Water Utilities Market "Scarce Resources, Many Competitors" E20 Xue Tao: The era of water utilities development dominated by "fighting for territory" has ended

Questioning AI · Under the situation of limited resources and many monks, what new paths are companies exploring?

On March 26, Beijing Daily (Reporter Li Biao) reported that on March 26, at the “2026 (24th) Water Industry Strategy Forum” hosted by the E20 Environmental Platform, discussions on the evolution of the water industry and future growth paths took place within the industry. The “scale expansion” development model seems to be collectively abandoned by water companies.

Zhang Lizhen, Deputy Director of the National Environmental Protection Technology Management and Evaluation Engineering Technology Center, introduced that 2026 is a year of special significance. We stand at the intersection of the conclusion of the 14th Five-Year Plan and the start of the 15th Five-Year Plan, and are also in a critical period of profound reshaping of China’s water industry. The complex and changing external environment and deep internal structural adjustments are driving the industry to shift from past scale expansion to value cultivation centered on “intelligent asset empowerment.” Low-carbon transformation, quality improvement and efficiency, systematic governance, and digital intelligence integration are redefining the underlying logic and development path of the water industry.

In response, Ma Yuntong, Senior Vice President of Beijing Enterprises Water Group Co., Ltd., explained that the entire industry has entered a deep water zone of stock, with a specific manifestation being a cliff-like decline in the speed of releasing incremental scale. Compared to the 13th Five-Year Plan period, during the 14th Five-Year Plan, the growth rate of various business forms, including pipeline sewage and sludge, may decrease by more than 50%. Therefore, the traditional model of heavy asset scale expansion is no longer sustainable.

Meanwhile, at the forum, Xue Tao, Executive Partner of the E20 Environmental Platform and Executive Dean of the Research Institute, pointed out that the era of water development dominated by large-scale construction or “land grabbing” has ended. In recent years, the marketization rate of municipal sewage treatment has remained generally stable, although perceptions may vary across regions.

Xue Tao further stated that local governments in first- and second-tier cities are gradually withdrawing from franchise rights, while third- and fourth-tier cities, due to fiscal pressure, are still releasing franchise rights; some cities are in an intermediate state, with relatively good fiscal conditions but choosing to extend franchise rights for debt relief considerations. Therefore, the current marketization rate of municipal sewage treatment is actually the result of multiple forces intertwined and balanced, and it remains generally within a normal stable range.

“In recent years, the number of newly released municipal sewage franchise projects has indeed decreased, and companies competing for projects in the market have also reduced accordingly; overall, the water industry still shows a ‘scarcity of monks’ situation — this is what our data reflects. What’s more troubling is that in recent years, most regions willing to release water franchise projects are in poor locations, and even if they are released, there may be no takers,” Xue Tao said.

So, where is the industry’s way out? Regarding this, Xue Tao told the Daily Economic News that most water companies are cautious about scale expansion. Currently, companies within the water industry are exploring some development paths, with some transformation cases, but they are still difficult to compare with previous conventional models.

现场照片：2026（第二十四届）水业战略论坛  每经记者 李彪 摄

Daily Economic News