The water market: bigger than oil by 2030

Can water keep the traders out for ever? Seems unlikely if there’s supply/demand imbalances to be taken care of, and money to be made from doing so.

CLSA Asia Pacific Markets, one of Asia’s biggest equity brokers,
estimates that total world water demand will hit 6.9 billion cubic m/year by
2030, equivalent to 119 million barrels of daily demand.

At those levels, water demand will have surged by around 53% from this
year, according to CLSA research. The total water market would by then be
significantly bigger than the world oil market — which the US’ Energy
Information Administration recently estimated will have reached 107 million
b/d of consumption by 2030, some 24% bigger than today.

Ed Slade, director of investment banking at CLSA, told a water seminar
organized by Singapore Exchange that the biggest opportunities in the water
market would come not from trading, but rather from the huge investments that
are likely to be made in building water pipelines, reservoirs and treatment
plants.

There will be gaps in some countries’ ability to meet their own water
demand, but speakers at the seminar generally gave a cold shoulder to the
ability of trade to help move water from plentiful places to countries that
might otherwise run dry.

“Water is not being traded. There are some attempts at trading water
rights,” said Sam Ong, chief financial office with Singapore-listed water
giant Hyflux. The company was, somewhat ironically, founded as a trading
company called Hydrochem in 1989.

Ong said problems with physical delivery of water, as well as complex
legal issues surrounding sovereign claims to water rights, had complicated
efforts to trade water — though he advocated for the creation of a market
trading in “water footprints,” along the broad lines of emissions trading
schemes that have been developed around the world to provide economic
incentives to reduce emissions.

A market in water footprints, which could provide similar cash incentives
to reduce water consumption, “should be part and parcel of what we do,” said
Ong.

Platts