Giulio Boccaletti is Managing Director of Global Freshwater at The Nature Conservancy. This post originally appeared on The Guardian. You can follow Giulio on Twitter @G_Boccaletti.

If there is one thing we are learning from China’s recent economic boom, it is the unprecedented scale of infrastructure that will be needed to serve the vast new middle class. Statistics on its urbanization are mind-boggling no matter how we look at them: China will soon have the world’s first 50-million-person city, and, in less than 10 years, will be home to nearly 100 of the world’s 400 largest cities.

Water provision is particularly challenging at this scale. China’s ability to provide safe, reliable water for such megacities will be a core determinant of its development success. The old model of urban utility, where water and wastewater are treated in one place, passively distributed through networks to and from users, is hard to manage efficiently when cities reach unprecedented scale and complexity.

Because of this, the market for “smart” water technology, such as advanced metering infrastructure, has been growing steadily, and examples are beginning to emerge. Cities like Singapore and Masdar have shown what an alternative could look like in practice: a fully controlled network, analogous to the electric grid, in which optimization to reduce leakage can be done remotely and interactively, and where multiple sources of water – whether rainwater, treatment, or reuse – are coordinated and managed automatically.

This vision for a “smart” urban water network has been slow in coming, due in large part to the unfavorable economics of the sector. But accelerated urbanization in the developing world, coupled with increasing concerns for water security, has energized this market.

This is a potentially game-changing opportunity for companies that provide automation and information technology. Urban water infrastructure is a market worth about $400bn per year, and growing fast. Anything that can increase its efficiency and effectiveness is bound to capture a share of this large pie.

But layering urban supply infrastructure with technology is not the only way in which water will have to become “smart.” When in a city, it is easy to forget that water is first supplied by the hydrology and ecosystem function of the natural catchments that surround cities. Failure to manage those catchments can challenge even the most sophisticated urban water system.

In fact, the availability of data on the performance of this “natural infrastructure” is the primary bottleneck to its inclusion in the toolkit of urban water managers.

Take Beijing for example. The city relies on groundwater for over 70% of its supply, but that supply has been depleted by unconstrained demand. Meanwhile, surface water has been in large part polluted by industrial activity around the city, rendering it unusable. The situation has become so untenable that the Chinese government has invested over $60bn in the south to north water transfer project, to source water from the Yangtze and transfer it north, where it can supply cities like Beijing.

The challenge is that managing catchments so that they are a sustainable source of usable water requires a suite of sophisticated strategies. It means reducing agricultural demands by increasing its productivity, managing both point source and non-point source pollution, steering land use with an eye towards water yields, protecting forests, improving ranching, and restoring wetlands so that areas of critical hydrological importance are protected.

Even more importantly, it requires all of these activities to happen in a coordinated and measurable fashion, and on the scale of the entire catchment, to maximize impact on water quality and quantity.

Knowing what portfolio of strategies to adopt is no easy task. For this purpose, and in partnership with Stanford University’s Natural Capital project and others, The Nature Conservancy has developed a system called the Resource Investment Optimization System (RIOS), a model that allows for analysis of investments in natural infrastructure in a catchment, and helps design a portfolio of aforementioned catchment interventions maximized to improve the condition of water sources.

But the critical limiting factor to its adoption is the availability of real time accurate data that can help manage the catchments effectively at scale and relate a suite of practices to actual impact on water yield and quality.

Things are likely to change, however. As cities across China and the rest of the developing world hit the walls of limited resources, the increasing cost of adding new water through traditional supply infrastructure should incentivize the active protection of source water. This will turn the optimization of practices in a catchment into a potentially attractive market opportunity, one that should support the necessary smart information infrastructure for its operational management.

Already, remote sensing technology applied to land use as well as to the management of groundwater is making steady progress. Technology companies are starting to see the opportunity. While early days, incumbents like CISCO and IBM have increasingly made forays into the world of data-intensive watershed management.

The new megacities of the world, such as those emerging in China right now, could be the drivers of this smart revolution. Active management of catchments, on the back of scientifically sound and reliable data, could turn the work of environmentalists into a tool in the toolkit of water managers, and provide a route to scale for catchment protection across the developing world.

[Image: Shibangou Bridge. Fuling District, Yangtze River, China. Image source: bilwander/Flickr via a Creative Commons license]

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