The global water market, which is estimated at $480 billion for 2010, is expected to grow at an annual rate of 6.2% over the next five years, according to a study published on Monday, August 9, by SAM, the Zurich-based investment boutique firm. The study focused exclusively on Sustainability Investing.
In announcing the study, “Water: a market of the future,” SAM said companies that offer innovative products and solutions along the entire water value chain, particularly in the areas of efficient irrigation, advanced wastewater treatment and its reuse, will profit from the growth trend. This, in turn, will create attractive investment opportunities for investors with long-term horizons, it said.
The study found that water consumption has been accelerating since the mid-20th century, when it stood at 1.5 trillion km?. Today, consumption has reached 4.5 trillion km?, and is expected to rise to some 6.5 trillion km? by 2030, resulting in significant shortages. Agricultural applications accounts for an average of 70% of global water consumption, followed by industrial production (20%) and private consumption (10%).
According to SAM, the growing demand for water is being driven by several megatrends. Population growth and urbanization are simultaneously creating regional concentration processes. In addition, climate change will cause variations in the hydrological system, altering global water supplies.
SAM’s analysis identified four business segments that could prove attractive for investors:
? Water distribution and management
? Advanced water treatment
? Demand-side efficiency
? Water and food
The firm’s announcement said investment opportunities are available across the entire value chain of the water market. “SAM estimates that about half of all available water resources are lost on the way to the consumer or at the end-consumer as a result of inefficiencies. Companies that address this problem with innovative technological solutions should enjoy full order books.”
SAM, which was founded in 1995, belongs to Robeco, a subsidiary of the AAA-rated Rabobank Group.
Michael S. Fischer ([email protected]) is a New York-based financial writer and editor and a frequent contributor to WealthManagerWeb.com.