Water is a green investment opportunity

Clean and safe water is a scarce commodity throughout the world. It is especially important in the developing countries where the poor might not be able to get drinkable water for a price they can pay. In the long run, safe water is important for economic growth and development of these countries.

Thus it should be evident that the water utilities focused on supply and maintenance of fresh water have a lot of growth potential. On the other hand, the sector is usually highly regulated which means the companies running the infrastructure are rarely attractive for investors. Because of this, green investors will probably find companies developing water technology more interesting than the companies involved in the maintenance and management of water resources.

River in wintertime.

Even now in countries like China, India and Brazil, water shortages are a severe problem. In the next decades, the pollution and population growth will probably make the fresh and drinkable water even scarcier than it is today. It has been estimated that the number of water-scarce and water-stressed countries will rise significantly in the next ten to thirty years. Because of this there will be constant need for new technologies for purifying water.

At the same time the big companies and institutional investors are acutely aware of the risk connected to the availability of water and the sustainability of the corporate technologies using fresh water.

  • In a recent survey, 59 % of the largest global companies report exposure to water-related risks.
  • Drought-related losses in Texas and neighbouring states total $10 billion.
  • According to the Chines goverment, 52 % of the country’s industrial output comes from regions facing water scarcity.

This situation provides an investor with interesting long-term perspectives as there are several interesting water purification companies in emerging markets. The passive green investors should probably have a look at some of the interesting water ETFs quoted in New York. The more speculative green investors can, of course, take a look at individual companies active in the sector.

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