World Water Week: the reality of water scarcity and investing for the future

A lot of talk about sustainability revolves around the impact of carbon dioxide (CO2) levels. But a focus on CO2, without consideration to deforestation, biodiversity loss and the reality of water scarcity is almost certainty not enough.

Water scarcity might sound strange to you and me, living as we do in a place where water flows freely from the tap or shower at any time. In what is, thus far, a wash out August, it doesn’t seem like something we have to worry about, right? Wrong.

Only a quarter of a percent – yes 0.25% – of the world’s water is usable*. The rest is too salty, too polluted or frozen. And as the world’s population grows, the pressure on this vital but scarce resource is intensifying.

Access to water is an undeniable human right, yet it’s estimated that 700 million people worldwide could be displaced by intense water scarcity by 2030**, and 20 countries could be experiencing water shortages by 2040***.

We can’t move forward as a global society while so many people – 2.1 billion^ and counting – are living without access to safe water. Even more disturbing in the 21st century is that more than 700 children under the age of five die every day due to water borne diseases and poor sanitation^^.

Clean water is vital for living a dignified, healthy life. We all need it.

‘The creation of a truly sustainable economy will require businesses and investors to become more attuned to the planet’s frailties and more responsible to public opinion.’ – Hans Peter Portner, Head of Thematic Equities at Pictet Asset Management

How do we fix a global water shortage?

When something is in scarce supply you either need to consume less, recycle more or, in the case of water, make the unusable, usable.

Many people assume that fresh water shortages are due to individual wastefulness: running the water while you brush your teeth, for example, or taking really long showers. Most of us assume therefore that water shortages can be fixed by improving our personal habits: taking shorter showers or turning off the water while we brush our teeth. But global fresh water scarcity neither starts nor ends in your shower.

Globally, domestic use of fresh water accounts for only 3.6%*** of consumption. 92%*** goes to agriculture and 4.4%*** to industrial uses. Individual habits are still important, but they’re not the whole picture. Agriculture needs to be the top target.

Companies fixing the leaks

According to Pictet, precision irrigation is one of the innovations aiming to cut the use of water in agriculture and also reduce the amount of pesticides etc, that will in turn cut water pollution…

New sensor-based technology is now being used to determine exactly when crops need water, for example. On a smaller scale, ‘smart’ sprinklers controlled by a mobile app can reduce water use in domestic gardens.

Polypipe

Cities cannot support their growing water demands. In fact, most European cities are using ground water faster than it can be replenished^^^. And innovation is needed, not only to create new systems, but also to preserve old ones. In the case of London, it’s infrastructure is also letting it down. London’s water pipes leak 680 million litres – that’s 40% of their supply – EVERY DAY^^^.

Polypipe, a holding in ASI UK Ethical Equity^^^^, is one of Europe’s largest manufacturers of piping systems, water and climate management systems, delivering engineered solutions that enable a sustainable built environment. They produce pipes and fittings, using recycled materials where appropriate, and all products are 100% recyclable at the end of their useful life.

Xylem

Fun fact: Xylem is the tissue found in plants that transports water from the roots to the leaves. Xylem is also a company and a holding in BMO Responsible Global Equity^^^^ and, you guessed it, It transports water. It transports, treats and tests water for government, municipal and industrial businesses. It’s not glamorous but someone has to do it. It’s been a part of numerous infrastructure projects to upgrade wastewater pumping and treatment infrastructure over recent years in London.

Ecolab

A top ten holding in Pictet Global Environmental Opportunities fund^^^^, Ecolab manages 1.1 trillion gallons of water. Its innovations conserve more than 171 billion gallons of water each year and it’s working to help its consumers save 300 billion gallows of water annually by 2030. It is doing incredible things both with companies and “on the ground” – here are two examples.

Its innovative 3D Trasar technology, without getting too geeky, is a smart technology water management system. The system was used in a Microsoft data centre in San Antonio, Texas and the technology helped the centre save 60 million gallons of water per year. And the initiative to Microsoft? Its water bill reduced by $140,000!

Saving companies money is great but what about all those stats I told you about people without water at all?

At a school in Cebu, Philippines, each student had to bring a gallon of water to school every day. That’s just so they had something to drink and wash their hands with. Nalco Water, a company within Ecolab, came up with a solution. It installed a water tank to collect rain water, carried clement up a hill to the school, installed it and created a hand wash station with seven individual faucets so nothing goes to waste. With this rain catcher tank the school has access to clean water.

As Pictet summed it up nicely: “Together, these established technologies – and the new ones currently in development – can help us ensure that there is enough clean water in the world. As investors, we have the opportunity to be at the forefront of this new and rapidly growing tide.”

*Source: Pictet Asset Management, Water: the high tech approach, March 2019
**Source: Global Water Institute (2013) Future water (in)security: facts, figures and predictions
***Source: TED Talk (Dec 2018) Are we running out of clean water?
^Source: WHO/UNICEF (2017) Progress on drinking water, sanitation and hygiene
^^Calculation made in 2018 based on data from UNICEF
^^^Source: Xylem (2011) Let’s Solve Water
^^^^Source: Fund factsheet, July 2019