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Water security: A dry future awaits?

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The biggest concern is the depleting sources of drinking and potable water, which is key to human survival.

By Chockalingam Narayanan

When the well is dry, we know the worth of water.
—Benjamin Franklin.

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As global citizens, we move past crisis after crisis—the Suez Canal traffic jam, wildfires in Australia and the US, tsunamis in Japan, flash floods in Uttarakhand in India, and pandemics such as the Covid-19 that brought the entire world literally to a standstill. However, there is one constant crisis that, as a human race, we have been ignoring consistently—the shortage of water.

Throughout our childhood, we all must have heard that the water crisis is upon us and we would struggle to get even drinking water, let alone for other important things. Well, the days of abundant availability of water seem to be numbered, according to the latest report by the United Nations which shows that climate change and rampant human activities are rapidly affecting the availability of fresh water, which is hardly 3% of the total water available on Earth. About 15% of global population is struggling to get access to drinking water. The disruption caused by the growing global population, brimming at 8 billion, wasteful consumption habits and rampant water pollution is bringing the water crisis to a point where there are hardly any resources left to fulfil the need. Some major rivers across the world are running dry; even the groundwater is being pumped out till the last litre, especially in agriculture areas.

The biggest concern is the depleting sources of drinking and potable water, which is key to human survival. It is a problem that many governments, global organisations and companies are trying to resolve. The cost of making available clean, consumable water is, of course, expensive, and governments are staring at bills that may outstretch their GDPs. The message is loud and clear—action needs to be taken now and there is a need to create alternatives.

There are companies working towards many of the aspects that revolve around water problems such as creating water infrastructure (water storage and transport equipment, smart irrigation, desalination of seawater, wastewater treatment and so on). Governments understand the critical role these companies are playing and are seeking their help to tackle the water shortage to create innovative solutions. Partnerships are being formed with utility companies that have expertise in water conservation, smart irrigation, automated meter reading, testing and treatment, leak detection, etc.

A way out is visible; however, the investments needed are significant as the problem is on a global scale. Projections of global financing needs for water infrastructure range from $6.7 trillion by 2030 to $22.6 trillion by 2050. According to World Bank estimates, an investment of at least $1 trillion is required in the next 10 years to meet the requirement of 20% of global population. More options are being created where investors too can participate and provide financial support by investing in these companies, through investment vehicles. Companies that can provide innovative solutions in water conservation and treatment are emerging or likely to emerge as the next lucrative investment destinations.

The struggle for water is real—for governments, communities or individuals. We need to think from a point where what could be the future of our children, and are we doing enough to provide them with abundant sources of water. If we think rationally, water sustainability is the end-game of all and there are opportunities for investors, too; however, a long-term vision is advisable.

The author is head, Equities at BNP Paribas Mutual Fund

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