I have one word for you, Benjamin: water…

Desalination looks like an attractive technology worth investing in.  Of course I’m not one for picking stocks, but this is similar to the famous line from The Graduate: “I have one word for you.  Plastics.”  I’m not saying I couldn’t be wrong, but having a good intuition about humankind’s necessity for resources allows you to focus in on a certain technology.  Let’s get the facts clear and on the table:

1. Population is growing in some of the hottest and driest areas of the world.  I doubt this will continue forever as population growth tends to tail off as nations grow more modern and advanced; however, as long as population is growing, demand for water will rise.

Population growth by country

2. Incomes are rising in these same regions due to economic growth.  This means standards of living are rising and consumers have more demand for reliable water sources.

GDP growth by country

3. Climate change is making regions even hotter and drier.  Climate is rising across the planet and global temperatures are up to record highs on average.  CO2 concentrations are rising as evidenced by the Mauna Loa Observatory’s readings.  This is common scientific knowledge that greenhouse gases trap IR radiation in the atmosphere and re-emit it within the atmosphere, leading to rising temperatures.

Climate change

For now, I will probably invest a small, disposable amount in water stocks.  As I approach my full-time job following graduation, I will think much more seriously about investing a larger stake in water stocks.  I don’t think it’s a “gamble” of sorts.  One of the sins of investing is using forecasting as a central argument for investing.  However, that is not the same thing is investing based on facts.  These three graphs are all you need to know to be wise about the future of water.


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