Why water is becoming an interesting investment

Why water is becoming an interesting investment

The earth, the blue planet. More than two thirds of the earth’s surface is covered by water. So water in abundance? On the contrary: water is scarce and is becoming an increasingly important commodity.

One has to be aware of how scarce water actually is, especially in Germany, says Holger Krohn from fund provider Swisscanto: “Water is still quite cheap. It doesn’t cost anything, people still use a lot. But there are also It’s regions where a water emergency has been declared for several years.”

Water attracts investors

Nevertheless, water is now also an opportunity to invest money. On the one hand in companies that earn money with drinking water. “Or you can invest in the areas of water technology, water suppliers and water protection. In the future, too, it will be about mankind managing to decouple economic growth from water consumption. That is very, very important,” says Krohn.

“This also includes wastewater technology – that more water is cleaned. Only 20 percent of the world’s water is recycled, that’s far too little and investments have to be made.”

Companies should question their use of water

At the same time, according to hydrologists, companies must also arm themselves to use this resource more sparingly – and above all to ask themselves how much their own production depends on water. In addition, there was, for example, the low level of the Rhine this year – at times the most important waterway was impassable for freighters. The consequence: the prices for the transport of goods rose. Because, as is almost always the case in business, things that are rare are usually expensive.

“We forecast that the water industry market will grow by around four to six percent per year. That is significantly higher than global economic growth,” says Krohn. “As a result, it is also very interesting for investors because there are a lot of recurring expenses. This plays a major role in the water supply sector, because many water networks are outdated and have to be modernized again and again.”

Agricultural sector consumes the most fresh water

Private households consume the smallest proportion of fresh water, followed by industry – and then, as the largest consumers, agricultural companies. The Federal Ministry of Economics and Climate Protection assumes that these consume around 70 percent of freshwater. Most of it seeps away or evaporates. Companies are already working on making irrigation more targeted and, above all, smarter.

Investments can make a contribution in the fight against water shortages. Before doing so, however, investors should be clear about how sustainably companies use water as a resource.


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