BWSmallBiz -- Innovation December 5, 2008, 5:00PM EST

How to Make the Drought in the South Pay

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The state required Atlantans to pare water use to the essentials, prohibiting outdoor watering. Industries such as landscaping and nurseries were all but decimated.

Problems in Atlanta have been compounded by enormous population growth over the past two decades, accompanied by a demand for rolling green lawns, which are not native to the South. "The main thing that has changed is our landscaping patterns," says David Stooksbury, associate professor of engineering at the University of Georgia's College of Agricultural & Environmental Sciences and a state climatologist for Georgia. "When I grew up, we did not water lawns here."

According to the Metro Atlanta Landscape & Turf Assn., the area has lost some 35,000 landscaping jobs since 2007 and over $3 billion in revenue. Still, "This is a tremendous opportunity to be innovative" in saving water, says Mary Kay Woodworth, the association's executive director. "So many of these companies started out as guys in trucks with one crew member and a lawn mower, and they realize the potential for business."

Jim McCutcheon, CEO of HighGrove Partners, a $12 million, 90-employee landscaper, couldn't agree more. Last fall about 60% of his customer base of large companies decided not to do any planting because of the watering restrictions, resulting in a large loss for HighGrove. So McCutcheon, an imposing man who practically bursts with energy, got moving. He took a trip to Colorado to study irrigation systems in Denver, which in 2002 experienced a drought similar to Atlanta's. "I knew people out West continued to water, and they understood the value of a healthy landscape," says McCutcheon. He wasn't pleased with the way the drought was being handled in Atlanta. "Here we were shutting our system down, and that was the answer," he says. "We were just going to let everything die."

His solution lies in a system he developed called KnowWater. It uses sensors and drip irrigation hooked up to a "brain" that takes into account factors such as temperature, humidity, and sun exposure to direct the right amount of moisture to the right place. Any watering automatically shuts off when it rains. McCutcheon says KnowWater can save up to 60% of normal water use on outdoor landscaping, or several hundred thousand gallons annually. Even at a price tag of up $15,000, seven of his customers have installed components of the system, and he expects to gain a lot more traction in the next couple of years. "There is water for everyone, if you use it correctly," says McCutcheon.

James Harrington has invented a lower-tech product. With his wife, Cecie, Harrington runs Rainwater Collection Solutions, which has $200,000 in sales. He has invented the Original Rainwater Pillow, an offshoot of his gardening business. His "aha!" moment came in 2007, while watching a television spot on the Iraq war. He noticed a flatbed truck transporting water in polyurethane bags. "I had these clients who didn't want a rain barrel or a tank in the backyard, but I thought, 'We can use this pillow in a crawl space,' " says Harrington.

His "pillow," made from an enamel-reinforced polymer, attaches to downspouts, gathering rainwater from rooftops. It's customized for each house and sits under a crawl space or a porch. The pillows can hold 1,000 to 40,000 gallons, and the average cost is about $5,000. To use the garden hose hooked up to the pillow, clients merely activate the switch to an electric pump. A 2,200-gallon pillow has allowed architect Leslie Heitz to continue watering her lawn and flowers while bringing her water bills down to about $20 to $30 a month in a neighborhood where the tab is usually closer to $100. The only downside: One of Heitz's neighbors, mistakenly thinking she was violating city water rules, reported her to the authorities.

Like the landscaping industry, forestry has suffered, too. Two years of consecutive drought have stalled the growth of trees such as the Loblolly pine, which is grown widely throughout the South. That makes it difficult for tree farmers to predict how much lumber or pulp they'll reap per acre. It's prompted five-employee ForesTech International, an Athens (Ga.) company that develops software for forest managers, to create an application analyzing the effect of the drought on trees, which can be planted as densely as 600 per acre. Using this software, foresters and tree farmers won't be surprised when, say, the 90 tons of lumber they expected to harvest per acre turns out to be closer to 83. "Water has become a big issue, as we have had a succession of droughts for 15 to 20 years in the South," says Barry Shiver, CEO of ForesTech, which has $700,000 in sales. Like other entrepreneurs, he believes the best approach is to meet the drought head on and develop products to help customers deal with the rainfall shortage. Says Shiver: "This is a chance for us to have a larger competitive advantage than we do." Those words are like rain in a dry season for many entrepreneurs in the Southeast.

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Quittner is a staff writer for BusinessWeek in New York.