Japan Tohoku Earthquake and Tsunami

The scale of the disaster caused by the Tsunami in Japan last week must be unprecedented in modern times. It is absolutely chilling.

As a former long term resident of Japan I have been getting most of my fine-grain news from the facebook updates of friends on the ground in Tokyo and in Chiba and Ibaraki prefectures.

An interesting lesson to come out of the disaster is that the only one of my friends in Ibaraki that currently has water supply and electricity is the one with his own solar PV array and his own well.

In a disaster situation the benefits of decentralized systems are abundantly clear. The resilience of decentralized systems should be given a weighting in decision making…resilience can trump efficiency.

I would also like to make a prediction, which is that many of the towns most seriously damaged by the Tsunami will never be properly rebuilt.

Japan’s rural and small town population was already in rapid decline due to their fast aging population. Now with many towns suffering the death of more than half their residents and the horror associated with the location for the survivors, as well as the environmental contamination in the area, who will have the spirit or desire to rebuild?

I believe that with the exception of Sendai, which has sufficient scale to stand alone and has a large area of high ground which was not inundated, there will be no rebuilding worth speaking of anywhere North of Iwaki in coastal Tohoku. Small towns and cities need other small towns and cities around them to survive.

The bulls who are expecting an economic resurgence in Japan on the back of the reconstruction driven building boom will be disappointed.

The water business in Japan

With all the excitement about the rapid growth of China, people forget that Japan is the second biggest economy in the world. It is a difficult market for foreign firms to enter, but prices are kept high by the lack of competition, meaning there is a lot of money to be made there.

The water industry is no exception. Apart from the equipment and chemical suppliers, that largely sell through local distributors, Veolia is the only firm that has managed to make an impact. After significant up-front investment and the acquisition of multiple local firms they have won a number of short operations contracts.

The rest of the water industry can benefit from this effort, as local authorities and institutions become more accepting of foreign businesses operating there. As far as I know, only one multinational design firm (Arup) has any presence in Japan whatsoever, and they do not have a water business there.

While Japan has a lot of rainfall, the density of population (everyone crammed onto the coastal river plains) and the intensity of rainfall events mean that they have plenty of water and environment issues to be addressed. Indirect potable reuse is already the norm in Japan, because many water treatment plants are drawing from rivers below wastewater treatment plants.

If I was running an engineering firm or water treamment business I would be looking very closely at potential acquisition targets in Japan right now.