“Do not wait until you are thirsty to build a well.” – Japanese proverb
In terms of the availability of scarce resources, not all areas of the globe are created equally. Natural gas, oil, and water are resources wildly scattered about Mother Earth, and not always in the fairest of ways. Given that these resources are limited in supply, both lengthening their lifespans and increasing their accessibility are likely to grow in importance because many projections saddle the globe with a population approaching 9 billion by 2050. This 30% increase represents nearly 2 billion more mouths to feed, 4 billion more hands to wash and, judging by the myriad estimates, an unpredictably greater amount of energy to provide.
Human rights are not always a given
Just shy of three years ago, water and sanitation became a human right bestowed upon us all by the UN Human Rights Council. Unfortunately, a report in 2012 from the International Food Policy Research Institute calculated that a too large portion – 36% – of the world’s population still lives in an area of water scarcity. This paints a bleak picture given that most of these areas are among the world’s poorest and are predicted to contribute the most to our increased population base. Adding to this saddening thought is the fact that greater than 2.7 million people die each year due to lack of sanitation. These areas which I am describing include China, India, the Middle East, and northern Africa.
More than just mouths to feed
Aside from the troubling picture surrounding the availability of water, these countries share another thing in common: all are expected to factor heavily in global hydrocarbon consumption and production. Vast amounts of oil and natural gas have either already been pumped out of these regions or the regions have been documented as the next big targets of the oil and gas industry. Unfortunately, extracting said resources is a very water-intensive activity. Without deriving a way to reduce the amount of water used through recycling or the involvement of chemicals, it might boil down to a trade-off between either providing drinking water or energy needs to the general public.
The all-important crossroads
Finding itself at the intersection of both of these problems, Ecolab Inc. (NYSE:ECL) presents an interesting investment opportunity given its wide portfolio of products and services, the bulk of which are aimed at both sanitation and managing water use. As the developing world continues to find itself in a wealthier position than it held in the not so distant past, Ecolab Inc. (NYSE:ECL)’s ability to help it catch up with OECD countries in terms of sanitation and water use management bodes well for investors.