Ofwat Boosts Investment in Water Solutions: Why Increased Funding is Essential for the Future

This week, Ofwat – the water industry regulator for England and Wales – announced ￡40 million in funding for innovative water solutions, bringing the total to ￡150 million across 93 projects since 2020.

While the amounts may not seem vast, they demonstrate a genuine commitment to improving water security and fostering innovation. This is a sector poised for significant growth, as the challenge of water scarcity intensifies and the demand for solutions rises.

At Path Financial, we identified this trend some time ago and currently hold two water and waste funds in our portfolios, which have returned 14% and 16% over the last year. We are confident these investments have a bright financial future ahead.

Furthermore, these “impact” funds are not just about financial returns. They play a direct role in addressing critical global challenges by increasing the capital available to companies that are developing solutions that the planet urgently needs. In our view, companies focusing on tackling the global water crisis are likely to present compelling investment opportunities.

To put things into perspective, only 0.25% of the planet's water is usable, with the rest being saltwater, polluted, or trapped in ice caps and glaciers. Water funds aim to tap into opportunities across the entire water industry, with a focus on areas like water supply, technology, and environmental services.

For instance, the global water services industry is projected to grow by 4-6% annually, offering exciting prospects for investors. Over $1 trillion needs to be invested every year until 2030 to build and maintain effective water infrastructure worldwide.

Balancing water supply and demand will be no easy task. Outsourcing the management and operation of water infrastructure could help ensure that water resources are managed efficiently. This creates sustainable investment opportunities for companies involved in infrastructure, distribution, and waste-water treatment—offering both financial returns and positive environmental impact.