Water is in short supply. Markets should pay attention

New YorkCNN Business — 

The world is in desperate need of water. Drought and increasing temperatures have threatened to impact nearly every major sector of the economy, from energy to agriculture to shipping.

Markets are taking note. The S&P Global Water Index, which tracks 50 companies from around the world that are involved in water utilities, infrastructure, equipment and materials, has outperformed the S&P Global Broad Market Index by more than 3 percentage pointsper year since its beginning in late 2001. So far this year, the Global Water Index return has been nearly 5 percentage points higher than the S&P Global BMI.

The big picture: Europe is suffering the worst drought it has seen in at least 500 years after sweltering temperatures led to thousands of deaths across Germany, the United Kingdom, Spain and Portugal. European rivers hit record low water levels, interfering with crop and power production as well as shipping. The Rhine fell so low that shipping had to be severely reduced, causing supply issues in Switzerland and Germany. Yields of major crops are expected to fall by at least 10% to 20% due to water restrictions.

It’s not the only region of the world struggling with water shortages. A drought that has been enveloping the southwestern United States since 2000 marks the driest 22-year period of the past 1,200 years, a UCLA-led study found. The American Farm Bureau Federation suggests that yields could be down by as much as a third this year compared with last year because of drought and extreme heat……more here

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