Large parts of the world are running short on water — even experiencing “desertification” — at an alarming rate. Innovative solutions being implemented by the public and the private sectors may offer interesting opportunities for investors.
Several factors are driving water shortages. Climate change could have the greatest global impact. Some projections have temperatures around the globe warming by three to four degrees (Fahrenheit) over the next century, which would affect water in many ways. Some areas would stay the same, but many others would be either flooded or stricken with drought.
Population growth is also putting pressure on clean surface freshwater resources in lakes and rivers. Brackish water must be treated before it is used for human consumption, and groundwater is harder to use because it must be pumped.
According to Julie Gorte, senior vice president for sustainable investing at PAX World Management, 96.5% of all the water on Earth is brackish and 1% is saline. Only the remaining 2.5% is fresh, and of that, 1.2% (0.03% of all water) is surface fresh water. Of the surface fresh water, 30% is groundwater, and 69% is currently locked up in glaciers and icecaps.
The more fresh surface water is used, the more it becomes contaminated. Industrial use is a major issue. For example, hydraulic fracturing, or “fracking,” takes about 5 million gallons of water to frack a well once. The water becomes highly contaminated, and treating it is extremely expensive.
Some countries with large populations are experiencing drought conditions, yet much of their water is contaminated. About 60% of China’s groundwater — which makes up about one-third of the country’s water resources — was rated unfit for human consumption by China’s Ministry of Land and Resources. In India, 80% of sewage flows into rivers without being treated, according to a 2013 study by the Centre for Science and Environment.