AllianceBernstein: Water Scarcity Sustainable Investors Address a Growing Scourge

NORTHAMPTON, MA / ACCESSWIRE / May 8, 2023 / Water scarcity is no longer just a problem for developing countries in desert climes. As demand for water solutions grows, equity investors will find opportunities in companies that help quench the thirst of parched communities around the world with innovative solutions.

The world has a serious liquidity problem-and it isn't on financial markets. About 2 billion people on the planet don't have access to safe drinking water, while 3.6 billion lack access to safely managed sanitation, according to the World Bank. In recent years, severe water shortages have made global headlines, hitting a growing list of communities from Cape Town, South Africa, to Scottsdale, Arizona. Major infrastructure upgrades and products to alleviate water stress are badly needed.

Growing Thirst for Dwindling Supply

Climate change, population growth and urbanization are intensifying the challenges. "Gaps in access to water supply and sanitation, growing populations, more water-intensive patterns of growth, increasing rainfall variability, and pollution are combining in many places to make water one of the greatest risks to economic progress, poverty eradication and sustainable development," the World Bank reports.

Across emerging markets, water scarcity is an ever-present scourge. In Somalia, a regional drought led to an estimated 43,000 deaths last year, according to the World Health Organization. In Argentina, a punishing drought is devastating economic growth, with the International Monetary Fund recently lowering its 2023 GDP growth estimate from 2.0% to 0.2%. In Asia, about 1 billion people and $2 trillion of GDP are in areas of high water stress.

In the US, the Colorado River is running at drastically low levels, threatening water supplies to millions of people. The residents of Rio Verde Foothills, Arizona, are a recent casualty of the parched Southwest, as the community was cut off from neighboring Scottsdale's supply in January.

Businesses also need water. For example, producing semiconductor wafers is very water intensive. Intel's construction of two semiconductor-manufacturing facilities in Arizona-not far from Rio Verde Foothills-will put even more pressure on dwindling supply.

Meanwhile, in Europe, a dry summer followed by a winter drought has depleted lakes and rivers. Low water levels throttled French nuclear power production (responsible for 70% of the country's electricity) and Norwegian hydro power output (90% of its electricity). In Germany, the shallow Rhine is disrupting a key shipping route.