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Investment opportunities in water are growing in size and number. Several forces intensify the urgency for government, industry, and community leaders to address water insecurity. First, there is a severe shortage of investment in water infrastructure.
The McKinsey Global Institute estimates that $7.5 trillion of
spending globally on water is needed in the next fifteen years.1 Every year, the United States wastes a trillion gallons of water due to leaky and broken water mains. Second, water risk—having not enough, or too much, or not the right quality—is a growing concern for cities and towns, large
industrial businesses, farmers, and conservationists. Water risk will only increase as the climate changes and the global population grows. Third, water is local and personal. Citizens are applying increasing pressure on their elected officials to solve water problems.
Innovators—both in technology and in finance—need patient capital to develop solutions to water challenges. Family offices and foundations are natural providers of patient, long-term, solutions-oriented capital.
For any given water investment, families should consider the idiosyncrasy of the intervention being funded, the novelty of the investment structure used to fund that intervention, the particularities of the place or market in which the investment occurs, and experience of the investee in managing all of the above.Motivated families can be catalysts and leaders in the nascent water market, helping create a playbook for the larger-scale water investment the world needs.
But investment capital alone cannot solve all of the water problems facing communities, industries, and ecosystems. Families who are working to protect or provide clean, dependable water in a particular place may consider weaving together several interventions, funded through a variety of financial structures.