Water security will become the biggest global investment theme over the next decade.
Find out more below
70% of the impact of climate change is expressed through the water cycle.
What does this mean for capital allocation?
It forces us to look at the future through a different lens: the lens of water security. It will reshape how we create value in the global economy over the next decade. It creates new risks, but also new opportunities.
At the Water Investment Summit, we will bring those opportunities into focus. They are crosscutting and urgent.
That is the nature of water: it is in everything that we do as humans on this planet.
Floods, which are exacerbated by rising sea levels.
Intensification of agriculture is leading to a build up of salt in the water cycle.
Environmental Water Quality
Environmental water quality is also an increasing regulatory priority.
Increased energy in the water cycle is leading to extreme droughts.
Water and Sanitation
Rapid urbanization creates unmet demand for water and sanitation services
Quality of drinking water
Health related concern about drinking water quality is rising.
Water Security Investments.
Where is the Opportunity?
Redefining the water cycle
Water is a limited terrestrial resource, but it is not the new oil.
It is endlessly renewable. That means that as the pressure on freshwater increases, the opportunity is in impaired water sources such as seawater, industrial wastewater, brackish and contaminated water.
The value in this approach is doubled by the potential to recover energy, minerals, and materials from wastewater streams.
The biggest opportunity is among industrial water users where improved water security and improved profitability can go hand in hand.
Where to play?
Retail investors find it easy to connect with the water theme. It has led to a huge expansion in specialist funds focused on water. US water equities continue to outperformed key benchmark indices.
Companies like Evoqua, Solenis and Culligan have provided fantastic exits for private equity players. With further corporate realignment on the cards, it is a good moment to be taking water seriously.
Impact investors can get leveraged returns by working alongside development finance institutions to deploy capital in water projects serving underserved communities in the developing world.
We are seeing creative new structures in the bond market to incentivize water secure investment. The clarity and impact of these offering ensure that retail demand remains strong.
The single biggest opportunity for investors is in the way the challenge of water security will play out in the broader economy. It will become a key value driver for ESG investors over the next decade.
New extremes of drought and flood, tougher environmental regulation have created a strong market for new technologies and solutions. It is a great moment to engage with this theme.
Most water infrastructure is publicly owned, but there are attractive opportunities in both investor-owned utilities and project equity. These are the perfect antidote to market volatility.
In the Western United states there is a unique opportunity to own wet water. For investors the best way to access it is through specialist funds. The recent drought in the Colorado basin highlights their attractiveness.