Water Infrastructure & Resiliency: Industry Report & Investment Case


  • By Ron Pernick, Clean Edge; Efram Slen, Nasdaq

Water Industry Overview

Whether it’s used to manufacture pharmaceuticals or to brew your morning cup of coffee, water is a vital resource. While 332,500,000 cubic miles of water exist on Earth, a mere 4% is freshwater – and only about 0.9% of that exists as surface water.1 With global population rising to an estimated 10 billion by 20552, the global supply of freshwater will need to be stretched and new sources of potable water will need to be developed. A resilient future depends on innovation in the ways we access and utilize this precious resource.

The global water market is attractive for two main reasons: reliability and opportunity. Due to its essential nature, the demand for water remains consistent despite fluctuations in the economy. But the availability of freshwater is increasingly in question, due to the triple threat of population growth, climate change (with increasing droughts and other impacts from changes in global weather patterns), and water resource contamination from industrial processes. These significant drivers and resulting impacts ensure the need for the continued development of innovative technologies to capture, treat, and distribute water to thirsty consumers – and to all the industries through which water flows.

The ISE Clean Edge Water Index (HHO) tracks the performance of U.S.-listed companies that derive a substantial portion of their revenue from the potable water and wastewater industry. Industry exposure includes:

  • Utilities and water distribution
  • Infrastructure (pumps, pipes, and valves)
  • Water solutions (purification and filtration)
  • Ancillary services such as consulting, construction, and metering

The Essential Nature of Water

Total per capita water use in the U.S. is around 1,100 gallons per day, though only about 80 to 100 gallons of that is used at home.3 Withdrawals for agriculture and thermoelectric power production make up a larger part of overall consumption. Many industries also rely on large volumes of water, including materials, textiles, automotive, and construction.4 However, we’re all learning how to conserve water. Total water use has been declining in the U.S. since it peaked in 1980, and economic productivity per gallon of water has continued to rise. Economic productivity is defined as the U.S. GDP divided by the total annual withdrawals from surface water, groundwater, or sea water over a given year. This rise in productivity indicates we are producing more value from less water than ever before.

U.S. Water Use vs. Population, 1980 and 2015

Economic Productivity of Water vs. Total Daily Withdrawals, 1980 and 2015

Global access to freshwater is limited, with extreme precipitation and extreme drought linked to climate change becoming more common. In January 2018, Cape Town, South Africa became the first city to announce it was three months away from running out of municipal water. April 12, 2018 was dubbed ‘Day Zero.’ As another unbearably dry summer and fall progressed, Cape Town saw thousands of residents lining up to collect water from local springs, unable to avoid signs of the impending crisis as they waited in the blazing sun6. Cape Town managed to avoid running out of water entirely, but Day Zero serves as a testament to the global need for technical solutions to curb consumption in drought-prone areas. During the same period in 2018, other regions also faced water supply issue. More than a third of the continental U.S. experienced drought and many regions implemented water-use restrictions.7 Mexico City continued to sink in elevation, due to groundwater extraction outpacing aquifer replenishment – an ongoing problem since the mid-19th century8. Chennai, India, a mere 3 years after historic floods, received less than 60% of its typical rainfall during the 2018 monsoon, leading to devastating water shortages the following year9. With the future supply of freshwater in question, efficiency is the name of the game. The best players are developing new technologies to do more with less.

Read the full report. 

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