Given the secular nature of water scarcity challenges, RobecoSAM expects the demand for innovative solutions that enable the more efficient use of available water resources or enhance the quality of drinking water to continue to grow. As a result, RobecoSAM forecasts the world water market to grow by 1-2 percentage points above GDP growth, reaching USD 1 trillion in 2025.
Daniel Wild, Head of Sustainability Investing Research & Development, RobecoSAM: “Despite global economic difficulties, we are seeing a rebound in the water market. This is being driven by two key developments. Firstly, water scarcity has reached a point where the damage cost of not solving the issues has exceeded the cost necessary to solve them. Secondly, there is currently a lot of liquidity in the market and investors are looking for opportunities with consistent returns and controlled risks – characteristics that investments in the water sector, and specifically in water infrastructure, hold true. ”
Junwei Cai-Hafner, Equity Analyst, RobecoSAM: “New environmental standards, increasing regulations on water quality, especially on industrial wastewater, as well as the upward trend of tariffs to enable cost recovery, all have a significant impact on the growth of individual segments of the water market and, consequently, on the attractiveness of companies doing business in these segments. We find that companies focusing on advanced wastewater treatment, improving water quality, and providing water reuse are interesting long term investment opportunities.“
Based on proprietary calculations using historical data, RobecoSAM identifies four attractive investment clusters according to their respective risk characteristics in terms of equity market volatility and beta:
|Top 5 Investment Sub-Clusters||Expected annual Growth CAGR 2014 – 2018|
|1||Reverse osmosis / Nano filtration||15.1%|
|2||Microfiltration / Ultra filtration||13.6%|
|4||Industrial solid waste management||10.5%|