The U.S. and global drought underscores increased long-term challenges to global food, water and energy security, as demand for food and energy each are expected to climb 50 percent by 2030 with the demand for water growing by 40 percent over the same period, potentially creating a perfect storm of interlinked challenges.
These changing conditions pose a range of opportunities and risks for investors. For investors interested in the themes of fighting drought and in promoting food, water and energy security, Bank of America Merrill Lynch has introduced a screen that identifies liquid stocks exposed to global drought-related themes under the Bloomberg ticker MLEIARID. The stocks included in the screen are those that it considers to be long-term solution providers in such areas as water, fertilizers, crop science, energy efficiency, second-generation biofuels and renewables.
“The severity of the global drought underscores the long-term challenges for national and global economies,” said Sarbjit Nahal, equity strategist with the Bank of America Merrill Lynch Global Research ESG (Environment, Social and Governance) and Sustainability Team and a co-author of the report. “Food, water and energy security are increasingly bigger issues, and as governments, businesses and other players struggle to adapt to and mitigate drought conditions, there will be an evolving set of opportunities and risks for investors.”...
A dry stream channel during drought conditions, North Platte River in Goshen County, Wyoming, near Wyoming-Nebraska state line, shot by Kirk Miller of the US Geological Survey, public domain
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