Investments in global water infrastructure

Rising prosperity and a growing global population come up against the limited supply of freshwater. Climate change also poses a threat to the amount of usable water that is available. As a result, the water gap becomes larger. The analysis identifies the causes and shows which sectors are attractive for potential investments.

Three key insights

Freshwater is becoming scarcer

According to forecasts by the United Nations, around 30% of the world's population live in regions with constant or temporary water shortages – and this trend is increasing.

Attractive growth rates for the water sector

The water sector is growing by an average of 4-6% per year, which is twice the global average economic growth.

Agriculture needs to become more efficient

Agriculture has the greatest potential for increasing water efficiency through the use of resource-conserving water technologies.

Freshwater is becoming scarcer

According to forecasts by the United Nations, around 30% of the world's population live in regions with constant or temporary water shortages – and this trend is increasing.

Agriculture needs to become more efficient

Agriculture has the greatest potential for increasing water efficiency through the use of resource-conserving water technologies.

Attractive growth rates for the water sector

The water sector is growing by an average of 4-6% per year, which is twice the global average economic growth.

Portfoliomanager Gerhard Wagner mit Insights über das Thema Wasser und dessen Anlagechancen.

The water gap is getting wider and wider

Rising prosperity with a growing global population is causing the demand for freshwater to increase disproportionately to population growth. Climate change also poses a threat to the long-term availability of sufficient freshwater. As a result, the difference between water demand and supply – known as the water gap – is becoming ever wider. According to forecasts, there will be a shortage of around 1,500 cubic kilometres of freshwater annually by 2050. This is about 30 times the volume of Lake Constance.

Agriculture needs to become more efficient

The combination of global population growth and rising prosperity must go hand in hand with an increase in global food production in order to ensure people are fed. Agriculture has a responsibility to meet this need. However, it is precisely this industry that consumes the most freshwater (groundwater and surface water). It is therefore important to use water as efficiently as possible in the cultivation of food. Possible measures include:

Drip irrigation or pivot irrigation are considered particularly water-efficient:

Collection and storage of precipitation, such as in artificially created water reservoirs
Use of covers over fields to minimise evaporation losses
Innovative fertilisers that increase the water retention capacity of the soil
Use of novel plant seeds that require less water

Water sector with attractive investment opportunities

Closing the water gap offers a number of attractive investment opportunities in the water sector. This sector is experiencing high annual growth of around 4-6%. This is significantly above the average global economic growth of around 2-3%. In addition, water is not substitutable in most applications. This gives water as an asset class a defensive character. Focus lies on the following three investment themes:

Summary

Population and prosperity growth are constantly increasing the global demand for water. At the same time, climate change and pollution tend to lower the availability of usable freshwater. Companies that have solutions relating to water technology, water supply and water protection are well positioned to benefit disproportionately from structural demand growth for freshwater and from investments in water efficiency and water protection.