Summary

Lenka Martinek notes that there have been 60 years of declining fresh water. The major factor on the supply side is the frequency of droughts across US and Europe. There is increased competition for a very under-priced resource which means it can be an exciting place to be from an investment perspective. Companies in the Consumer Staples and Discretionary sectors are most exposed to groundwater depletion such as those in food production, beverages, textiles and luxury goods. Also, Metals and Mining and Oil and Gas are industries which are very water intensive. Yet few companies are reporting water usage and where they are it is often not accurate. Most should be taking a leaf out of Intel’s book which reports river by river on how many litres of water they are using from each part. Also Nestle has created a water stress level index to assess activity at their factories. Investors should look for companies involved in water treatment technologies focusing on the three Rs - Reduce, Reuse and Recycle. As examples Kurita, Echo Lab, Veolia, and Badger Meter.

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