Why water scarcity now threatens our future technologies

Waves of water of the river and the sea meet each other during high tide and low tide. Whirlpools of the maelstrom of Saltstraumen, Nordland, Norway

Paul Buchwitz, DWS, writes his insights on World Water Day

For the first time since 1964, not a single rain-bearing typhoon made landfall on Taiwan last year. On the one hand, these cyclones usually bring destruction to the country, but on the other hand they usually fill the island state’s water reservoirs with their rain. The result: in many reservoirs in central and southern Taiwan, the levels have dropped to below 15 percent of capacity, according to the Water Resources Agency. And there is no improvement in sight, as meteorologists expect hardly any precipitation until June.

In view of this situation, Taiwan’s President Tsai Ing-wen has called on citizens to conserve water and prepare for shortages. Already in 2015, during a severe drought, the government had cut back the water supply to homes on certain days and also imposed restrictions on industrial enterprises. Such restrictions would be particularly serious for the country’s extremely “thirsty” semiconductor industry, which is producing at the limits of its capacity due to the high global demand for chips.


Electromobility also relies on water

There is more water in modern electric vehicles than some people might think. On the one side, they contain vast quantities of the water-intensive semiconductors that turn them into rolling computers. But on the other side, the production of the vehicles themselves also consumes a lot of water.

“These examples show, how water scarcity now threatens future technologies for future growth. And possibly also the fight against climate change. After all, electromobility and the digitalisation and automation of infrastructure are crucial pillars for the reduction of greenhouse gas emissions. Therefore, the key role of technologies for a more efficient water infrastructure as well as for saving and treating water must be made much more visible to the public”, says Paul Buchwitz with a view to the World Water Day. He manages the DWS Invest SDG Global Equities fund and invests in companies that make a positive contribution to achieving at least one of the 17 UN Sustainable Development Goals. These goals include the availability and sustainable management of water.


For some chip manufacturers, water now also comes by truck

What Buchwitz considers particularly challenging is the situation for the semiconductor industry. “There, an incredible amount of water is consumed during production because the wafers are cleaned at every step of the process. The bottom line is that about 100 litres are needed to produce a single chip,” he says. A large part of the water is recycled. Because of the high demand, especially from the automotive industry, and in view of the drought, some companies have nevertheless already begun to have some of their water needs delivered by truck. “A prolonged drought could have an impact on the entire global economy,” says the ESG expert. According to the latest figures, Taiwan, for example, produces just under 10 per cent of global chip demand, while South Korea, which is also increasingly affected by drought, produces a good 15 per cent.


“Green” hydrogen also increases demand for water

Not only the production of battery-powered electric vehicles, but also the production of hydrogen-based synthetic fuels consumes large amounts of water. “One litre of synthetic fuel requires about 1.4 litres of water. If this fuel is also to be produced from ‘green’ hydrogen produced with renewable energies, then the amount of water required can rise to 70 litres per litre of e-fuel in the overall view, since large amounts of water are also needed in some cases for the provision and maintenance of renewable energy sources, such as solar plants,” says Buchwitz. So in future, he adds, water demand will be driven not only by population growth and the accompanying increase in food demand, but also by “green” topics  and this against the background of an increasing number of droughts. “This combination will once again significantly increase the need for investment in the coming years,” says the portfolio manager.

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