BLUE GOLD: Here The Are Lucrative Investment Opportunities In Water Today

Drop of water in a glass

The discussion surrounding water investing is growing as the global population swells and water becomes an increasingly scarcer commodity.

Citi recently held a Water Investment Conference with several panel discussions featuring industry executives and portfolio managers investing in the water space. They released a report with the key takeaways from the panels.

The panelists identified key areas within the water equipment industry that look poised to benefit most from global water trends. 

The water investing movement is only in its very early stages

Marc Robert, who runs an investment portfolio for Water Asset Management, characterized the industry as "in its infancy."

This owes to "massive underinvestment in basic infrastructure over the past few decades," and therefore presents a sizeable opportunity for investors.

Robert estimated that $500 billion needs to be invested over the next 30 years to keep basic water infrastructure viable, versus EPA estimates of anywhere from $300 billion to $1 trillion.

Source: Citi Investment Research & Analysis

Here are likely the biggest opportunities for water investors

The hydraulic fracturing industry is providing huge demand for water and water services.

Ballast water is only a $1.35 billion market right now but panelists think it should be more like a $30-50 billion market.

Services will need to alleviate water stress (in areas where population growth is booming while water supplies dwindle).

Europe-based water companies represent good value because their businesses are resilient to the macro outlook.

Companies providing analytics and meters will benefit from a growing water industry as a whole.

Source: Citi Investment Research & Analysis

The whole fracking industry is as much a play on water as it is on oil or gas

Every oil well developed by hydraulic fracturing requires 3-5 million gallons of water as part of the process.

20 percent of this water can be re-used for more fracking, but 80 percent of the water becomes 3-10 times saltier than seawater.

Desalination methods are still costly but the fracking industry will provide plenty of demand for development of these technologies in the future.

Source: Citi Investment Research & Analysis

See the rest of the story at Business Insider

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