More Investment in Water Technology To Prevent A Crisis – ValueWalk Premium

More Investment in Water Technology To Prevent A Crisis

Cape Town has become the first major city in the world to face a water crisis. Authorities have managed to stave off “Day Zero” (the day when the city officially runs out of water) until 2019 thanks to strict consumption limits (13.2 gallons of water a day per person), but ultimately, avoiding this catastrophic scenario is entirely dependent on the rain — something no one can control.

Cape Town is the first city to experience a water crisis, but it certainly won’t be the last if current projections prove correct.

PublicCo / Pixabay

According to a recent report from the UN, roughly 3.6 billion people currently live in areas that suffer water shortages for at least one month a year. By 2050 that number is expected to grow to 6 billion as the world’s population hits 10 billion. Flooding and drought risk will increase significantly as well. The UN estimates 1.6 billion people will be at risk of flooding by 2050.

As well as a growing population, demographic shifts and rising income will lead to increased water consumption.

According to a new report from Cornerstone Capital Group, spending on water treatment increases significantly with nominal GDP. For example, at the bottom end of the scale India, with a nominal USD GDP per capita approximately $2,000 spends less than $5 per capita on water treatment. Meanwhile, wealthy nations such as Switzerland, Japan, and the United States spend around $160 per capita on water treatment.

A great example of the impact demographic and population changes are having on water demand is Cape Town. Since 1995 the city’s population has grown by 79%, but dam storage has only expanded 15%. Another example, a 2007 survey of young Chinese shows that urban populations consume 195 liters per capita per day versus 101 liters for young rural Chinese.

Emerging markets are taking action to try and stave off disaster before it’s too late. China’s 13th Five-Year Plan includes an “ambitious” target that 90% of wastewater sludge should be treated by 2020 compared to today where around 80% of wastewater sludge is not addressed. India is committing $3.1 billion between 2015 and 2020 to ensure no untreated wastewater is discharged into the Ganges River.

These efforts are a start, but in reality, they are insignificant compared to the scale of the challenge. According to Cornerstone’s report on water scarcity, an assessment of the current state of US infrastructure by the American Society of Civil Engineers estimates that water and wastewater infrastructure requires an additional $152 billion of investment by 2040. To try and attract investment, governments around the world have allowed water prices to creep up in recent years gradually.

Cornerstone notes that globally, the price of water increased 4.3% between 2014 and 2015 with Latin America leading the way with an increase of 9.7%, 6.2% in North America and 2% in Asia. These price increases, coupled with the defensive nature of water infrastructure have attracted capital. Private investment in water technology increased 180% between 2003 and 2016, but despite this growth, according to data on private investments from Bloomberg and CrunchBase, private investment into water technology was only $120 million in 2016.

water investment, water treatment

It seems the world is only just starting to wake up to this enormous impending crisis.

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