Turning water shortage into opportunity

With no alternative to water, its supply is one of the great challenges of the 21st century and therein lies the potential for investors to profit.
With water use forecast to increase by 40% globally between now and 2020, Andreas Knoerzer, head of sustainable investment at Bank Sarasin, recommends investing in water as a long-term theme.

ôWater actually powers our economy, because it is essential not only for human life, but for agriculture and industrial process,ö says the Switzerland-based Knoerzer, who made the remarks at the recent TBLI conference on Sustainable Investment Strategies in Bangkok. The Brooklyn Bridge-TBLI Group seeks to raise awareness of sustainable investment in the financial sector, by assisting investors and providing a global network for players.

ôWith increasing demand and growing local shortages, investing in efficient water use, supply, infrastructure, and other water-exposed sectors is attractive,ö Knoerzer adds.

With no alternative to water, its supply is one of the great challenges of the 21st century. Population growth, greater affluence and the destruction of arable land increasing the need for irrigation are all driving demand. At the same time, global warming has changed precipitation and evaporation patterns.

Almost 65% of the worldÆs population will live in water-stressed regions by 2025. As a result, various investment opportunities exist across numerous sectors that involve water.

From research and development, through construction and engineering, consulting, and services such as metering and billing systems, there are a variety of opportunities across regions and industries, Bank Sarasin says. These include: efficient devices and processes, pollution prevention, waste-water recycling, desalination, and engineering and construction companies involved in water infrastructure (ranging from canals and dams to sewage treatment and new pipes).

ôWe expect water to continue to outperform the market in 2008 and beyond,ö says Knoerzer.

The Sarasin Sustainable Water Fund invests in stocks such as Hyflux, which is one of AsiaÆs leading environmental companies. Specialising in membrane technologies, it has operations and projects in Singapore, China, the Middle East, North Africa, and India.

Bank Sarasin set up its sustainable research team in 1989, and is a market leader in sustainable investment. In 1994, it launched the worldÆs first-ever eco-efficiency fund. Today, its sustainable investment team consists of 27 people and is one of the largest in Europe.
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