Investing Themes – Investing in the Earth’s Most Precious Resource

Although fresh water is a necessity for all forms of life, only a tiny fraction of water on the earth is safe enough to be consumed. As an investor, you might not think that fresh water has anything to do with you or the industries you primarily invest in or serve. But actually, fresh water is a crucial component in every industry. There is currently a large and growing need for companies that can provide water solutions in water scarcity, clean water and water infrastructure. What role can you play in this?

Investing in private sector companies that play a vital part in securing water supplies is the first step. From there, investors considering expanding their portfolios can invest through exchange traded funds and mutual funds that specialize in this area.

Reasons to invest in water

Studies show that roughly 2.1 billion people lack access to safe drinking water. Not only are there water quality issues globally, they exist right here at home. Not much of our water is potable, and part of what is, is made not drinkable from pesticides, fossil fuels operations, discarded plastics and other contaminants.

Further, many regions of the world have high populations in areas suffering from water scarcity. The global demand for water is expected to increase by 55% during the first half of this century. This amplifies the need for businesses that can help facilitate the transport of water, too.

Shown to disrupt the world’s fresh water supplies are population growth, pollution and climate change. The UN Environment Program believes the water crises to be among the top global risks for the coming decade. Companies that can create solutions, such as developing technology to increase the supply of clean water, stand to benefit and make an impactful difference.

How investing in water benefits the investor

Widespread infrastructure issues create opportunities for businesses that repair aging infrastructure, build new infrastructure for underserved populations and protect freshwater ecosystems. And as demand for these products increases, the stock price of the company can go up over time.

Not only is water scarcity a humanitarian crisis, it strongly impacts businesses. For example, the semiconductor industry is a large user of ultrapure water. Many of the manufacturers are located in regions of drought. The need for semiconductors is expected to greatly increase due to the growing demand for electronics – putting more pressure on providing water in areas of scarcity. This industry will continue to need ways to reduce the risk of disruption of manufacturing because of scarce resources.

Key Takeaways

Investing in water companies has been an increasingly popular investment theme over the last 20 years. Investors are primed to make a difference in the world through investing in this industry. If you’d like to learn more about investing and financial planning, please contact us.

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