Climate change and population growth will exacerbate water scarcity in the coming decades, considers Morgan Stanley. AND, according to the investment bank, you can earn on it.
Focus on cost optimization
Morgan Stanley calculated: over the past hundred years, water consumption has increased six times, and 2 million people do not have access to safe drinking water. According to forecasts, by 2050 demand will increase by 30%.
Another bank added, that the lack of water, food and global climate change are three key sustainability challenges. And they're all connected, because agriculture accounts for approximately 70% world water consumption, and climate change leads to floods and droughts.
“Water shortages could lead to increased regulation of industries like agriculture and industry., which means, and increase business costs. These industries need to become more efficient in terms of water consumption.”, — said in Morgan Stanley.
And in such a situation, companies can win, who develop technologies to reduce water consumption.
Promising technologies
Morgan Stanley has identified five areas for investors, and a dozen other separate companies.
smart watering. During irrigation, up to half of the volume of water is wasted. This problem is solved by smart irrigation systems.. They change schedule and watering time, taking into account the weather, temperature, soil conditions, humidity and more. Conventional irrigation systems operate according to a predetermined schedule and do not take these features into account..
Companies: AGCO и Valmont.
Plant growing. According to Morgan Stanley, seed innovation has led to a marked increase in yields. So, some crops have become more resilient to floods and droughts.
Companies: Corteva и Bayer.
Meters and data management. Smart meters help companies reduce their water consumption. And with the help of special software, utilities can better predict demand and change tariffs.
Companies: Badger Meter, Itron, Roper и Xylem.
Vertical trusses. These are high-tech greenhouses. Their key feature is the multi-tiered placement of plantings.. The yield of such greenhouses is five times higher compared to traditional ones., and water consumption is 80-95% less.
Desalination. Morgan Stanley noticed: Total 3% water on earth is drinkable. And here desalination can help - removing salts from water.. The technology also has a downside., namely the high cost.
Companies: Veolia, Suez and Acciona. Note: the shares of these three companies are not traded on the St. Petersburg Stock Exchange.
The bank also singled out four companies from the industry, that do not fit into any of the categories: drinking water supplier American Water Works, utility company California Water Service, water treatment technology developer Ecolab and the diversified Danaher Corporation.
The Morgan Stanley listing is just the first step in choosing a company. Before making a purchase decision, you should study the business of a particular issuer in more detail, like his financial statement.
Prices of shares available on the SPb-Exchange on 14 February
| AGCO (AGCO) | 127 $ |
| Valmont (VMI) | 214 $ |
| Corteva (CTVA) | 52 $ |
| Bayer (BAYN) | 52 € |
| Badger Meter (BMI) | 102 $ |
| Itron (ITRI) | 58 $ |
| Roper (ROP) | 438 $ |
| Xylem (XYL) | 90 $ |
| American Water Works (AWK) | 148 $ |
| California Water Service (CWT) | 58 $ |
| Ecolab (ECL) | 182 $ |
| Danaher (DHR) | 270 $ |
127 $
