Overhaul of water systems in developed countries: it’s getting urgent

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Water lost to leakage in water systems

It is difficult to imagine that access to water can become a major problem in developed countries. In France, there is a 23% loss due to leakage that occurs throughout the water transmission and distribution system; this figure is almost certainly underestimated as many local authorities do not publish their data. This 23% loss is equivalent to circa 1 billion cubic meters a year. In monetary terms it’s worth a staggering EUR 4.15 billion.

The need for investment in water infrastructure

Over 50% of the French water system is more than 40 years old. Currently, only 0.6% of it is repaired each year; at this pace, it would take 160 years to renew the whole system. Industry experts estimate that the current level of annual investment of some EUR 800 million should be at least doubled. Municipal authorities tend however to disregard the issue as local politicians consider it too costly and is not a vote winner.

Regulation of the wastage of water

This situation has prompted government authorities to force local water authorities to tackle the problem. In the aftermath of the Grenelle Environment Forum, a decree was passed in 2011.
The need to address water wastage is all the more important since France is slowly but surely becoming a water-stressed area, particularly in the south. In addition, policy-makers see such investment as contributing to creating a significant number of sustainable jobs.

A worldwide issue

The need for a complete overhaul of water systems stretches far beyond France to all developed countries. By way of illustration, it is expected that, in the US, USD 23 billion annually will be required to cope with water infrastructural problems.

Investing in funds that contribute to resolving water waste problems

BNP Paribas Asset Management proposes funds that invests in those companies that will work on projects to overhaul water infrastructure. In our view these companies should benefit from the expected growth in this sector of the economy.

Sources :

Alexandre Jeanblanc

Investment Specialist, SRI

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