摩根士丹利 -水资源约束 The Water Constraint

TheWaterConstraint

TALESFROMTHEEMERGINGWORLD|EMERGINGMARKETSEQUITYTEAM|May2026

Waterisoftentreatedasapublicgood.Inmanyindustriesitisregardedasafreeinputwithmostlargeuserspayingfarless

thanitstrueeconomiccost.Buttherealburdeneventuallyfallsbackoncompanies:throughhighertreatmentcosts,tighter

permitting,operationaldisruption,reputationalrisk,andtheneedtosecureaccesstoincreasinglyscarcesupply.Thefictionthatwateris“free”hasshapeddecadesofindustrialplanning,steeringcapitalintoenergyefficiency,automationandlogisticsasifwaterabundancewerepermanent.

Itisnot.Inanumberofregions,waterisbecomingabindingconstrainton

production,permittingandcommunityconsent.ArecentUnitedNations

reportputitbluntlyinitstitle:“GlobalWaterBankruptcy.”Whilebankruptcyisperhapstoodramatic,waterinsecurityisincreasinglyaconstraintongrowth.Thisisparticularlytrueinwater-stressedregionsoftheworld,wheredemandisrisinginareasalreadyfacingfreshwaterscarcity.

Waterstressisnotanabstractenvironmentalmetricbutratherameasureofhowmuchwaterisbeingwithdrawnrelativetotheavailablerenewablesupply.TheWorldResourcesInstitute’sAqueductframeworkclassifiesregionswhere

withdrawalsexceed40%ofsupplyashighlystressedandthoseabove80%asextremelystressed.Atthoselevels,drought,infrastructurefailureorcompetingdemandcanquicklytipafragileconditionintocrisis(Display1).

DISPLAY1

Ed

TheDemandforWaterIsRisingGlobally

Freshwaterwithdrawals

index(1980=100)

stimate

198519901995200020052010201520202025

200

180

160

140

120

100

80

1980

Source:FoodandAgricultureOrganizationAQUASTAT.Asof12/2025.Forecasts/estimatesarebasedoncurrentmarketconditions,subjecttochange,andmaynotnecessarilycometopass.

AUTHORS

ERICCARLSON

PortfolioManagerandHeadofSustainability,EmergingMarkets

Equity

JASONQI

ExecutiveDirectorCalvert

GrowthConstraint

Mostvisibleriskisoperational.Manyindustriescriticalto

growth—fromcopperminingandsemiconductorstodatacentersandpowerinfrastructure—arewater-intensiveandoftenconcentratedinareasofhighwaterstress(Display2).Wherewaterisamajorinput,disruptionsinitsavailability

andqualitycanhaltproduction,cututilizationandraisecosts.Companiesthatactivelymanageboththeirwaterqualityandsupplygainresilienceandcontrolthatpeerslack.

Butoperationalriskisonlypartofthestory.Watercan

alsobecomeareputationalproblem.Asfreshwaterisanintenselylocalresource,itcarriesanemotionalchargeandanimmediateconstituencyinwaysclimateriskoftendoesnot.Amine,fabricationplantordatacentermayaccountforasmallshareofnationalwateruse,butstillbecomescontentiousifitappearstocompetewithlocalhouseholdsorfarmers.Watermismanagementcanalsospreadinto

commercialandpoliticalrisk.

AChileanminingcompanyencounteredresistancefromlocalcommunitieswhentheChoapaRiverwatershedcameunderprolongeddrought.Theriverrunningthroughthevalley

wasbeingusedforlocalagricultureandminingoperations.Facingproductioncurtailments,thecompanydecidedto

builddesalinationplants-atacostofover$2billion-to

endtheneedtosiphonwaterfromtheriver.Thoughthe

capitalexpenditurewasexpensive,theinvestmentwasa

reputationalhedgeasmuchasanoperationalone.Sincethentheminehasincreasedproductionandextendeditslife.Thelesson?Investingininfrastructureandefficientusageoflocalfreshwatercanserveanoperationalneedwhileenhancingcorporatesociallicense–movingfrombeingpartofthe

problemtobecomingpartofthesolution.

