You can pay 20 times more for water than petrol in some capitals these days: in Doha, you'll part with a handful of euro cents for a litre of unleaded and a fistful of dollars for the equivalent Perrier. And, as demand increases and supplies dwindle, we soon may be paying similar tabs for the stuff that comes out of taps, while the water industry, currently worth €300bn a year, will double in size over the next decade.
Remote though it might seem from a western European perspective, water has already run dry for billions of people. The UN estimates that around 1.1 billion have poor access to drinking water, while 2.6 billion have inadequate water for sanitation. Governments in the Persian Gulf are turning to desalination - which purifies seawater either through evaporation or filtering - not as a supplement to aquifer water, but as the main source.
Philippe Rohner, senior investment manager for water and clean energy funds at Pictet & Cie, a Swiss private bank that pioneered the first and currently largest pure- play water mutual fund, notes that when he opened the water fund eight years ago, it was due to the prompting of concerned, ethically minded private clients. "But it was very difficult to get people to see it [water] as an investible theme - yet since then awareness has increased enormously."
Not only is water the ultimate sustainability theme, but like clean tech and alternative energy, it's one of the great emerging markets of the 21st-century. Pictet's investment manager for theme funds, Arnaud Bisschop, describes desalination as a "boiling market." He says. "For 40 years we've had talk, but now it's really happening. Huge contracts are being won for desalination plants, while there are a host of opportunities for smaller, specialist companies offering specific solutions within this emerging universe. There's a spectrum of opportunities."
This spectrum is truly global. And while there is a fault line dividing oil-rich Gulf states buying in desalination solutions from poorer, heavily populated emerging states for whom such expensive solutions are nigh impossible, governments everywhere are desperate for water management competence, new irrigation technologies and various aquaculture techniques (fish farming) to feed their booming populations.
In this broad sense the provision of potable water and the purification of waste water - historically the mainstay of a utility business with low profit margins - is today a visible crisis for food production as well. Fully 70% of the world's water consumption is for agriculture, 20% is by industry and just 10% is domestic.
As if population growth wasn't enough of a concern, climate change is heaping additional problems into the water equation by plunging some parts of the world into drought while others suffer from flooding and storms.
Key rivers and lakes are drying up or becoming seasonal, swamped by rocketing human populations and over-extraction. Lake Chad, which used to be a landmark for astronauts circling the earth, has shrunk 96% in four decades, while water tables virtually everywhere are falling, precipitously so in places such as the North China Plain where they aren't being replenished.
Nor is this just an emerging market problem. Never mind the watery catastrophe wrought by ever more destructive hurricanes, the US has other issues. US water consumption has tripled in the past 30 years despite its population rising just 50%; and its enormous, seemingly inexhaustible Ogallala aquifer, stretching from Texas to South Dakota, is being drained by agricultural demands that grow exponentially as western US states suffer from higher temperatures and less certain rainfall.
In May, drought-hit Barcelona, Spain received its first supertanker of freshwater, shipped across the Mediterranean from Marseilles, France, while in the UK, Germany and parts of central Europe, citizens have been buffeted alternately by decimating floods and drought over the past two years.
Such widespread problems explain why "smart metering, grid deployment, resource and infrastructure management" are a second tier spectrum of commercial opportunities after desalination, filtration and purification according to Rohner.
A third tier rests on infrastructure upgrading in Europe and the US, where a vast renewal programme for pipes and sewage dating back to the Victorian era will occupy municipal authorities for years to come.
Although the investor perspective is broadly attractive, not all parts of the water business are equally profitable. Less attractive is the gritty, infrastructure end of the water chute, where the cheap manufacture of hardware such as pumps, valves and pipes is no more enticing than trying to compete with Guangdong on the price of a T-shirt.
Confirming the approach of investors like Pictet, a recent report by investment bank Goldman Sachs included a 'water technology valuation continuum' that placed desalination at the very top, while nearby the other hot sectors consist of filtration technologies, new types of waste water treatment and sophisticated new types of testing equipment.
Gaining exposure to exciting, pure-play water companies is not easy because the big desalination players are companies such as General Electric, for whom the water business remains a relatively small part of overall income. Pictet recently launched a new fund to allow institutions access to private equity situations, since "80% of the [water] industry is not listed," according to Rohner.
European companies lead the high-tech end of the water business, and desalination in particular. Ranked by 2007 revenues, four of the five top global companies in water are European. The largest is France's Veolia Environnement with over $15bn in water revenues, just over a third of sales. Ranked second is Frances' Suez, third is Spain's Grupo Ferrovial, and fifth is the UK's Severn Trent.
Other notable European companies are Germany's RWE and Siemens, ranked sixth and 11th respectively; Spain's Acciona; Austria's BWT and Christ Water Technology; and Sweden's Cardo.
Globally, there are a dozen familiar US corporations, such as Rockwell Automation and Honeywell, whose water technology businesses represent less than 1% of revenues yet are still worth north of $100m a year.
