For millions of people across the world, access to clean water remains a distant reality. With the UN highlighting almost 800 million people lack basic drinking water, this crisis impacts health, dignity, social inequality and economic development. Factors such as demographic and climate change ensure this problem will only get worse.
There are also political ramifications; 10% of the growth in global migration has been directly linked to the water deficit. Addressing this issue requires financial investment as well as creative thinking, and private capital will likely play a pivotal role.
It is widely accepted that governments alone are ill-equipped to deliver either the scale or financial investment required to close the gap in global water provision. To be able to provide optimal, efficient and viable solutions, an inclusive approach needs to be adopted that involves governments, global agencies and, most importantly, enterprises (private and public, large and small).
The intrinsic attributes of private markets align well to these challenges. Providers of private capital (equity and debt) often have a long-term investment perspective consistent with the long-term nature of large infrastructure projects and adoption of new technologies. Additionally, the typical return profile from large infrastructure investments, such as water provision, in terms of delivering dependable, regulated and often inflation-linked income streams may be highly attractive.
Private equity has traditionally been an early investor in nascent or transformative technologies – likely a key requirement in tackling the ‘water gap’. However, the role of private capital is not limited to simply delivering attractive returns to investors – it can play an equally positive role in helping enable positive social change.
Read the full article in PA Future’s October 2024 digital magazine.
