Boycotted strawberries: lack of water creates technology race – 06/15/2023 – Market

Spanish strawberries are a spring treat for northern Europeans. They are also a flash point in a wider dispute over access to dwindling water resources. German activists are calling for a boycott of “drought strawberries”. Illegal extraction of water for this crop has drained a once-thriving swamp in Andalusia.

Water scarcity will be a defining feature of the coming decades. This will create new opportunities and new risks for investors.

The demand for clean water is increasing along with population and prosperity. Climate change is reducing rainfall. While water stress across Europe as a whole has eased, Spain has been hit particularly hard: last April was the hottest and driest on record, prolonging a persistent drought.

By 2030, water demand will be 40% greater than supply, according to a study by McKinsey consultancy. Filling this gap will require investments in three key water technologies.

Water conservation is lower on the cost curve. It is particularly important in agriculture, which accounts for 70% of the water consumed globally. Some companies, like Israeli Netafim, focus on drip irrigation. Others are developing drought-tolerant crops. State subsidies may be needed to finance the adaptation of the poorest farmers.

Next are the technologies for treating and reusing water. Water scarcity poses an existential threat to businesses that are heavy users, such as mines. Unless they can create closed-loop water systems, they risk losing their licenses to operate. This creates opportunities for “water technology” entrepreneurs. Water technology’s first unicorn, Gradiant, developed new methods of purifying industrial wastewater.

Further up the water technology cost curve is desalination. This uses technologies similar to purification plants, but separates smaller molecules. Over the past 15 years, the cost of producing fresh water from seawater has dropped from US$1.50 (just over R$7) to US$0.50 (about R$2.40) per meter. cubic. It will fall further as renewables get cheaper. This will make desalination a real option for water-scarce coastal areas.

ACWA Power of Saudi Arabia built the world’s largest plant in Abu Dhabi. Broker Jefferies says several companies offer exposure to the sector, including Sweden’s Azelio AB and Japan’s Hitachi Zosen Corporation.

Big data and machine learning projects can help optimize all three types of technology. The American Xylem, for example, sells sensor technologies, intelligent measurement and data analysis for underground infrastructure.

In the past, adoption of hydro technology occurred at a glacial pace. The recent round of droughts may —finally– encourage the flow of investment.