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  • Writer's pictureJay Coulter, CFP®, CIMA®

PHO - Invesco Water Resources ETF

The Gravity of Water Scarcity: A Global Problem Beyond Climate Change

Water scarcity has become a critical issue in the 21st century, as freshwater sources are dwindling at an alarming rate. While climate change is often cited as a key factor contributing to this crisis, it is important to consider other elements that have played a significant role in the global water shortage.

The Issues:

  1. Population Growth and Urbanization

The global population has witnessed exponential growth in recent decades, resulting in an increased demand for freshwater resources. As more people move to urban centers, the need for water infrastructure has grown significantly. In many cases, existing water systems are unable to keep pace with the rapidly increasing demand, leading to shortages and water stress in various parts of the world.

  1. Agricultural Demand

Agriculture is the largest consumer of freshwater, accounting for approximately 70% of global water use. As the global population continues to grow, so does the demand for food. This has led to an expansion of agricultural activities and a greater need for water to irrigate crops. Furthermore, inefficient irrigation methods and water-intensive crops exacerbate the strain on our finite freshwater resources.

  1. Industrialization and Pollution

Industrial processes account for a significant portion of water consumption worldwide. The increased production of goods to meet the demands of a growing population has led to a higher need for water in various industries. Additionally, irresponsible waste disposal and pollution from industries have contaminated freshwater sources, rendering them unfit for human consumption or agricultural use. This further reduces the availability of clean water for a rapidly growing population.

  1. Inadequate Infrastructure and Water Management

In many parts of the world, inadequate infrastructure and water management practices have exacerbated water scarcity issues. Aging pipes, leakages, and inefficient water distribution systems lead to a tremendous amount of water loss. In some cases, water is not effectively allocated or regulated, resulting in unequal access to freshwater resources.

  1. Socio-political Factors

Water scarcity is often exacerbated by socio-political factors, such as regional conflicts and disputes over shared water resources. Tensions can arise between countries or communities that rely on the same water source, leading to disputes over access and allocation. Furthermore, corruption and mismanagement of resources can contribute to an unequal distribution of water, leaving some communities without access to this essential resource.

Water scarcity is a pressing global issue that extends far beyond the implications of climate change. A multitude of factors, including population growth, agricultural demand, industrialization, pollution, inadequate infrastructure, and socio-political issues, have all contributed to the growing water crisis. Addressing this problem requires a multifaceted approach, involving improvements in water management, infrastructure, and agricultural practices, as well as increased awareness and cooperation on a global scale. By recognizing and addressing these factors, we can work together to ensure that clean, accessible water is available to future generations.

There are companies positioned to solve this problem. PHO from Invesco is a ETF collection of such companies.

From their website:

The Invesco Water Resources ETF (Fund) is based on the NASDAQ OMX US Water Index (Index). The Fund generally will invest at least 90% of its total assets in common stocks and American depositary receipts (ADRs) and global depositary receipts (GDRs) of companies in the water industry that comprise the Underlying Index. The Underlying Index seeks to track the performance of US exchange-listed companies that create products designed to conserve and purify water for homes, businesses and industries. The Fund and the Index are rebalanced quarterly and reconstituted annually in April.

ETF Website: Link


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