World Oceans Day: Supply and demand for water are imbalanced

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World Oceans Day is held every year on 8 June. This event aims to recognise the importance of our oceans for all species, as the oceans are the main lungs of the planet. It also calls for us to achieve an ecological balance on land and in the sea. Thomas Trsan, ESG & Impact Analyst at Vontobel AM, spoke to us of the water needs of the human population.

Pay attention to the differential: Supply and demand for water are imbalanced

"Water, water, everywhere. Nor any drop to drink" – this was the situation of the protagonist in "The Rime of the Ancient Mariner" by Samuel Taylor Coleridge in the 18th century. After shooting an albatross – an omen of good luck amongst sailors, as it was "the bird that made the breeze to blow" – the tide changes for Coleridge's anti-hero: the storm is calmed and the ship's crew are at the point of dying of thirst. As a punishment for killing the innocent bird, the mariner is forced to wear the dead albatross around his neck. He only finds salvation when he becomes more attuned to nature. As the mariner appreciates the beauty of some nearby sea snakes, the dead bird falls from his neck, slips into the ocean and the voyage continues.

The situation remains much unchanged several hundred years later. According to the WWF – the leading international independent organisation dedicated to conserving nature and the environment – fresh water only constitutes 3% of global water resources. Of this percentage, two thirds is frozen or not available. Over the last century, the use of water has increased more than double the global population, and we have also developed practices which have resulted in situations such as deforestation, which only exacerbates the supply shortage. It is estimated that there are currently 1.1 billion people worldwide without access to water, and 2.7 billion struggling with water shortages at least one month a year.

Given the wealth of possibilities, investors should focus on distinct segments

Although monitoring our own water consumption is an important first step, we believe that allocating resources would resolve the problem. By investing in companies which are tackling water-related issues, such as shortages and contamination, investors can not only reap positive social and environmental benefits, such as providing people with access to clean drinking water and sanitation, but also financial benefits. There are many options, including water extraction and storage, hydraulic infrastructures and water use efficiency.

Desalination: Not taking water shortages with a pinch of salt

Desalination involves extracting the mineral contents from salt water and it plays a key role in expanding the supply of drinking water. For regions facing water shortages, such as the Middle East, desalination is essential. Saudi Arabia, for example, is the leading global producer of desalinated water and generates around 50% of its drinking water using this technology. Saudi Arabia's recent decision to award the contract for the construction of a new plant to the Spanish company Acciona – a leader in desalination of seawater and salt water by reverse osmosis – shows that market demand is still far from saturated. The Madrid-based firm operates over 80 desalination plants producing over 4.1 million m3/day, supplying water to over 22 million people.

Australia is another example. Until the turn of the century, the driest habitable region in the world had depended solely on water stored in reservoirs. Then the country was hit by drought in 2000, and the nation's water industry was changed forever. During this period, the low rainfall caused a significant drop in the levels of water in the reservoirs. The drought wreaked devastation across the entire country, causing widespread losses to crops, livestock and forest fires. To avoid a recurrence of this situation, the state governments began to build desalination plants across the whole country. These infrastructures, which had initially been considered an option which could be activated and deactivated, have become a fundamental pillar in Australia's water supply.

Water leakage and prevention: Stopping the last drop that makes the cup run over

The prevention of water leaks represents another interesting, but often overlooked opportunity for investment. Given the fact that 46 billion litres of treated water is lost every day, it is crucial to reduce the sources of water leaks as quickly as possible. This is where firms like Utilis Corp – an unlisted, privately-owned Israeli company – come into play. Utilis uses satellite technology to detect underground leaks from space. The satellite images cover an area of 3500 square kilometres at a time and enable leaks to be quickly identified. After confirming the findings on site, dedicated professionals mark the affected pipework and excavate it for repair.

We are also finding ourselves in hot water in 2020

World Oceans Day now serves as a reminder that the albatross has not yet fallen from our own necks and slipped into the ocean. Despite all efforts, population growth and improving living standards demand that we slow down our high levels of water consumption. By 2030, demand for water is expected to increase by 40%. In an environment where more than 2 billion people are now already living in water-stressed countries, we still have a long road ahead of us. We believe that companies which are dedicated to tackling these issues offer new opportunities to investors looking for an attractive return, while at the same time making a positive impact., retrieved on 12.08.2020

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