I have been interested in the idea of investing in water for a while now. I actually studied the topic and wrote a brief report on it in different parts. I enclose the first part. I also have notes which I recorded later on, but which I will also add to the report!
Water is the commodity that fuels life - yet its slowly running out. A global study of over 223 river basins found that the demand for water in the surrounding areas greatly outstripped supply. The in 2.72 billion people in beside these river basins were losing access to water over-time and this was occurring in almost every region across the globe.
This crisis in access to drinking water is already troubling, however the crisis will only accelerate in the coming years for three reasons. Firstly, high income countries use far larger quantities of water. Household wealth in China and to a lesser degree in India has surged. As the quality of life increasing for the middle classes in emerging markets increases, so will their demand for water. Secondly, the global population is rising rapidly as well and agricultural is the primary driver of water use in the world. Thirdly, fresh water is not being replaced at the rate it is disappearing.
Before we address this issue, it is best to explain the crisis in water supply by adopting the appropriate terminology. Scientists in the space use the term water footprint to measure a nation’s water use. A nation with a low water footprint uses its water resources carefully and does not require much excess water. It may even have a surplus. Nations with a high water footprint do not use their resources well (pun), or may not have adequate resources. The term water footprint is split into three areas: blue water footprint, green water footprint and grey water footprint. Blue water is the resources in wells, dams and reservoirs. It is commonly allocated for drinking purposes. This resource is transported across nations via pipelines. Green water is used to produce crops through drilling, wells, or irrigation. Grey water is waste water.
A nation must manage these three congruent elements if they want to manage their water footprint. Even if a nation manages these three issues, there would still be waste. Scientists in recent years have found that there is another metric which should be used to manage water usage - virtual water. Virtual water focuses on activities which are water intensive, but are not accounted for on a nation’s balance sheet. For example, if an electronic company uses 1,000m2 of water every day to produce electricity, that involves expenditure of water which would not have been monitored traditionally. This use of water is almost invisible, yet it greatly depletes a nation’s water resources. Yet virtual water uses a nation’s domestic water supply as well. Virtual water can be used domestically, imported, or exported. The management of virtual water is critical for managing a nation’s water footprint. A nation which exports virtual water through products, or produce increases its total water footprint, or total waster wasteage. The water which could have been allocated for green or blue purposes is now being exported and is therefore wasted. A nation which imports virtual water products, or produce, decreases it total water footprint - it can move its green and blue water resources away from the product its importing, freeing up its resources.