Xylem set to clean up as world population continues to urbanise
Global water technology company Xylem Inc. has a far from modest mission: to ‘solve water’. However, the extent that the company has managed to succeed in this goal already is incredible. It has been influential in furthering original research into water use (through its sponsorship of the Stockholm Prize, as well as in-house), and it has been involved in some of the biggest water-related projects in the world. One area where the company is likely to reap huge benefits in the future is through the continued global trends of population growth and urbanization.
Urban population as a percentage of world population
SOURCE: World Bank
With urbanization comes increasing pressure for new water infrastructure, and demand for the maintenance or replacement of existing infrastructure. This is a massive business opportunity, as the world’s population – at over 7 billion people and growing – is showing no signs of reversing its trend towards urbanization.
In 1960, just 16% of the population of China lived in cities. Today, that figure is 56%. In India, growth has been similar, but far slower – from 18% to 33%. In both of these cases, populations are forecast to continue moving to cities, as they are globally. By 2008, over 50% of the world’s population was urbanized – and that number is growing.
To provide water facilities for the billions of people that move into urban areas will put pressure on governments, but it will also put pressure on the environment. As we face a global water crisis in the future, we do not have enough to spare to leaking pipes. Xylem Inc. may be able to provide a solution to that problem – and if it does, it will be great news for the company’s investors.
Dominion holds Xylem Inc. in its Global Trends Managed Fund.
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