World Water Day is an annual United Nations observance, started in 1993, that celebrates water and raises awareness of the two billion people currently living without access to safe water. A core focus of World Water Day is to inspire action towards Sustainable Development Goal (SDG) 6: water and sanitation for all by 2030. Here is a link to the full list of goals: https://sdgs.un.org/goals.
And here is a link to World Water Day 2022.
There are numerous events scheduled by organizations around the globe to expand knowledge of water issues. This year the theme is “Groundwater – Making the Invisible Visible.”
In our daily lives in the United States, most of us have taken water and the treatment of wastewater for granted. Water is there when we turn on our faucets, and it is generally affordable. Most of our water is supplied by municipalities or utility districts and some by private companies, while many have wells and septic systems.
World Water Day brings awareness to areas around the world that are water starved, either by insufficient supply or improper treatment processes. In the US, worsening drought conditions and reduction of storage in reservoirs, such as the dangerously low level of Lake Mead, remind us that a changing climate is impacting water supply. Daily news of ruptured pipes reminds us of our aging water infrastructure. The release of lead into the water supply of Flint, MI, highlighted the need to be careful when changing public water sources.
But Americans are learning not to take water for granted – awareness has been growing. Many are accustomed to having lawn-watering restrictions, and over the years more efficient toilets and shower heads have been promoted or required in buildings. Our turning the water off as we brush our teeth shows that Americans are not unaware, as does the proliferation of permanent water containers to replace throwaway bottles. However, the turn to bottled and delivered water and in-home treatment systems highlights the fact that some don’t like the taste or texture of the water from their faucets. And it is starting to cost more.
There are numerous charities that help provide water or access to water in deprived areas — Water For People, Water.org, and CharityWater.org, to name a few. Each charity has its own approach and regions that it supports, so choose ones that align with your impact values. There are also numerous think tanks and other organizations you can learn from, including the Water Environment Federation (WEF.org), Ceres (ceres.org), and even your local water utility.
In the US, water quality and wastewater effluent quality are regulated by the EPA and local departments of environmental protection. If certain quality measures are not met, there may be fines, although the EPA is also there to work with utilities to provide clean water. Many states have state revolving funds (SRFs) that, in addition to providing guidance, offer low-interest loans and funds to subsidize water and wastewater projects of small issuers and communities such as mobile home parks that do not have their own financial and technical resources.
At Cumberland we invest in municipal water and sewer revenue bonds. We like these bonds because the issuers have a monopoly on an essential service and have rate-setting authority. The bonds usually have strong security provisions, requiring a high level of debt-service coverage to be maintained, reserve funds, and limits on additional bonds. We also invest in bonds issued by state revolving funds because the bonds are secured by loan repayments in excess of expenses and debt service payments and/or large reserve funds.
Water and wastewater bonds can also be considered to have positive environmental impacts and to be part of an ESG strategy.
We wish you all an informative and thoughtful World Water Day!
Patricia Healy, CFA
Senior Vice President of Research & Portfolio Manager
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