How do we make water security for 8.3bn people an investment opportunity?

What does water want out of the UN? I found myself asking this question as I was flying back from a slightly surreal UN-sponsored water event in Dushanbe at the end of last month.

The capital of Tajikistan was an apt place for the meeting: a post-Soviet wonderland that is difficult to place in time and space, but quite lovable in its own way. The UN is also something of a timeless wonderland that has struggled to find its place in the post-Soviet age. If you can overlook the foibles, it is also quite lovable.

The main foibles include a lack of overt leadership (you could easily mistake Secretary General António Guterres for a baffled pensioner struggling with a bus timetable as the organisation tries to keep pace with today’s world of great power politics); its insistence on process over productivity (nothing quick and dirty ever happened at the UN); and its love of platitudes (no UN meeting that I have attended is complete without a plenary in which each country gets to stand up for three minutes and say blindingly obvious things about peace, love, and water).

None of these foibles has helped the UN to end the wars in Ukraine and the Gulf, but equally they have ensured that the UN remains the only forum where the world can address issues that require global solutions. The Board of Peace, the G7 and the G20, the World Economic Forum, and Taylor Swift fans might all have similar aspirations, but in the final analysis they don’t cut it.

Water is rapidly becoming one of those issues that needs a global solution. The growing intensity of the extremes of the water cycle is a crisis of its own, but it is also magnifying the impact of all the more localised water crises around access, value at risk, biodiversity, pollution, and ageing infrastructure that are more easily ignored. The world needs to take notice and act.

The first question that we as an industry need to determine is: what is the ask?

In my mind, it has to be about asset allocation. At the moment, probably less than 1% of financial assets are allocated to water infrastructure. If we are to deliver the water transition – i.e. if we are to ensure that the flourishing of society, the economy and the environment are not limited by water – we will need closer to 5% of financial assets to be allocated to water infrastructure, green or grey.

This shift can be justified in economic terms on the basis that it is an investment in growth. If temperatures continue to rise and the extremes of drought and flood become more intense, the drag on growth – both directly and through political instability and the loss of free ecosystem services – will result in the impact on the value of global financial assets being far greater.

Obviously this isn’t just an ask from governments. Private investors need to see the opportunity in water infrastructure if they are allocate their assets towards it. That entails making water more investible as an asset class. Already it has some attractions: water is a HALO (heavy assets, light obsolescence) investment. It also has a reputation for delivering steady returns where it is possible to invest. The problem is that most water infrastructure is uninvestible, either because it performs so poorly that no sane investor would want to give it money, or because it is so deeply embedded in the public sector that private investors can only reach it indirectly through government bonds.

The UN can’t change this, but it can do two things that will make the difference. It can publicise the issue so that it is on the global agenda. It can also use its convening power to bring together the relevant parties to discuss how the change we want to see might be delivered.

This year’s UN Water Conference in Abu Dhabi coincides with Abu Dhabi Finance Week. The former will bring together the global political leadership of water, while the latter will bring together the institutions responsible for managing more than one third of the world’s wealth. Between the two events, there is a unique opportunity to start the journey towards the reallocation of investment towards water.

I see this beginning as an extension of the World Bank’s Water Forward initiative. This aims to bring water security to 1 billion people, based on a series of compacts between governments and lenders agreeing the changes that need to happen to enable finance to flow into water infrastructure. Why not extend that target to 8.3 billion people by engaging politicians and financial institutions more broadly to make the changes necessary to ensure that water infrastructure is more investible?