Water isn´t just for drinking, playing and washing in, it could also help you make some money. Alberta Opoku investigates what looks set to be in the next big investment trend.
Water or “blue gold” as its called in the financial markets could be the next big thing for those in the money-making business.Is
the only commodity of which demand is not subject to macroeconomic whims such as inflation and recession. The availability of water is limited –its a finite product, which increases its value- Of
all the water on earth, approximately 2.5% is fresh water and only 1% of the available fresh water is suitable for human consumption. Since 1970, water supply has dropped by about 40%, due, among other factors, to the explosive population growth in the past century. While
the world population tripled, water consumption rose by an astounding 700%. According to an estimate by World Wildlife Fund International, over the next 20 years, the average supply of water worldwide per person is expected to drop by a third. By
the middle of this century, seven billion people in 60 countries may be faced with severe water shortages. So
water is expected to replace oil as this century´s dominating factor in (international) politics and economics, which means its value will only increase. Private property The
privatization of drinking water companies in the US and the UK during the 1990s sparked huge investment opportunities, in particular in drinking water infrastructure. According
to a World Water Council estimate, $30 billion in investments is needed to ensure safe drinking water for the world´s population by 2015. Developing countries need to invest $ 465 million in infrastructure maintenance and improvement, while $1 billion is required to upgrade the US infrastructure for drinking water. In
the late 1990s stock markets created indexes such as the Dow Jones Water Index, Bloomberg World water Index, Palisades Water Index and the Pictet Water Fund. Institutional and private investors ,
as well as water-related companies –from beverage providers to equipment makers- have been eagerly investing in the booming water market,
and it certainly hasn´t done them any harm.
The annual income returns of the biggest water indicesaveraged a mind blowing 35% to 40% over the past four years. Investors in oil got an annual return of 29% over the same period.There are
roughly two types of “blue investments”: environmentally responsible investments or old fashioned, returns-oriented water investments. The difference lies in the sort of companies a specific water index includes.The largest
water users in global terms are Agriculture (67%), Industry (19%) and Municipal or Residential (9%).
An index that tracks the performance of water “industrials”, such as the Dow Jones Water Index, may not always be as “water friendly” as one that tracks water “utilities”, which is what the S&P/ABN Amro Index, S&P1500 Water Utilities Index and the SNS Reaal Water Fund do.Water solutions companies
are also becoming an increasingly interesting utilities investment. These are the firms that specialize in global drinking water shortage solutions, such as converting salt water into freshwater. The ISE B&S Water Index tracks the performance of such companies. So either they are environmentally responsible or simply returns-based, water investment opportunities have made one thing crystal clear: the future is blue. The top ten water-rich countries
1. Finland 2. Canada 3. Iceland 4. Norway 5. Guyana 6. Suriname 7. Austria 8. Ireland 9. Sweden 10. Switzerland The ten least water rich-countries
1. Haiti 2. Niger 3. Ethiopia 4. Eritrea 5. Malawi 6. Djibouti 7. Chad 8. Benin 9. Rwanda 10. Burundi