Yesterday was not a typical Sunday. People from around the globe were reminded of one of the most important natural resources that life depends on: water. The vital role that water plays in economic development and future investments along with the possible repercussions due to its scarcity are amplified on World Water Day.
Designated by the United Nations General Assembly, World Water Day was established on March 22, 1993, in an effort to bring awareness about the importance of managing fresh water resources. The 16th Anniversary of WWD highlights how rapid population growth in developing nations, change in climate patterns, industrial usage, among other factors are affecting the supply and demand of this valuable commodity.
According to a report issued by the United Nations this year entitled Water in a Changing World, demand for water is growing by 64 billion cubic meters per year; mostly driven by an approximate 80 million increase in population each year.
The World Water Organization estimates that by 2025, 1.8 billion people will live in regions with absolute water scarcity. This is compared to the current level of 880 million people that do not have access to decent sources of water according to estimates from the Organization for Economic Cooperation and Development.
Other statistics by the UN Water website show that only about 2.5 percent of the total volume of water on Earth represents fresh water. Of this amount, less than 1 percent of all usable fresh water resources available for humans and ecosystems are readily accessible.
Some of the business opportunities that are being impacted from water scarcity include global grain trade, sales of water rights, bio-fuels, and water conservation and efficiency consultants, according to Michael Thaler, President of TLR Energy, a carbon and sustainability firm.
“It takes about 1,000 tons of water to create 1 ton of wheat, therefore this effectively makes trading of grains equivalent to trading of water,” Mr. Thaler said.
Based on his research, roughly 70 percent of all fresh water is used for agriculture, while 22 percent is devoted to industry consumption, and 8 percent for domestic use.
Mr. Thaler anticipates that as fresh water scarcity intensifies, the intrinsic value of water would need to be incorporated in the price of products that are water intensive in their manufacturing process; similar to what is expected on the cost of carbon.
Indeed, currently it takes approximately 155 liters of water to produce one liter of beer; 2,000-5,000 liters of water to produce one person's daily food; and 13,000-15,000 liters of water to produce one kilogram of grain-fed beef.
“The need for fresh water is going to be one of the major challenges in the 21st century and onward, with industries facing regulatory risks,” Mr. Thaler predicts. “Governments are going to have to get involved in controlling the use of fresh water for industrial purposes.”
Public companies and ETFs involved in water resources include:
- American Water Works
- Aqua Americans
- Watts Water Technologies
- California Water Service Group
- American States Water
- Insituform Technologies
- Ameron International
- Northwest Pipe
- PowerShares Water Resource Portfolio
- PowerShares Global Water Portfolio
- Claymore S&P Global Water
Sources: UN-Water, OECD, WWAP
Comments? Send them to email@example.com