As investors, consumers, and corporations acknowledge, water is vital for human life, as well as most economic production. At the same time, it is probably one of the most under-appreciated assets in the developed world. Since the dawn of the Industrial Revolution, human population has grown 9x, the world economy 100x, and global water usage nearly 20x. By the middle of this century, population is projected to rise from 7 to 9 billion, the economy to grow 4x, and water use to increase more than 50%. The majority of growth will occur in developing nations, requiring new water infrastructure; therefore, investment will be required in developed nations to update and modernize old water infrastructure.
As water demand rises, supply is growing scarce due to overuse, pollution, urbanization, and climate change. At present, 1.2 billion people lack access to clean drinking water and 2.6 billion to basic sanitation; by 2050, the number of people living under “severe water stress” will increase more than 200%, amounting to 40% of the world population. The price of water-related assets will rise due to physical scarcity, infrastructure spending, and regulatory enforcement. As a result, supply chains will be disrupted, demand will grow for efficiency technology, forward-thinking companies will outperform the competition, and long-short investors will be able to capitalize from a growing, changing industry landscape.
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