DISPLAY2

TheWorld’sMostStressedBasinLevelHotspots

AREA

COUNTRY(S)

IndusBasin

Pakistan/India

ColoradoRiverBasin

U.S./Mexico

Tigris-Eurphrates

Iraq

NileBasin

Egypt/Sudan

Murray-DarlingBasin

Australia

NorthChinaPlain

China

CentralChile

Chile

SemiconductorsandWaterSupply

Advancedsemiconductorfabricationplants(fabs)areamongthemostwater-intensiveindustries,requiringlargevolumes

ofultra-purewateronacontinualbasistoproducechips

efficientlyatscale.Evenshortinterruptionscanbeexpensive.Theparadoxisthatsomeofthemostadvancedsemiconductorfabsarebuiltinwater-stressedregions,includingTaiwanandArizona.Assuch,thesectorhasrespondedwithlarge-scale

recyclingandreclaimedwatersystems.

DISPLAY3

GlobalGDPExposedtoHighWaterStressIsExpectedtoIncreaseSignificantly

0

20102050

80

70

60

50

40

30

20

10

Source:WorldResourcesInstitute;Aqueduct4.0.Asof8/2023.Forecasts/estimatesarebasedoncurrentmarketconditions,

subjecttochange,andmaynotnecessarilycometopass.

ATaiwan-basedchipmakerreportedinits2024annualreportthatbyoptimizingmanufacturingandrecycling,theyreducedtheirrelianceonmunicipalwaterby31%.Atthesametime,outofthefab’stotalwatersupply,thechipmakerreplaced17%byusingreclaimedwater.Thegappointstoastructurallimit:reclaimedwatercaneasefreshwaterdependence,butdoesnoteliminatetheneedforcontinuousinput.Recyclingchangesthesourceofsupplymorethanthewaterintensityoftheprocess,andtheenvironmentalpressuresoflarge-

scaleindustrialwateruseremainsubstantial(Display3).

WhileTaiwanfaceswatervolatility,Arizona,hometoa

numberofsemiconductorfirms,faceschronicscarcity.

Buildingadvancedfabsinadrought-pronestaterequires

complexplanningaroundwaterresilience,coordination

withmunicipalitiesandsignificantupfrontcapitalinvestment.

GDPexposed($trillion)

Source:UnitedNations.Asof12/2025.

2MORGANSTANLEYINVESTMENTMANAGEMENT|EMERGINGMARKETSEQUITYTEAM

Publicperceptionoftencentersonmunicipalwateruse,butleading-edgefacilitiesaredesignedaroundhighrecyclingratesandreclaimedwatersystems.Oneplantoperatesa12-acre,

on-sitewaterreclamationfacilitythatcantreatupto9milliongallonsadayofwastewater.

DataCenterBottlenecks

Datacentersarealsolikelytobringwaterpoliticsinto

sharperpublicview.Amedium-sizedfacilitycanrequirearound110milliongallonsayearofwaterforcoolingandlargersitesmayneedasmuchas5milliongallonsaday.

Thevisibilityproblemisdifferentfrommanufacturing.Inachiplabormine,waterisembeddeddeepinproductionflows,whiledatacentersplacecoolingsystemsinhighlyvisiblelocations.Coolingreliesheavilyonevaporative

systems,wherestudiesindicatethatupto80%ofwaterislostasvaporratherthanreturnedtoitsoriginalsource.Thismakesevaporationaformoftruenetconsumption,requiringcontinuousreplenishmentfromlocalwater

sourcesandincreasingpressureonregionalsupplies,particularlyinwater-stressedareas.

Liquidcoolingandclosed-loopsystemscanreducepressureonfreshwatersuppliesbuttheyreducewaterintensityratherthaneliminatedemandaltogether.Companydisclosures

suggestthesesolutionsremainunevenlydeployedand

cancomewithhardtradeoffs.Forexample,eliminating

evaporativecoolingmaycutwaterusebutraiseenergy

consumption.Inwater-stressedregionstheadvantagewillgotocompaniesthatcanmanagethetrade-offs,notjustreducethewaterintensity.

Takeaway

Forinvestors,theriskisthatwatermovesfromahiddeninputtoabindingconstraintongrowthandcreatesoperational

disruptions.Thegapiswideningbetweencompanies

thatregardwaterasastrategicassetandareinvestingin

desalination,recyclingandwater-positivecommitmentsand

thosewaitingforregulation,communityoppositionordroughttomaketheriskvisible.Aswatershortagesintensify,that

divideislikelytoshowupinstockperformance.

RISKCONSIDERATIONS

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