How Water Analytics Give Agriculture Investors A Competitive Edge

Dec 22, 2020 | Agricultural Investment, Blog

How Water Analytics Give Agriculture Investors A Competitive Edge

As much as 30% of the planet’s freshwater resources are found in underground aquifers and other groundwater resources, while surface water (lakes, rivers, streams, etc.) makes up only 0.4% of the total freshwater supply. However, the availability of groundwater varies widely around the world, and aquifers are being drawn to depletion in some of the world’s most important agricultural regions.

Water scarcity is both an environmental concern and a business risk. Without sufficient water to grow crops, entire supply chains will be disrupted. There is cause for optimism, though: according to a report by the World Wildlife Fund and other organizations,


“Smarter use of … water, where available, could help countries achieve a global goal to ensure everyone has sustainable access to water and sanitation by 2030.”


By using water analytics to inform their decisions, agriculture investors have a role to play in the mitigation of water risk in the years ahead. This article takes a look at some of the tools available for water analysis and how investors can use them to stay competitive in a changing agricultural investment landscape.


(Part of our Agriculture Investing Guide)

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What It Means to Have Good Water Analytics

Accessing reliable and transparent water data has been a challenge – and in many cases it still is. Publicly available information on water rights and water use data may be lost in outdated query systems or databases.

Now, new technologies like smart water meters are making it easier for growers to monitor their own water use, while smart water markets help to facilitate the transfer of water rights at market rates. Drones can be used to measure evapotranspiration data, while NASA satellites keep track of drought risk and snowpack levels.

In other words, there’s more information available than ever for investors who are able to find it and make sense of it – and a centralized, transparent database can help. And if there is the ability to share data in a convenient format with other stakeholders – all the better.

With access to better data, investors can use water analytics to find out the water risk of a particular parcel of land, including what water rights are attached to it and whether the source will be reliable in times of drought or abnormally dry weather. These actionable insights allow investors to make better decisions and lower their financial risks.



How Access to Water Data Gives Investors An Advantage

Historically, water risk in many sectors has been treated as an afterthought, but awareness of the role that water security plays in agriculture is increasing. One report by Ceres found that ¾ of the publicly-traded companies they studied include water risk in their financial filings. Other reports show that water-related impact investing is on the rise, including “waste management, sanitation, flooding, and nutrient management.”

Just as business intelligence data is used to drive investment decisions in other sectors, agricultural investors who factor water risk into their land deals have an advantage over those who don’t. They can make faster, more informed decisions, with an awareness of long-term trends that could impact the availability of water and other inputs.

Whether it’s an increase in the cost of livestock feed during a drought or reduced water allocations due to regulations like SGMA, what happens in the water space can impact financial stability, business relationships, and overall investment success. While water analytics were once hidden resources, that isn’t the case anymore – nor should it be.

As one recent Market Watch article puts it, “Healthy capital markets depend on accurate information useful for decision making.” They call for “standardized disclosure of climate risk” and other environmental risks, which will “only serve to strengthen markets.”


The Benefits of Water Analytics

Aside from the benefits to investment markets as a whole, how can water analytics data benefit individual investors? In large part, it all comes down to sustainability. Investing in land with reliable access to water resources will boost long-term ROI, and mitigate the impact of drought and other environmental risks.

Water access is a determining factor to which crops can be grown on a piece of agricultural land. Growers without access to sufficient water resources may be forced to plant less water-intensive crops, pay more for water resources, or let their fields go fallow. Land that was once a promising investment may become a liability.

On the other hand, investors who have done due diligence around water security will have less to worry about. Growers may be able to plant more diverse crops and maintain a competitive advantage in the marketplace. They may be able to sell excess water through smart water markets so that the surplus can be put to other good use. Water can also be stored for credits in a water bank.

Having access to better water analytics won’t eliminate risk altogether, but it can allow investors to back more sustainable parcels of land and agricultural businesses. Those investors who take an active role in land and water management can work with other stakeholders to boost water resiliency and see more longevity in their returns.



How to Find and Present Water Right Analysis

Communicating about water rights can be a challenge, especially if stakeholders have varying levels of experience in the agricultural sector. That’s why it’s important to start from a shared understanding of the facts and how water security fits into the specific agricultural investment or land deal under discussion.

AQUAOSO’s Water Security Platform allows the integration of first-party water and geospatial data directly into portfolios and can be used to create reports that are shareable with other stakeholders.

Assembling a water rights analysis on one’s own can require time-consuming research. AQUAOSO, however, puts the aggregation of the hidden water data into a geospatial tool that can be used to collaborate with team members and customers while finding opportunities to reduce water risk.


Read more about water risk in agricultural investment in our explorable guide.

The Bottom Line

Water security data is only as useful as the systems that are in place to make it useable. At AQUAOSO, we’re committed to providing actionable, up-to-date water analytics – along with cloud-based tools to help users incorporate water risk data into their decisions.

AQUAOSO’s research and mapping tools, water security dashboard, and other resources put users such as investors in a position where they can stay ahead of the curve and maintain a competitive advantage.

Contact us today to start a conversation about water risk and find out how our unique Water Security Platform can help you!


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