Season 7, Post 11: Next time you shower…
When you took your shower or boiled your kettle last weekend, you were probably not aware that Saturday 22 March was World Water Day. This day was formally proposed in 1992 at a United Nations conference and was adopted the year after as an annual observance day focusing on the importance of water. As we have written previously, although the world water sector accounts for less than 1% of global GDP, the remaining 99% could not survive without it.
The statistics around freshwater speak for themselves. Over 2bn people still live without safely managed drinking water, while three in ten schools globally lack a basic water service. Next time you send a request to ChatGPT it might also be worth remembering that it takes 1500 gallons of water – yes, you read that figure correctly – to produce just one semiconductor chip.
Logically it behoves all stakeholders to consider how to manage their water consumption more effectively. A recent report compiled by the World Economic Forum in conjunction with McKinsey highlights several key strategies. These include defining better the water cycle in planning, budgeting and pricing decisions as well as incentivising investments in water that use structures designed for collective action. Policy regulations need to be reviewed and public-private collaborations should be encouraged.
We concur with all the above. In our own work, we have noted that change typically occurs only slowly in the water sector owing to risk aversion. To move the debate forward, it is perhaps best to think of water as a service, where technology can be an enabler. Rather than focusing on controlling demand (we all like our showers and hot drinks), AI and IOT technologies can help route water more efficiently, pre-emptively identify network faults and provide useful analytics that enable more efficient planning. If water risks could wipe over $5tr from global GDP by 2050 (see here), then it is time to get investing.
26 March 2025
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
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Alex Gunz, Fund Manager
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