39:19
  >> I get a wild card answer.
• 39:20
  >> Yeah, you can. Yes, that's why I'm
• 39:22
  expecting a wild card. I mean, we we
• 39:23
  talk about rethinking. Rethinking. So,
• 39:26
  Damian, if you were to rethink um 10
• 39:29
  years from now and um we're on the path
• 39:33
  to bridging our infrastructure gap,
• 39:36
  right? What are what would that look
• 39:38
  like? I mean, if you could wave a magic
• 39:40
  wand, what what do you think that
• 39:42
  actually looks like? If you could
• 39:44
  rethink the
• 39:47
  >> So, so that's a great question. Uh, I'll
• 39:50
  answer it a couple different ways.
• 39:52
  >> Um, number one, you've probably heard of
• 39:54
  NEOM
• 39:55
  >> in Saudi Arabia.
• 39:57
  >> Yes.
• 39:57
  >> Um, they said, "Let's redesign
• 40:01
  everything right for the line." Now,
• 40:04
  forget about the the criticisms and all
• 40:05
  that, but one of the things they did was
• 40:08
  rethink how they were doing water.
• 40:10
  >> And you got into the whole recycle,
• 40:12
  rearch, reuse, desalination, using clean
• 40:15
  energy, because the biggest cost in
• 40:17
  desalination is energy.
• 40:19
  >> Um, and so I think that is kind of like
• 40:22
  a a a how you how you would do it. Mhm.
• 40:25
  >> Um I think from a a a a built
• 40:28
  infrastructure,
• 40:30
  >> I think you've got to roll into a re a
• 40:34
  looking at how we how we uh manage these
• 40:37
  systems,
• 40:38
  >> how we value water,
• 40:41
  >> uh and how you're going to deliver that
• 40:44
  water.
• 40:45
  >> You know, for example, you know, and
• 40:47
  again, it's it's
• 40:48
  >> there's an instinctual revulsion to
• 40:50
  this, but you know, recycle, recirc.
• 40:52
  >> Oh, absolutely. Oh, I'm I'm there. No, I
• 40:54
  agree. I I know. I would love to see a
• 40:56
  world and in which uh you see that in
• 40:58
  Indiana, you know what I mean? I feel
• 41:00
  like if that would actually become uh
• 41:02
  practice or even having one person Oh,
• 41:04
  maybe we should do that, Isaac. We
• 41:06
  should do that. Yeah, maybe.
• 41:07
  >> Well, the whole the whole carbon foot I
• 41:08
  mean, as you look at
• 41:10
  >> the carbon footprint aspect of it and
• 41:13
  the energy and if you're concerned about
• 41:14
  those things, then
• 41:16
  >> you know, you you got to think about
• 41:17
  keeping everything in place.
• 41:18
  >> Yeah.
• 41:19
  >> Yeah. H Well, this has been absolutely
• 41:22
  wonderful. Um I uh always learn so much
• 41:25
  and gain uh even more perspective uh
• 41:28
  when we chat Damian. So if um for those
• 41:31
  would like to get in touch or learn more
• 41:33
  about what you uh do and what you're up
• 41:35
  to, where should we send them?
• 41:37
  >> Uh send them to my email address,
• 41:38
  damn.org dentons.com.
• 41:41
  >> And did I mention he's always
• 41:42
  accessible?
• 41:44
  >> He is. I got the same 10 digits on my
• 41:46
  mobile phones for 25 years.
• 41:49
  >> Oh my gosh, I love it. Well, well, thank
• 41:51
  you for our all that you do uh for the
• 41:53
  industry and for us uh working in the
• 41:55
  industry and we appreciate you.
• 41:56
  >> Oh, certainly. And that always enjoy
• 41:58
  >> such a good conversation. And thank you
• 42:00
  all so much for joining um the Make
• 42:03
  Water Work podcast and listening in. We
• 42:05
  love getting to have these conversations
• 42:07
  with folks like Damian. And so if you've
• 42:09
  enjoyed this episode, please like,
• 42:11
  share, follow, reach out to us, let us
• 42:13
  know who else you'd love to hear from.
• 42:15
  And we can't wait to see you next time.
• 42:17
  Thanks for listening to the Make Water
• 42:19
  Work podcast. If you enjoyed today's
• 42:22
  episode, please take a moment to like,
• 42:24
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• 42:26
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• 42:29
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• 42:31
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• 42:33
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• 42:35
  everyone.