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Investing in Water:Demand Outweighs Supply

Most of the world's water is undrinkable, and making it drinkable is expensive.

| BY Kent McDill

In the world of economics, nothing is more true than the standard of “supply and demand’’.

Because of that, no alternative investment seems more ripe for investment and growth potential than water.

Put quite simply, the world is running out of potable water and there is no source outside of precipitation that is going to help the situation.

Even melting ice caps and icebergs at the North and South poles become salt water upon melting.

“Water is one of the great business opportunities,’’ Fortune Magazine recently wrote. “Water promises to be to the 21st century what oil was to the 20th century: the precious commodity that determines the wealth of nations.”

First, some numbers that illustrate just how pressing the need for water and water-related infrastructure is:

The Population Institute says the demand for water worldwide has already exceeded supply by 17 percent.

While two-thirds of the planet’s surface is covered by water, only 3 percent can be consumed by humans. Much of that percentage includes water that currently sits as ice on the planet’s poles in the form of ice, and when it melts, it becomes salt water.

Meanwhile, the demand for water grows as the world’s population grows.

“A billion people lack access to clean water,’’ noted Bank of America Merrill Lynch in a recent research piece. “Water is undergoing pressure both on the supply and demand side.”

The United Nations estimates that the need for fresh water has tripled over the past 50 years and increased by almost 17 trillion gallons ever year.

The World Water Council estimates that current annual infrastructure spending worldwide is at $80 billion and will double by the next decade.

The Environmental Protection Agency reports that in the United States, aging water pipes, some as old as 100 years or more, leak 1.7 trillion gallons of water every year. Almost half of the pipelines in the United States are rated as either in fair or poor condition.

The World Health Organization estimates that 80 percent of all sickness comes from unsafe water or poor sanitation. Each year, five million people die from water-related diseases, and many of them are children.

Finally, bottled water costs approximately twice as much as gasoline.

The water industry wants investment capital, and is now in the position of begging for it. Last year, the National Association of Water Companies worked with the U.S. Chamber of Commerce to launch a campaign called “Water is Your Business.”

The call to invest in water is perhaps necessary, because a lot of investors are not doing it. In a survey of investors from August of 2013, only 3 percent of more than 1,000 investors said they are investing directly in water-related companies or products. In the same survey, only 6 percent were invested in solar power products, and only 3 percent were invested in wind.

“It is very difficult for the investment industry to invest in water because water is subsidized,’’ said Stella Thomas, managing director of the Global Water Fund. “You never really know what the real price of water is. If we charge people the real cost of water, there would be an uproar.

 “But what you can do is look to invest in the delivery and treatment side of water,’’ Thomas told Millionaire Corner. “There is a big demand for pipes, valves, metering controls, purification, all kinds of manufacturing related to the delivery of water.”

 



About the Author


Kent McDill

kmcdill@spectrem.com

Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.

In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.

McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.

McDill is the father of four children, and an active fan of soccer, Jimmy  Buffett and all things Disney.

 


 

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