Water, water everywhere…

Viewing the tragedy of Haiti is heartbreaking for us to bear.  One of the most immediate needs that rescue organisations have to focus on is the supply of fresh water, waste disposal and sanitation.   But a quick glance around the world shows that whist Haiti’s needs are desperately immediate and urgent, they are certainly not alone in facing this challenge.  The UN has reported that in the next 20 years the quantity of water available to everyone is predicted to decrease by 30 per cent. Furthermore, approaching 40 per cent of the world’s inhabitants currently have insufficient fresh water for minimal hygiene.  The challenge is not isolated to developing third world countries as many of the largest economies and societies will also face huge challenges ahead.
 
Clearly world governments and organisations will need to invest ever increasing amounts on new technologies and better infrastructure to meet the needs of the ever increasing population.  A good place to start to get a broad exposure to water utility companies in your portfolio is in exchange traded funds and here is a few to investigate.   POWERSHARES WATER RESOURCES (sym PHO US) is one of the first and largest of the water based ETFs. It invests in companies that focus on the provision in the US of potable water and the treatment of water.  For a more global focused investment the POWERSHARES GLOBAL WATER PORTFOLIO (sym PIO US) would be a more geographically diversified vehicle. For example it has approximately 40 per cent exposure to Western Europe and approaching 20% of its exposure to Asia Pacific.
 
Here in the Cayman Islands we are very aware of the cost of fresh water which stems from the energy cost needed to desalinate water.  Take a look at Consolidated Water Co., Ltd. (sym CWCO US) which develops and operates water production and distribution systems in the Caribbean region and in other locations. However to play a more global but similar theme of desalination necessity, ENERGY RECOVERY INC (sym ERII US), is a leader in the design and development of devices for desalination. This company operates in Shangai, Madrid, United Arab Emirates and other such dry places. 
 
Much of the world faces infrastructure improvement and repair challenges responding to exploding populations and climate changes. Governments will need to invest billions if not trillions of dollars in the decades ahead. Don’t let your portfolio run dry so consider some core positions of companies which will benefit from the increasing demand and shrinking supply of fresh water.  There is, after all, absolutely nothing else which is so fundamentally important to the health of the world’s great civilisations.  

Disclaimer: The views expressed are the opinions of the writer and whilst believed reliable may differ from the views of Butterfield Bank (Cayman) Limited.  The Bank accepts no liability for errors or actions taken on the basis of this information.

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