Is water the most overlooked natural resource?

Among the basic requirements for human life, water is second only to the air we breathe.

Being able to turn on a tap and have as much safe, clean water as you like is only possible thanks to an engineering endeavour that dates back to the earliest days of human civilisation. Yet this triumph masks huge inequality in access to safe water, and emerging threats to this vital resource.

In this blog I want to debunk three common misconceptions about water and show how continued innovation is needed as we enter the next chapter of humankind’s complicated relationship with the planet.

Misconception 1: Water covers most of the planet. How can it be scarce?

Water covers approximately 70% of planet Earth, but only around 3% of that is fresh water, meaning it’s not saline and is suitable for processing into drinking water. Of that 3%, two-thirds is located in frozen glaciers or otherwise inaccessible.¹

The other point that’s important here is that a rise in the global population puts additional pressure on the supply of clean water. The UN forecasts the global population to rise from 7.9 billion today to 9.7 billion by 2050.² By the end of this decade, demand for fresh water will exceed supply by 40% according to the UN,³ with demand for water in urban areas expected to grow by 80% by mid-century.⁴

The increasingly stretched supply/demand balance is further compounded by climate change causing negative changes to the entire water cycle, and by the perennial problem of leaks: annually, 32 billion cubic metres of clean, processed water are lost through leaks.⁵

Misconception 2: It’s hard for investors to get excited about the clean water theme – it’s just utilities.

Although utilities are an important part of the water industry, they are far from the only players in this sector. In some cases, utilities may not provide particularly pure exposure to this theme as many large utilities are diversified, encompassing areas such as electricity and gas.

Other companies that investors might want to consider in an allocation to the clean water theme include water technology and digital solutions providers, as well as water engineering companies.

These can provide innovative solutions that can allow efficiency gains in water infrastructure, better distribution of water and better resource management along the entire value chain, enabling utilities to manage water more efficiently.

Misconception 3: Clean water is all about pipes and treatment plants. Hardly high tech.

Smart meters offer a tangible example of how digital technology can help utilities to detect leaks, as well as helping incentivise consumers to think about how much water they need to use. Research estimates that a coordinated roll-out of smart metering across the UK would deliver £4.4 billion in benefits to society against costs of £2.5 billion, representing a net benefit of £1.9 billion.⁶

Beyond smart meters, the water sector is increasingly making use of advanced technology to find new solutions to the familiar problems of leakage across the network and dealing with floods and storm surges.

Digital monitoring equipment can be installed in wastewater networks that feeds data into artificial intelligence systems. These systems then use machine learning and predictive analytics to compare the current situation with historical data and predict potential issues, enabling fixes to be implemented before problems arise.

More advanced monitoring of water and the various contaminants found within it will also be critical to tackle the growing threat of antimicrobial resistance.

Ultrapure water is another area where high technology is potentially transformative. This extremely pure form of water – which can be a thousand times purer than typical drinking water – has applications across pharmaceuticals, the energy industry and semiconductor manufacturing.

Currently, production of ultrapure water is carried out in labs, entailing long lead times. However, technology is driving progress. Photonics-enabled solutions, which use light through monitors and sensors to analyse water, could potentially accelerate production times.

1. Source: Wildlife, 2023

2. Source: UN, 2019

3. Source: https://www.weforum.org/agenda/2023/03/global-freshwater-demand-will-exceed-supply-40-by-2030-experts-warn/ 

4. Source: https://unesdoc.unesco.org/ark:/48223/pf0000384659 

5. Source: https://business.bofa.com/content/dam/flagship/bank-of-america-institute/esg/addressing-scarcity-in-a-transforming-world-april-2022.pdf 

6. Source: Cost benefit analysis, assessing the social and environmental case for a smart water meter rollout (arqiva.com)