Looking ahead, the multiple authors of the Goldman report predict that there will be extensive, ongoing consolidation of the sector plus the emergence of massive, pure-play Asian players currently still in their infancy, such as China's Tianjin Capital, Beijing Capital and Shanghai Raw Water.
The other obstacle for investors is that water companies are already highly priced - Goldman's water sector index having outperformed the S&P 500 by over 20% since 2000. Other than buying into a growing number of water-themed Exchange Traded Funds, Goldman notes the availability of mutual funds offered by PowerShares, Claymore, First Trust and Summit, although the Pictet Global Water Fund is the largest, with $5bn (€3.4bn) in managed assets.
But can desalination really be a panacea? This partly depends on what technology it uses, and how the desalination plant is powered. Desalination takes seawater or brackish, semi-saline water, purifying it via two main methods: multi-stage flash (MSF) which turns the water into steam, which is then condensed; and reverse osmosis (RO), which forces the water through a very fine membrane, forcing it to relinquish its salt.
In one obvious sense, using either method is preferable to a future of potential water shortages, but is large-scale desalination really the solution? The energy consumed is so considerable that the resulting water is both expensive and highly carbon intensive.
According to a recent report by the WWF, RO is the best technology, emitting 1.78kg of CO2 per m3 of water compared to 23.41kg CO2 per m3 for MSF. But the comparatively 'green' reverse osmosis process is still only as green as the energy powering it. Sydney's proposed, 500,000m3/day RO plant would be coal-fired, producing nearly a million tonnes of CO2 per year, the equivalent of putting another 220,000 cars on the road.
Environmentalists want desalination to be a last resort once conservation measures have been rigorously implemented to cut consumption, while end consumers and politicians are wary of rapid price hikes implicit in high-tech solutions.
Rob Shore, a freshwater programme manager for the World Wildlife Fund (WWF) in Latin America, says: "The pinchpoints in the world are where there is a combination of three factors: high population, low natural water availability and poor water management." The greatest of those is often poor management, and while the WWF recognises that desalination is part of a range of measures to defeat water shortages, it notes that in many cases it can actually confuse the need for good management, becoming a technical bandage for an open sore that could be easily healed by other means.
A change in public habits wouldn't hurt either. According to the US Environmental Protection Agency (EPA), an average US household uses 100-150 gallons of water per day, Europeans use 74, Africans use 17 and the Chinese 23. The Swiss are the most water-conscious Europeans, cutting average consumption to 35 gallons daily.
The is already evidence of changes in consumer behaviour in the wealthy West, where there is is a backlash against the extravagance of expensively packaged water. It has become fashionable to insist on tap water in restaurants, with customers citing the environmental crimes of bottled water, which mainly revolve around unsustainable transportation and packaging practices resulting in a massive carbon footprint. Significantly, sales of Nestle's nine bottled water brands (of which one is Perrier) fell 9% in Europe and the US in the first quarter of the year.
But Nestle's travails are a mere drop in an ocean of problems mounting up around the one commodity whose commercial potential may resemble oil. Indeed, one massive stumbling block facing desalination advocates is actually the rocketing cost of fuel.
Global Water Intelligence estimates that the market is growing at 20% a year in the core markets of the US, China, India and Australia, but the central curb on growth will be the price of energy, according to the International Desalination Association, which notes that the rising price of fuel has made water production much more expensive.
Not surprisingly, then, the future lies with innovative corporations with the size and scale necessary to develop new technologies. Siemens' water division is currently working on technology that could halve energy consumption to 1.5kWh per m3.
Elsewhere, experimentation is proceeding apace; not all of it successful. The EU-backed project Sodesa, installed eight years ago on Gran Canaria, aimed to harness solar power to distill seawater into freshwater, but it was shelved due to cost.
Meanwhile, the WaterPyramid, designed by Martijn Nitzsche, founder of Dutch holding company Aqua-Aero WaterSystems, uses a tent structure to heat and distil seawater, but, once again, it is impeded by cost and longevity issues. Other start-ups examining the problem are Danish company AquaDania and dotcom millionaire Morten Lund.
In the larger scheme of things, no one is holding their breath. The barriers to entry are enormous and the direction the industry is now taking is towards big solutions for big populations, with steep energy costs underwritten by desperate governments at the taxpayer's expense.
What the smaller companies, inventors and entrepreneurs may offer, however, is portable technology addressing small scale, local needs. AquaDania claims to have made a breakthrough with its patented WaterStillar unit, which uses a solar collector measuring two square metres, enabling it to distil between 40 and 60 litres a day, five times more than conventional stills and enough for the daily requirements of a family.
Chief executive Tom Juul Andersen says: "We're not looking to challenge industrial-scale methods with this system. The point is that it's local, low tech and affordable. It eliminates the need to transport water."
This and other forms of rainwater harvesting represent a very large part of the solution for rural populations, who outnumber their urban counterparts by four to one according to a recent report by UNICEF.
In light of such needs, the traditional assumption of most people that water is both abundant and virtually free, is rapidly dying out. That means that even the utility end of the water business is set to become much, much more exciting to investors as bills rise inexorably and regulators roll over in the face of much-needed upgrades to existing infrastructure.
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