Tags: Ahmad | water | security | good

World Bank's Ahmad: 3 Main Global Water Issues: 'Access, Security, Resilience'

By    |   Friday, 10 April 2015 09:00 AM

For those of us who didn't think water is a big issue, the water usage restrictions just imposed in California — the first in that state's history — have bluntly let us know otherwise.

And water shortages aren't confined to California, which is suffering a horrendous drought. Throughout the world countries are at risk.

Junaid Kamal Ahmad, head of the World Bank's water global practice, offers a cogent analysis of the problem.

"Today, especially in the context of climate change, I see a three-pronged challenge: ensuring access to water and sanitation services, achieving water security and building resilience," he told Institutional Investor.

"Demand is growing. With population growth, plus energy, plus industry, plus agriculture, the perfect storm is coming." Floods, droughts and global health crises, such as the Ebola outbreak, can represent major threats to water security.

More than 700 million people can't get safe drinking water and 2.5 billion don't have access to modern sanitation, such as toilets, Ahmad explains.

"The underlying challenge — especially in developing countries where the market is growing — is the debate as to whether water is an economic good or a social or political good," he notes.

"The assumption is that if it's an economic good, poor people won't have access. As a result, the tendency is for public policy to consider water as a social good and for governments to underprice it," Ahmad adds.

"This approach inevitably places water squarely within the political domain, and those who control politics — usually the middle class and those who have a disproportionate influence on policies — get the water."

New York Times columnist Eduardo Porter offers an interesting take on California's crisis. The state's "main challenge is not technological, but economic and political," he writes. "The state still has plenty of water. It just doesn’t have enough for every possible use, no matter how inefficient and wasteful."

Water rules are distorted, Porter says. "A byzantine system of historic rights established to allocate water across the American Southwest actually encourages overuse," he explains.

"And the decision by California Gov. Jerry Brown to exempt farmers from California’s first restrictions ever on water use, even though they consume some 80 percent of the surface water used in the state, underscores the scale of the political challenge."

If you're looking to take advantage of water shortages as an investor, last year Kiplinger suggested considering five stocks: Calgon Carbon (CCC), Mueller Water Products (MWA), Rexnord (RXN), Xylem (XYL) and Pentair (PNR).

"Water is such a huge part of everything that we eat and manufacture that what drives the stocks represents almost every segment of the economy," Matthew Sheldon, co-manager of the Calvert Global Water fund, told Kiplinger.

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For those of us who didn't think water is a big issue, the water usage restrictions just imposed in California — the first in that state's history — have bluntly let us know otherwise.
Ahmad, water, security, good
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2015-00-10
Friday, 10 April 2015 09:00 AM
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