Why Water Funds are getting popular globallyOnly 1% of all water is actually drinkable, according to the FAO. And yet, we tend to treat water as...Why Water Funds are getting popular globally
Only 1% of all water is actually drinkable, according to the FAO. And yet, we tend to treat water as though it were an infinite resource, with massive quantities literally being flushed down the pipes every day.
According to some research, a typical shower lasting around 10 minutes requires around 100 litres of water and about 5 kilowatts of energy to heat the water to body temperature. If we assume we spend one or two of those 10 minutes using body washing products and shampoo, that leaves eight minutes — or 80 litres — of reusable water wasted.
This wastefulness gets even worst when considering that vast swathes of the world population are still in need of water. According to 2020 research by UNESCO, worldwide 3.6 billion people — nearly half the global population — live in areas that experience water scarcity at least one month each year. That figure could reach 5.7 billion by 2050.
The hunt for fresh water
The management of water services represents a major challenge for future generations, but it is also an opportunity for investors. “The main thesis underlying an investment in global water equities revolves around the scarcity of fresh water as a commodity. Over recent years, demand for fresh water has increased at more than twice the rate of global population growth, leading to dramatic predictions of future shortfalls between supply and demand,” says Kenneth Lamont, analyst at Morningstar.
Additionally, fresh water resources are not evenly distributed across the globe. Even highly developed regions such as California, are not immune to crippling shortages. This is likely to provide an increasing number of opportunities for companies involved in the treatment and distribution of water globally.
The coronavirus pandemic has led to greater attention on environmental issues and water is something investors are increasingly concerned about.
Don't forget about food
The issue of water is closely linked with agriculture too, if you consider its intensive use in food production. According to the Water Footprint Network, producing 1kg of apples requires 822 litres of water. A kilogram of coffee requires 18,900 litres. And, according to this 2018 report, the water footprint of California almonds averaged 10,240 liters per kilogram kernels (or, 12 liters per almond kernel).