Water is essential and non-substitutable. For decades water was often taken for granted. That is no longer the case as supply becomes less reliable. Government run water systems often price their water services below cost leading to underinvestment in infrastructure and unreliable, unsafe drinking water and inadequate sanitation. WAM believes that greater transparency around water's value and the cost of the infrastructure to transport, treat, and deliver water is necessary to deliver safe, adequate and reliable water and sanitation services.
Investing in water combines free enterprise with serving the common good and delivering measurable positive impact. Delivering clean water and treating waste water is essential to sustaining communities and public health while restoring rivers, coastal and marine ecosystems. Energy consumption can be reduced through more efficient water systems as moving and treating water consumes ~ 3% of world's electricity; . Providing reliable, regulated water and sanitation services in developing countries increases economic productivity, improves public health, promotes greater gender equality (liberating women and girls from the burden of hauling water) and improving eductaional outcomes. Water infrastructure investment in developed markets has an exponential impact on job creation and social stability.
The primary outcome of climate change is the growing intensity of drought and flood requiring further investment to insure water supply resiliency and clean water solutions . Water, managed properly, is the ultimate renewable resource. Allowing for sustainable supply with no depletion curve .
Water Stewardship
WAM's participation in Colorado River water conservation programs have resulted in billions of gallons of water retained in Lake Mead during the last 4 years helping to elevate water levels that have dropped to dangerously low levels threatening the entire system. Additional conserved water is expected from these programs to further elevate water levels for the next three years.
WAM is an active water policy participant, advocating for greater recognition of the need for greater transparency around water needs and risks in government, society, culture and most importantly in capital markets. Solving water problems requires substantial capital investment, operating competence, performance transparency and regulatory certainty.
Water investing has historically acted as an effective hedge against inflation with water pricing rising n excess of the rate of inflation. These increases are driven by the need to upgrade and maintain infrastructure (storage, transmission, treatment) and develop sources of new supply. There is increasing competition among users of water (industrial, agricultural, residential and environmental) that require more efficient and flexible mechanisms to deliver an allocate water.
Clean water is scarce, in a world of excess liquidity where most everything is in oversupply.
Lower Price Compared to Electricity, Gas, Cable, and Telecom: The comparably low price of water relative to value leaves ample room for price increases to cover full costs of operations, capital investment, and reliable supply.
Low Correlation and Volatility: Water demonstrates a low level of correlation with a broad universe of commodities and equity indices, and has also tended to increase in value more consistently over time.
Diversification: Water is a critical input to future growth: food and energy production, oil and gas development, manufacturing, mining, housing, and data storage among others, allowing investors in water to gain broad growth exposure to a variety of real assets and economic activity.
Water Asset Management believes that the water industry is entering an unprecedented period of transformation . Water companies and assets offer investors the ability to realize capital appreciation, sustainable long term income growth, positive impact, with relatively low levels of risk and volatility.
