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Clean water – a challenge

Everything we use, wear, sell or eat requires water for production. Global demand for clean water is growing rapidly. Meanwhile, the water supply faces challenges from pollution, climate change and inefficient use.

How scarce are global water resources?

Global water consumption has increased sevenfold over the past century, and demand will exceed supply by 2030 if the trend continues at the same pace. In the developed part of the world, we often take access to clean water for granted, but what is the reality?

70% of the earth’s surface is covered by water but we can only use 1 % 

If we look at a globe, it is easy to draw the conclusion that the world’s water is supply is almost unlimited, but 97 per cent of this is saltwater and another 2 per cent is locked up in polar ice. This means that we must live on 1 per cent of the total amount. A large proportion of this 1 per cent is underground. In many cases, that makes it difficult and expensive to access.

1 % − available fresh water as a share of all water on earth

Ten countries hold 60 per cent of water resources

Fresh water is a renewable though finite resource − so it is important that we manage it wisely. As population grows, these limited resources are put under pressure. In theory, there is enough fresh water to meet such needs in a sustainable way. But in practice, these resources are distributed very unevenly.

Water is already a scarce resource

Today 844 million people have no access to clean drinking water, while another 2.3 billion have no access to basic wastewater treatment infrastructure. Population growth is one of the most important underlying reasons.

Agriculture consumes the most,  manufacturing in second place

Using modern technology, we grow crops in places they cannot grow naturally, but this water-intensive agriculture destroys many nearby environments. Meat production is also very water-intensive − on average 15,000 litres of water are required per kilo of beef, compared to 1,500 litres per kilo of grain. In manufacturing, water is used as a raw material but also for cleaning as well as for heating and cooling in energy production.

Our water footprint

People need about 20 litres daily for personal use, which represents about 8 per cent of fresh water consumption. Our indirect water consumption is vastly greater. “Water footprint” is one way of expressing indirect use. It includes all the water needed for a product or service to be consumed. In Sweden, the average daily water footprint is nearly 6,000 litres per person, equivalent to around 40 medium-size bathtubs. According to waterfootprint.org, global average daily use is 5,000 litres, but this varies widely depending on where you live and what you eat – from 1,500 to 10,000 litres a day.

How can we achieve balance between supply and demand?

To begin with, we should make sure that all water is used as intended, which unfortunately is far from the reality today. Water loss, for example due to leakage or theft, is a significant problem worldwide. As much as two thirds is lost in low- and middle-income countries. In developed parts of the world, a lot of water is also lost − in some parts of Europe, the figure is a full 50 per cent.

Infrastructure improvements on the way

The share of water loss due to leakage may seem unnecessary. A lot of resources are also being invested in water infrastructure, with more on the way. In the period 2010-2030, more than USD 1.8 trillion is expected to be spent in this field by the 36 mainly affluent OECD member countries. This is twice the amount being spent on electricity, road and railway infrastructure combined. The question is whether that is enough.

Water and wastewater treatment and re-use

Globally, a surprisingly small percentage of all water is recycled. According to the UN, perhaps more than 80 per cent of wastewater from households globally ends up in rivers and seas with no treatment whatsoever. With the right technology, the share of water that is re-used should increase quickly and significantly.

How can we produce more usable water?

Water is now desalinated in more than 150 countries. Although its energy use is now a tenth of what it was in 1970, the desalination process is still very energy-intensive. Desalination has limited use given its cost, but great potential. In Israel, desalinated seawater accounts for a full 40 per cent of water for household use.

Increased awareness leads to change

One impressive example of how knowledge can lead to change is Cape Town, South Africa, where people started talking about Day Zero − the day when water would no longer flow from taps. Because people began to communicate about this and there was a fixed date, they dramatically changed their behaviour. Although Day Zero was postponed numerous times and has now been put off to an indeterminate future date, by early 2018 the city had halved its water consumption compared to four years earlier.

Should water be more expensive?

Many people regard water as a cheap good, barely affected by market forces or scarcity. The result has been inefficient overuse. Higher water prices would increase the incentives for more efficient use and would improve water sector finances. In 2010, the UN declared access to clean water and sanitation a human right. This is also one of the 17 goals on the UN’s 2030 Agenda for Sustainable Development. It is a challenge to put a price on a valuable, limited resource and at the same time give everyone access to it.

Great opportunities for investors

For anyone who wants to invest in this theme, there are great opportunities. In every field, there are companies more or less focused on these challenges. Examples include various wastewater treatment methods required to enable water re-use, infrastructure improvements, new methods for detecting and locating leaks, desalination, water-efficient irrigation methods, more water-efficient products and water-efficient energy sources.

Jonas Evaldsson, Economist, SEB Investment Strategy

Jonas Evaldsson
Economist
SEB Investment Strategy

Read more

You can read more in “Theme: Clean water shortages” on pp. 17-21 in the latest  Investment Outlook

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