As growing pressures combine to force investments in water infrastructure and technology of up to US$1 trillion every year between now and 2030, Jens Peers, portfolio manager of the Calvert Global Water Fund and head of Eco Funds for Dublin-based KBC Asset Management International Ltd., told reporters today that water sustainability is likely to break through in 2010 as a mainstream issue for investors.

“Water is already known by many investors as ‘blue gold,’” says Peers. “2010 is shaping up as the year in which that reality will become apparent to one and all, as awareness grows that the demand for safe water is outpacing supply all around the globe. The bottom line here is that a lot of government money that will be spent in these sectors in the next 5-10 years, which in turn, will help the private sector to outperform.”

Peers outlined four major trends—growing demand, aging infrastructure, the rise of government oversight and “the China factor”—that are now bringing increased investor attention to water sustainability. He outlined four major trends that are driving water investing today:

  • Growing demand. According to the World Health Organization, US$1 trillion in investment is needed over the next 20 years to meet worldwide demand for clean water. Despite its apparent abundance on the planet, a global water crisis now threatens the livelihoods and lives of millions of people. Less than one per cent of the world’s water supply is available for human consumption. This supply is shrinking due to pollution, draining of underground aquifers, and melting of glaciers as a consequence of climate change. Demand for water is growing at an even faster pace than population growth. In the United States, water demand tripled in the last 30 years, a period when the population growth was only 50 per cent.
  • Aging infrastructure. The World Bank predicts that given current trends about one-third of the world’s population will not have access to adequate drinking water by 2025. In developed countries, significant investment is needed to overhaul the aging infrastructure for water distribution. In the United States, pipe networks that cover distances greater than the national highway system are in a state of disrepair. Some estimates indicate leakage rates are as high as 40-50 per cent.
  • Regulatory pressures. Around the world, government oversight of the water sector is intensifying, as access to reliable, renewable, and sufficient freshwater supplies becomes a dominant public policy issue. The European Union designed the new Water Framework Directive to improve and integrate the management of water bodies in its member countries.  In the U.S. alone US$150 billion needs to be invested by 2016 to upgrade the water infrastructure in order to comply with safe drinking water laws. China has also established a national inspection network to monitor water quality.
  • The “China factor.” In China and other emerging economies, climate change and pollution have reduced the available supply of water and there is an urgent need to build drinking water and wastewater treatment systems. Two-thirds of China’s cities suffer from water shortages and rapid economic growth is placing huge strains on supply.  China’s government plans to spend US$125 billion by 2010 to build wastewater treatment plants and upgrade water distribution infrastructure.
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