| 26 October, 2020

Megatrends of the 21st Century: global water market

Héctor Ferreiro Portfolio Manager

The term megatrend is becoming commonplace within society and even more so within the investment world. The speed with which technology has changed our lives over the last few years has been extraordinary, we can also assume that this will not stop here and will continue in the future.

A megatrend can be defined as a set of social, economic, and circumstantial aspects designed to transform, irreversibly, the patterns of behavior and consumption that today govern the lives of billions of people.

At BBVA in Switzerland we want our clients to be present in this type of investment ideas and thus be able to obtain a good return for them.

A megatrend that we believe can be key in the 21st century is water. The objective of guaranteeing the availability of water, its sustainable management, and sanitation for the whole world is within the 17 sustainable development objectives set at the United Nations Conference on Sustainable Development.

sostenibility goals english

Looking at the figures, 75% of planet Earth is occupied by water, representing 1,386 million cubic kilometers. Of this amount, 96.5% is saltwater from the oceans and inland seas. The remaining 2.5% is freshwater, 2% is in a solid-state in glaciers and barely 1% is used for human activities such as agriculture, industry, consumption, or sanitation.

According to the experts, there is a risk of a crisis in supply due to factors such as the exhaustion of freshwater reserves that are attributed to pollution, the disappearance of the glaciers that are the main freshwater reserves on the planet, and obviously the spectacular increase in the population, which currently stands at 7.2 billion people and is projected to reach 9 billion by the middle of the century.

It is not possible to invest in water as a raw material as it does not exist, but there are investment funds that invest in companies that are dedicated to various aspects of water: supply and infrastructure, treatment or management of water. A curious fact is how Michael J. Burry, the famous investor who bet that mortgage securities would collapse in the United States during the 2008 crisis, now invests in water.