Investors warm to water as shortages mount

LONDON – As liquidity is drained from credit and money markets and pours into oil and gold, another asset class that could offer long-term returns to the discerning investor is water.

Water shortages are on the rise – stemming from soaring demand, growing populations, rising living standards and changing diets. A lack of supply is compounded by pollution and climate change.Investors are mobilising funds to buy the assets that control water and improve supplies, especially in developing countries such as China where urban populations are booming, further tightening supply.”Many of these cities have tripled in size in the last 10 years so there’s just an unaddressed need, there’s an enormous opportunity for investment,” said Kimberly Tara, chief executive of commodities investor FourWinds Capital Management.FourWinds will this year start raising global funds initially of up to three billion euros to invest in water, Tara said.Water shortage is already a serious problem in many regions of the world, as underlined in a December report from Zurich-based Sustainable Asset Management (SAM), which manages about 8,5 billion Swiss francs in assets.These include southern Spain, the Maghreb, the Middle East, Central Asia, Pakistan, southern India and northern China.In the Americas, the US mid-west, Mexico and the Andes are the worst hit areas.Eastern Australia is also badly affected.China is a particularly strong example.It has a fifth of the world’s population but just seven per cent of the water.Most of the length of the country’s five main rivers is unsafe for direct human contact, and the country will have to build 1 000 wastewater treatment plants between 2006 and 2010 to meet national pollution targets, Citigroup analysts say.But not everyone will benefit.While some Chinese cities are now investment hotspots, rural areas are being by-passed, underscoring a trend of under-funding in poorer regions and countries most vulnerable to shortages.Large equipment suppliers for sourcing water and treating waste will not operate in parts of the developing world, said Merrill Lynch analyst Robert Miller-Bakewell.”They’re pretty selective about where they go.That means a lot of this need will not necessarily be addressed in the near-term,” he said.”The technologies exist.You and I and the World Bank and everyone else can identify the need.The big problem all along is about who’s going to pay for it all.”Parts of Africa are especially dry – both of clean water and cash – at a time when prices are rising for the steel and concrete raw materials for treatment plants.A combination of unsafe water and poor sanitation kills about 1,8 million children annually, a Merrill report estimates.Nampa-ReutersA lack of supply is compounded by pollution and climate change.Investors are mobilising funds to buy the assets that control water and improve supplies, especially in developing countries such as China where urban populations are booming, further tightening supply.”Many of these cities have tripled in size in the last 10 years so there’s just an unaddressed need, there’s an enormous opportunity for investment,” said Kimberly Tara, chief executive of commodities investor FourWinds Capital Management.FourWinds will this year start raising global funds initially of up to three billion euros to invest in water, Tara said.Water shortage is already a serious problem in many regions of the world, as underlined in a December report from Zurich-based Sustainable Asset Management (SAM), which manages about 8,5 billion Swiss francs in assets.These include southern Spain, the Maghreb, the Middle East, Central Asia, Pakistan, southern India and northern China.In the Americas, the US mid-west, Mexico and the Andes are the worst hit areas.Eastern Australia is also badly affected.China is a particularly strong example.It has a fifth of the world’s population but just seven per cent of the water.Most of the length of the country’s five main rivers is unsafe for direct human contact, and the country will have to build 1 000 wastewater treatment plants between 2006 and 2010 to meet national pollution targets, Citigroup analysts say.But not everyone will benefit.While some Chinese cities are now investment hotspots, rural areas are being by-passed, underscoring a trend of under-funding in poorer regions and countries most vulnerable to shortages.Large equipment suppliers for sourcing water and treating waste will not operate in parts of the developing world, said Merrill Lynch analyst Robert Miller-Bakewell.”They’re pretty selective about where they go.That means a lot of this need will not necessarily be addressed in the near-term,” he said.”The technologies exist.You and I and the World Bank and everyone else can identify the need.The big problem all along is about who’s going to pay for it all.”Parts of Africa are especially dry – both of clean water and cash – at a time when prices are rising for the steel and concrete raw materials for treatment plants.A combination of unsafe water and poor sanitation kills about 1,8 million children annually, a Merrill report estimates.Nampa-Reuters