Cornucopia
As the world gets ready to celebrate
the holiday season and the New Year it’s also significant to point out the
disparities that exist when considering the distribution of natural “gifts”
that exist on the planet. The allocation
of natural resources such as food, energy, raw materials, and the industrial
capacity to utilize them is not always an equitable equation.
Water-related investing, in
particular, is a compellingly misunderstood and under-reported phenomenon. And yet, the danger of this commodity’s
scarcity and/or depletion is one of the most significant headlines of our
times. Further, the investment
opportunities related to water recovery, purification, and delivery might be
the most impactful capital gains notion of this century.
For several decades, I have been
deeply involved in this topic, and others, in the field of “sustainable”
socially responsible investing (SRI).
Our Global Water Resources portfolio concept, for example, has a
record of significant outperformance compared to its peers. My research has concentrated upon safe
provision of potable water, water treatment (desalinization), and the
businesses that are devoted now and in the future to technology in service to
these human needs. Our recommended
equity basket contains about 43 companies, various capitalizations, and
multiple geographic locations. Water
related businesses run the gamut from Utilities, Consumer Discretionary, Technology,
and Basic Materials. The criteria for
inclusion focuses on earnings, price, and relative strength. The next few decades might represent our best
investment alternative amongst the many in our portfolio.
While pundits are foretelling a
global crisis in water access, we believe the essence of the problem is most
unique to specific geographic regions.
Comparing water withdrawal rates in various parts of the world, we note
an uneven distribution of the problem, the most disturbing of which is in
Africa and South America. Those problems
are directly related to poor infrastructure and ineffective government
oversight.
In fact, the infrastructure situation
is particularly vexing. Most water
systems worldwide were built in the last century and before. While miles of canals and containment
stations need rebuilding now, recent weather catastrophes have made the public painfully
aware of the effects of climate change and a disastrous collapse of land and
concrete which abut them.
Less is definitely not
more
Because mankind depends upon water
for survival and commerce there must be a greater sense of urgency to modernize
the systems that protect retrieval and potability.
Nearly 80 percent of the planet is
comprised of water but less than 1 percent is fresh water or easily
accessible. The remaining supplies are
either frozen in (evaporating) oceans or contaminated by industrial and
agricultural pollution. The United
Nations posits that only about 10 percent of that 1 percent is fresh product
suitable for personal use.
The real problem is that demand has
risen while standards have dropped.
Water consumption is multiplying as the population expands. The need for drinking water could double in the
next generation. Who will step up to
remediate the problem; which government, business, or charity will succeed at
de-stressing the dual crises of poor quality and limited access?
Water is required to provide for the
production of goods and services, as well as sufficient drinking
quantities. (Parenthetically, if countries
do begin a transition to nuclear power plants as their abrupt choice for
“alternatives”, then additional sources of water will be required as cooling
agents). It is increasingly clear that
the future will require more of this precious gift, not less. If your tap is full and your access is
unabated, think about those who must do without when you sit for your
celebratory gatherings this holiday season, and be grateful.
Happy
Thanksgiving
No comments:
Post a Comment