With so much buzz surrounding the development of a cleaner and more efficient electrical grid, only a few analysts have questioned the need for similar smart infrastructure for water. But several companies, including IBM, are already leading a wave of innovation aimed at improving measurement and management tools for water.

Spotting this swelling interest, Pike Research released a report predicting that there will be 31.8 million smart meters worldwide by 2016, up from the 5.2 million meters already in place in 2009. It also said that 31 percent of all new water meters delivered will be digital, allowing for two-way communication between meters, utilities and even consumers.

Like businesses and utilities already jumping into the smart water movement, Pike sees water shortages as a prime motivator for accelerated innovation. According to its research, about 50 percent of the world’s population will be impacted by water shortages by 2030, and in the U.S. alone, 36 states will experience drought by 2013.

With water supplies drying up, utilities are moving fast to encourage conservation and eliminate systemic problems. The more water that gets to their customers, the more money they make. All of a sudden, leaks and customary losses are becoming less and less acceptable.

IBM and other companies are developing elaborate sensor systems to help remedy these problems. Last November, the computing giant launched smart water tools with three utilities. These sensor networks detect waste and contamination along distributions systems. If they can justify their cost with savings, they will no doubt catch on elsewhere.

That said, there are major challenges standing between smart water meters and wide adoption. Municipal water boards and utilities are notoriously slow moving, unlikely to adopt new technologies unless they are monetarily advantageous or necessary to compete. Smart water monitoring will require a significant investment, so the transition may not be compelling for several more years.