The Global Fight for Water
As the Earth’s supply continues to drain, the impact of the global water crisis grows more severe. Here’s a look at the numbers behind the problem.
From space, Earth looks like it has so much water that it’s called the blue planet. But the reality is that much of that water is unfit for use by farmers, businesses and households around the globe. The salt water in our vast oceans is, of course, undrinkable and unsuitable for agriculture. Only a small fraction of earth’s water is fresh, in rivers, lakes, streams and aquifers. And only a fraction of that is clean and safe enough for human consumption — and near the populations that need it. Exacerbating the problems is crumbling water-related infrastructure around the world that both wastes water and jeopardizes its safety. What elevates this from a series of problems to a crisis is the massive population growth in areas of the globe where water supplies are under the most pressure.
The growing stress sets the stage for a massive build-out of the global water infrastructure over the next decade and beyond. Here’s a look at what’s threatening the planet’s water and the impact a dwindling supply could have.
Financing to find a solution
Demand-side solutions should play a part in addressing future water shortages. These include rationing measures as a means of curbing overuse, higher rates from local utilities and gains in efficiency. Over the longer term however, supply-side measures are likely to play a larger role in addressing the scarcity challenge. Two supply-side solutions in particular—wastewater treatment and desalination—should play a major role in addressing the imbalances.
We therefore expect demand for water services to increase over the coming years, both in emerging and developed economies. This should benefit companies involved in a range of related industries such as water monitoring, wastewater treatment and liquid purification services, in addition to those that provide industrial equipment for fluid handling such as pumps, valves, filters, seals and water analysis instruments. Desalination plant developers and operators should benefit from growing adoption, alongside materials producers involved in the development of new membrane technologies. Providers of other products and services that target efficient water use should also be well-positioned. These include techniques such as drip irrigation and rainwater harvesting, piping infrastructure maintenance to reduce leaks, water-efficient appliances and water utilities that can raise rates as a means of better aligning demand with available supply.
For more on the global water situation, read “California’s Challenges and the Growing Risk of Global Water Scarcity” by Ehiwario Efeyini, Director and Senior Market Strategy Analyst, in the October 5, 2020 edition of Capital Market Outlook.
This material was prepared by the Chief Investment Office (CIO) and is not a publication of BofA Global Research. The views expressed are those of the CIO only and are subject to change. This information should not be construed as investment advice. It is presented for information purposes only and is not intended to be either a specific offer by any Merrill or Bank of America entity to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.
Global Wealth & Investment Management (GWIM) is a division of Bank of America Corporation. The Chief Investment Office, which provides investment strategies, due diligence, portfolio construction guidance and wealth management solutions for GWIM clients, is part of the Investment Solutions Group (ISG) of GWIM.
