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Repairing outdated water supply and management systems

BNP Paribas Asset Management

On 25 September 2015, at the UN General Assembly, 193 world leaders pledged to guarantee “universal and equitable access to safe and affordable drinking water for all” by 2030.­

But the World Health Organisation’s latest findings, from July 2017, show that this will be a tough target to meet, given the current reality that “844 million still do not get a basic and reliable supply of drinking water”.

The issue of water stress until recently seemed to involve mostly poor or developing countries (see Exhibit 1). But in an echo of fears raised by the extreme drought conditions from 2010 to 2015 in California, French water use restrictions in the summer of 2017 showed that developed countries have not been spared. Nicolas Hulot, the French environment minister, has said as much in his recent speeches.

Exhibit 1: Worldwide water stress


Source: Eau Poitou Charente, as of September 2017

Leaky water infrastructure – acute in large cities

The problem is especially acute in large cities. For example, Rome, which was once known as the ‘Queen of the Waters’, this summer suffered one of its worst ever water supply crises. The exceptional drought that hit the entire Mediterranean rim was exacerbated by the poor quality of the water infrastructure that underpins supply and management networks. According to the consumer association Codacons, there was a leakage rate of about 45%; in comparison, Paris’s leakage rate is only 10.4%.

Technological solutions exist to detect and patch leaks. For example, sensors placed in pipes at various points help to remotely determine the location and nature of the leaks.

Patching the water infrastructure – a costly affair

According to World Bank estimates, the renovation of existing water infrastructure worldwide would cost USD 114 billion a year, not counting normal operating and maintenance costs. As water becomes rare and expensive, this figure is likely to rise sharply in the next 15 to 20 years. Water sector companies will be well placed to benefit from these exceptional investment flows.

The specialists of BNP Paribas Asset Management’s environmental funds are keeping a close eye on trends in the sector so that they can invest in innovative companies offering solutions in areas including water infrastructure.

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