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Today I would like to give you a brief insight into what I consider to be an enormously exciting industry of the future.
Water is becoming the strategic resource of our time. While capital flows continue to flow into energy, AI and defense, an industry is growing in the background that is likely to determine security of supply, quality of life and geopolitical stability in the future: the efficient extraction, treatment and distribution of clean water. The combination of seawater desalination and decentralized water treatment in particular is developing into a future sector with considerable structural potential.
According to the World Bank, more than two billion people already live in regions with chronic water shortages. Climate change is further exacerbating this situation: periods of drought, declining groundwater reserves and increasing water consumption due to urbanization and industrial production are pushing existing systems to their limits. Traditional water management is increasingly coming up against physical and ecological limitations. As a result, desalination and treatment are being transformed from an emergency solution into a pillar of modern infrastructure - a market which, according to industry analysts, could reach a volume of up to 250 billion US dollars by 2035. These estimates mark the upper end of the forecast range; realistically speaking, growth is likely to be in the region of 6 to 8 percent annually, driven by public investment programs and private infrastructure partnerships.
Technological progress is giving this development a boost. Reverse osmosis, the core process of seawater desalination, is becoming more efficient, more durable and more modular. A key role is played here by$ERII (-0,47 %) I (Energy Recovery Inc.): With its PX Pressure Exchanger, the Californian company has established a technology that reduces the energy consumption of desalination plants by up to 60 percent. This brings the economic viability of such projects within reach - even in regions that were previously considered too cost-intensive. ERII acts not as an operator, but as an enabler: a technology supplier that brings efficiency and scalability to a traditionally sluggish industry.
$CWCO (+0 %) (Consolidated Water Co.) stands for the operational implementation of this change. The company plans, builds and operates desalination plants in the Caribbean, Mexico and increasingly also in the USA. The latest project in Hawaiʻi, with a contract value of over 200 million US dollars, shows that desalination is no longer just a niche technology, but is becoming part of modern public services - even in industrialized countries. While $ERII (-0,47 %) stands for energy efficiency and technological differentiation, desalination embodies $CWCO (+0 %) embodies the infrastructural core: physical access to water.
A broad industrial ecosystem is emerging along the value chain. $XYL (-0,71 %) (Xylem Inc.) develops digital control and sensor systems for water and wastewater networks, $VIE (-2,98 %) (Veolia Environnement) is a global market leader in the treatment and reuse of water, and $PNR (-0,51 %) (Pentair plc) serves the filtration and pump technology sector. $AWK (+1,12 %) (American Water Works), the largest listed utility in the USA, stands for stability and predictable cash flows. In addition, there are specialized providers such as Forward Water Technologies or Desalitech (DuPont Water Solutions), which develop decentralized, modular treatment plants - an area that is increasingly seen as a driver of innovation for the entire industry.
This decentralization in particular is changing the logic of the market. While mega-projects such as those in Saudi Arabia or Israel dominate the media attention, the demand for compact, scalable systems for hotels, farms, industrial parks or coastal communities is growing. Such modular systems can be operated locally, require fewer permits and can be flexibly adapted - characteristics that are becoming increasingly important in times of geopolitical uncertainty and disrupted supply chains. This is reminiscent of the transformation in the energy industry: once centrally organized, now increasingly distributed.
The comparison with the solar industry is therefore understandable - albeit with limitations. Water infrastructure remains a local, permit-intensive and capital-intensive business. Scaling is not exponential, but gradual. Nevertheless, the direction is right: just as photovoltaics has decentralized access to energy, water technology will increasingly organize access to drinking and process water locally. Increased efficiency, automation and digitalization do not replace speed here, but ensure sustainability and profitability over long periods of time.
This will create a new form of infrastructure that combines economic stability with ecological necessity. Water is not a substitutable good; it is the basis of every industrial activity. Demand is inelastic, supply is increasingly driven by technology. For investors, this results in a rare combination: social relevance, political backing and economic predictability. Water treatment addresses key sustainability goals of the United Nations and is one of the few areas in which ESG capital flows are congruent with real economic benefits.
Of course, the industry remains challenging. Desalination is energy-intensive, the recycling of concentrated brine is ecologically sensitive and approval procedures often take years. Many projects depend on state planning and financing, which harbors political risks. Nevertheless, the structural logic prevails: without investment in water infrastructure, neither agriculture nor industry will be sustainable in the long term.
The sector offers several opportunities for investors: Technology providers such as $ERII (-0,47 %) and $PNR (-0,51 %) benefit from margin levers through innovation, operators such as$CWCO (+0 %) or $VIE (-2,98 %) offer stable, inflation-protected cash flows, and digital and infrastructure service providers such as $XYL (-0,71 %) connect both worlds via data and control technology. This interplay forms an industry that is not defined by cycles, but by necessity.
Water treatment will therefore become one of the key topics of the coming decade - not as a quickly scalable growth story, but as a long-term answer to the most pressing resource issues of our time. Water is the foundation of every economy, and desalination is its silent but indispensable engine. In my opinion, anyone investing in this sector today is not positioning themselves in the trend, but in the substance.
