Calvert’s Explanation for Why It Launched Its Water Fund Should Be Required Reading for All Investors
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Posted: November 5, 2008
“Water is the ultimate natural resource. Some resources have substitutes. There are, however, no alternatives to water.”
So concluded Calvert Asset Management Co., the socially-conscious investment fund company, when it recently announced it was launching the Calvert Global Water Fund (Symbol CFWAX) to invest in “utility, infrastructure, and technology companies active in managing water resources.”
As the ultimate resource that has no substitutes, the fact that, as Calvert put it, water is in a “precarious global situation” should be foremost in the mind of every investor, for every company in every country on Earth requires freshwater. Thus the world’s growing water crisis is every investor’s worry.
“Demand for water is rising around the world with both population growth and development,” Calvert noted. “According to (the) Scientific American (article) ‘Facing the Freshwater Crisis,’ to provide access to water for these growing needs will require an investment of as much as $1 trillion per year through 2030 in water infrastructure and sanitation systems.”
Given the enormity of the current global credit crisis, it would seem unlikely that nations will be able to spend that much any time soon; however, the longer this is put off, the more likely it becomes that global economic development will stall and social unrest will grow, perhaps exploding into what the U.S. Pentagon has said it fears – an all-out war over water.
Calvert isn’t the only investment firm thinking about an impending global water crisis. Neil Berlant of the PFW Water Fund (Symbol PFWAX) recently said that, notwithstanding the credit crisis, prospects for water investing “are the best they have been since I began my focus in the mid-1980s.”
Berlant’s water price forecast should worry every investor. Because of the need to spend more on infrastructure, sanitation and so on, Berlant sees the price of water in the U.S. rising as much as 300% over the next few years – a hit to every company’s bottom line.
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