(photo credit: REUTERS)
As the oppressive heat of summer is upon us, we are constantly reminded of our
need for water. We walk around with water bottles, force our kids to drink at
every break in their game of tag and run through the sprinkler to cool off. In a
nutshell, we need water.
WATER AS AN INVESTMENT
As abundant as it appears
to be, only about 20 percent of the global population has access to running
water. Additionally, only one-third of the world’s population has access to
clean water. Many estimate that in 40 years, more than four billion people, half
the world’s population, are expected to live in areas that are chronically short
Moreover, economic development has placed greater pressure than
ever on the supply of fresh water. In 1900, the global annual water use per
capita was 350 cubic meters. In 2000, that number had grown to 642 cubic
In the United States alone, the demand for water has tripled in
the past 30 years, while the population has grown by just 50%.
AFRICA AND THE US
The need to increase access to clean water around the world
has led some to call water the “oil” of this century. As the world becomes more
and more developed, wealthy countries will not only be able to afford, but also
will have a moral obligation to provide this basic necessity to their
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China and India, which are experiencing economic booms right
now, are therefore investing hundreds of billions of dollars in improvements to
their water infrastructure, while many sub-Saharan African countries that are
beginning to show signs of economic growth will soon need to begin to provide
the basics to their public.
In all three of these examples, these are
huge populations that are in their infancy when it comes to the basic needs of
their citizens. They have been steeped in poverty for decades, and only now are
they emerging. As such, they need to start from scratch, which means access to
water and building roads.
Regarding the US, the Environmental Protection
Agency estimates that up to $1 trillion will have to be spent on upgrading water
infrastructure over the next few years. The country’s aging infrastructure, much
of which is more than 100 years old and has long exceeded its useful life, is in
a state of utter disrepair.
The network of drinking water pipes in the US
extends more than 700,000 miles – more than four times the length of the
national highway system. This all adds up to the need for new reservoirs, better
water canals and more efficient irrigation systems. And Israel is a world leader
in the necessary technology for making such repairs.
HOW TO INVEST WISELY
There are three ways to try and profit from the global water problem: • Private
investment: For investors who have very large sums of money, investing directly
in companies that are working on water technologies is an option. There is no
shortage of Israeli companies looking for investment capital.
mind that investing in private companies comes with high risk and high
• Individual stocks: For the majority of investors, investing in
private companies comes with one prohibitive barrier of entry: the huge amount
of money needed to invest. For those who don’t have a spare million, individual
stocks that trade in public markets is an option.
There are plenty of
publicly traded companies that work in the water industry.
traded funds (ETFs): Investors looking for more diversification without having
to pick water stocks can buy one of the water ETFs that trade on the stock
exchange. Here you get a basket of stocks that are focused on the water
industry, and instead of buying one or two companies, you get a fund that is
investing in many more shares, thus helping diversify your holdings.
THE RIGHT ADVICE
In light of the above, improving the water infrastructure is
set to be a popular investment theme for many years to come. To consider whether
investing in water would be right for you, speak with your financial adviser to
see if there is room in your portfolio to invest in
firstname.lastname@example.org Aaron Katsman is a licensed
financial adviser in Israel and the United States who helps people with US
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