Recent droughts in Northern Europe and Africa have created good investment opportunities in the water sector, according to Simon Gottelier, investment manager of listed equities at Impax Asset Management.

He believes significant climate change may already be upon us and that extreme weather events, such as the recent severe drought in the Eastern Sahel, are likely to become more frequent and dangerous.

All over the world, policy makers and investors are trying to find ways to mitigate the effects of such events. Over the past few months China has announced targets for investments of up to $300 million in water conservation, while the Environmental Protection Agency in the US announced an initiative to renew urban waterways, Gottelier said.

“These events are driving demand for companies and technologies working in the water infrastructure and treatment sectors. The World Bank estimates that $180 billion of water infrastructure investment is needed each year until 2030 to meet freshwater demand and this urgent need for vast amounts of capital investment is quickly gaining recognition,” he added.

Investment opportunities are found in three main areas, according to Gottelier: water infrastructure offers high growth, especially in the emerging markets due to mass urbanisation; water treatment; and water utilities.

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