The World Water Council and OECD estimate that up to US$1 trillion is required annually to meet the world's water infrastructure needs. What role can private and institutional investors play in meeting this investment need? Do water infrastructure and services in developing economies represent commercially viable investments that can also deliver social and environmental benefits?
Aither's thinking on this topic has recently been picked up by the United Nations and World Bank's High Level Panel on Water in its Action Plan for meeting the water-related Sustainable Development Goals. Simply put, appropriately valuing water for all users should help make the case for major investments in water infrastructure by showing that water is often taken for granted and its many benefits are not adequately considered in decision making.
Arnaud Bisschop manages a US$3.9 billion water fund for Pictet Asset Management and makes the case for why investors should look to water to deliver returns and make a positive contribution to our future...
The size of the [water] market today is $600 billion globally and it’s expected to grow to $1 trillion as it’s growing at about 4% to 6% a year. That figure includes what everyone in the world is paying for water services – revenues from utilities worldwide, packaged water, and water equipment for industrial companies. But water’s massively under-represented in the stock market because you have a lot of public authorities playing in this market. Outside that you have private companies, but they’re pretty small. They’re usually playing on some niches in terms of equipment or geographies. There’s not a single company taking 15% to 20% market share where you can invest. You can’t address all the challenges water availability is facing through just one name. That makes it a very interesting area for a portfolio manager.