Can investment avoid a water crisis?

Water shortages are set to be the cause of a great deal of conflict and misery in years to come, says Charles Stanley's Jeremy Batstone. Which is why the $400bn water treatment industry is such an attractive investment.

We wonder how many people know that water treatment has grown into a $400bn global market, that no one company controls more than 5% of that market and that in the US the sub-sector outperformed the S&P 500 by 7.0% over 2005? The UN estimates that by 2025 5bn of the world's 7.9bn population will have difficulty accessing "safe" water. Whilst much is made of the extent to which differences in religious beliefs underpin recent conflict, we suspect that something much more fundamental could underpin the conflicts of the future.

When the writer began his A' Level economics course the first question posed to him pertained to the diamond water paradox, the solution to which many deem to be the foundation stone of neoclassical economic thought. Essentially the paradox is expressed as a perplexing conundrum; Even though water is essential to human life, the price of water is relatively low. Diamonds are not essential to human life, but the price of diamonds is considerably higher.

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