The Great Lakes’ riches manifested in Chicago’s $1 billion water deal.

As US states like California grapple with harsher and more frequent droughts, the Midwest is touting its bountiful water supplies to spur economic growth.

Chicago just signed a billion-dollar contract to sell its water elsewhere—the first such deal in 40 years—and the city expects more to come. Illinois is also launching a federally funded plan to expand its $17 billion “blue economy” to attract companies from water-intensive chip manufacturers to climate technology start-ups.

The Great Lakes, which account for more than 80% of North America’s surface fresh water supply, are increasingly becoming a major selling point. As President Joe Biden pushes advanced manufacturing and green infrastructure, the Midwest is preparing for a much-needed economic boost.

“We have this important water,” said Alaina Harkness, executive director of Current, the nonprofit water innovation center behind the plan. It added that it is important not only to the region’s climate and residents, but also a critical component of the supply chain for manufacturing, food and beverage companies, data processing and warehousing centers and chip makers. “Not being able to access it poses a risk to companies.”

Midwestern cities such as Chicago suffered a decades-long decline in traditional manufacturing as factories moved abroad in search of cheaper labor and resources. Now Biden wants to reinvest in advanced industrial and infrastructure — with a focus on clean energy as well as $55 billion to improve drinking water and sanitation systems.

As a result, Illinois aims to replace its rust belt label with a clean belt economy by 2030, according to the current report. The region has vast amounts of water and land for businesses from wind farms to chip manufacturing.

“A lot of industries — whether it’s electric vehicles or food, life sciences — have a lot of water needs,” said Michael Fasnacht, World Business Chicago president and city marketing director. “Companies, too, will look at climate resilience and water safety, so being right next to the water is a huge, huge factor.”

Cities with direct access to fresh water are already looking to take advantage of it. Chicago Mayor Lori Lightfoot last week signed a 100-year deal to sell water to Joliet, about 50 miles inland, and its suburbs. That would make it the city’s second largest water buyer when supplies begin in 2030. The deal comes after Chicago lost some customers in recent years after price hikes, said Jenny Bennett, the city’s chief financial officer.

“We put the Chicago water system back into growth mode with the Juliet deal in a really big way,” Bennett said in a recent interview. “We know that access to high-quality, low-cost water is very important to many industries.”

Chicago can offer water for less than cities like Detroit, New York, Houston, Philadelphia, and Los Angeles can. And it’s just a fraction of the price in San Francisco, according to data from the Windy City’s water department.

The Midwest certainly has not yet seen a massive influx of business due to its abundant water supply. Fasnacht, whose job includes attracting companies to Chicago, said companies also take into account other factors when choosing to relocate, but questions about water and energy supplies have increased in recent years.

There are also concerns about how tap water can be utilized as a tool for economic development without depleting the resource. Solving this problem could also be an opportunity for companies like Milwaukee-based Rockwell Automation. The company is developing solutions that include the use of artificial intelligence to reduce the amount of energy used in water treatment.

“All of our customers talk about it across industries,” said Damon Sippy, Rockwell’s director of business development. “It’s real, they have goals by 2030 and 2050 that they need to meet, and our role is to help them.”

Startups are also starting to take notice. The opportunity was attractive enough that Seyi Fabode decided to start Varuna four years ago, after leaving the energy sector. The company has offices in Chicago and Austin and tracks water-related hazards such as possible lead contamination or burst pipes.

Most of the water system in the United States was built in the 1970s and 1980s. About 14% to 18% of the country’s treated drinking water is lost through leaks, according to a McKinsey study.

“Water has become the next big thing,” Fabody said. “Austin had a water problem, Flint had a water problem, and I felt like there was an opportunity to use my expertise.”

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