Solar, wind and water – part 3

Water investments

May 10, 2018

I want to open this blog by restating something I said earlier when writing on the subject of water investing a few months ago:

‘That the world is facing an acute water shortage is, increasingly, a truism. Large regions of major countries – such as the United States – are in drought or have questionable long-term access to a water supply.

While this may not appear to be a significant issue for us in Canada – we own 7% of the world’s supply of renewable fresh water,1 for example – water as an investment subject is an obvious winner.’

A long-term point-of-view

Todd Millay, writing in Forbes – Investing in Water2 (November 26, 2016) – had an insightful strategic point-of-view on the subject:

‘With political uncertainty soaring around the globe, investors need to make sure their portfolios include investments that will provide attractive returns over an extended period of time. Opportunities that benefit from demographic trends or from the increasing effects of climate change are particularly attractive to investors with a long time horizon.’

As Mr. Millay correctly observes: ‘There is no substitute for water. As the world’s population continues to grow and becomes wealthier, demand for water is rising fast. According to the UN, by 2025, 1.8 billion people will be living in countries or regions with absolute water scarcity, and two-thirds of the world population could be under water stress.’

Day Zero

Consider Cape Town, in South Africa. They’re calling it ‘Day Zero’ – the day when the taps run dry. In one of literally hundreds of reports about this crisis, Paul P. Murphy,3 CNN, observed that inhabitants of Cape Town are playing ‘a new and delicate game of water math each day.’

People use bath water to flush toilets. They limit showers to 90 seconds. And walking around with unwashed hair is considered a sign of social responsibility.

You don’t have to be an investment guru to recognize that, since the global demand for water is expected to explode in the coming years, it makes enormous sense to consider a long-term investment in an essential commodity whose supplies are limited.

Hydro Québec

Within Canada, according to Hydro Québec, this province alone has vast hydraulic resources4 in the form of some 500,000 lakes and 4,500 rivers. This wealth offers immense hydroelectric potential: a collective asset we have been able to harness over time.

Hydropower is the ideal means of meeting the major challenges facing North America in terms of reducing greenhouse gas emissions and ensuring a secure electricity supply.

Conclusion

Writing in MarketWatch, Ciara Linnane – How to invest in water5 (April 21, 21018) – suggested a crisp two point approach:

  1. Buying the shares of those companies that make everything from pipes, pumps, meters, filters and other equipment and infrastructure.
  2. Investing in the water utilities and environmental-services companies that clean, purify and distribute it.

To which I can only retort: ‘Right on!’

Please contact me personally for help and guidance if you wish to explore the exciting possibilities associated with investing in water energy.

Dave Ritcey, The Ritcey Team, Scotia Wealth Management


1 http://www.canadafaq.ca/how+much+worlds+fresh+water+in+canada/
2 https://www.forbes.com/sites/toddmillay/2016/11/28/investing-in-water/#76cfcca55948
3 https://www.cnn.com/2018/01/24/africa/cape-town-water-crisis-trnd/index.html
4 http://www.hydroquebec.com/about/our-energy.html
5 https://www.marketwatch.com/story/a-long-term-bet-on-an-essential-commodity-with-a-limited-supplyand-its-liquid-2018-03-22