DROUGHT: Nearly 60% of the US is now seeing drought conditions, the most in a decade, and double the average. A third of the country is seeing severe, exceptional, or extreme (see chart) drought. Similarly, 64% of the UK and Europe is under either a drought warning or alert. China is seeing its worst heatwave and drought in six decades. Investment impacts here are widespread, from near term rising food prices to a longer-term focus on water usage and pricing. Less than a estimated 0.5% of the world’s water is available fresh water, leading some to call it ‘blue gold’.
WATER: Global warming, population growth, and urbanization are all putting pressure on water resource availability. ESG adoption is adding an additional investment focus. Water is not a tradable asset. Though the one listed water futures attempt has more than doubled in price since starting two years ago. Water-equities is a narrow but secular growing investment theme. These stocks range from water and wastewater utilities and infrastructure (like AWK, WTRG), to equipment and materials (XYL, FERG.L), and with an increasing water-tech focus (DHR, WTS).
AGRICULTURE: Water availability and drought is closely linked to agriculture commodities. An estimated 70% of US water is used for irrigation, with only around 15% for public consumption. Droughts are cutting crop yields and boosting prices, from soybeans to wheat, worsening global food security concerns. Cotton has been the latest commodity impacted. Prices are up 20% in a month as the US drought cuts supply by 20% in its 3rd biggest supplier. Water scarcity also puts a focus on ag efficiency and productivity solutions, from irrigation to seeds. See @Food-Tech.
All data, figures & charts are valid as of 29/08/2022