No joke: Bill Gates wants to reinvent the toilet.

Gates is focusing on the need for a new type of toilet as an important part of his foundation‘s push to improve health in the developing world. Open defecation leads to sanitation problems that cause 1.5 million children under 5 to die each year, Gates said, and Western-syle toilets are not the answer as they demand a complex sewer infrastructure and use too much water. As a matter of fact, toilet technology has not fundamentally changed since the invention of the flush toilet in 1775.

One year ago, the foundation issued a challenge to universities to design toilets that can capture and process human waste without piped water, sewer or electrical connections, and transform human waste into useful resources, such as energy and water, at an affordable price. California Institute of Technology in the United States received the $100,000 first prize for designing a solar-powered toilet that generates hydrogen and electricity.

In addition to health issues and equal opportunities, this represents a huge potential market for business. As reported in an interesting article on the Harvard Business Review by Alfredo Behrens:

The largest markets will be seen around the axis of India and China, because both countries have huge populations, with a significant share still living in rural areas. India, for instance, expects to see some 350-400 million people becoming urban residents in the next three decades. That could mean demand for as many as 150 million new toilets.

Beherns estimates that in 2010, the two world’s largest toilet suppliers have shipped about 6 million units to emerging markets where, altogether, there are about 2.8 billion people without access to sanitarily acceptable toilet systems.

It looks pretty clear that demand and supply gap is daunting. Moreover, additional demand for new toilets, and derived demand for raw materials and energy, is only the tip of the housing demand iceberg coming from emerging markets. This will far outstrip the current demand coming from the advanced economies.

Globalization, anyone?