Adaptation is the next big wave in Climate-tech, and water risk is the most compelling investment opportunity

Forward thinking climate investors are refining their Adaptation thesis. It would be hard to not allocate towards the water risk vertical.

1.

Spending on technology solutions to manage climate-change-induced water risks is projected to go from $425 billion in 2024 to $1.27 trillion by 2030, far surpassing spending on wildfires, wind, pests, and extreme temperatures.

2.

Dealflow of early-stage companies focused on water risk is broad and deep, spanning earth observation, in-situ monitoring, AI, digital twins, and a myriad of digital applications for sectors that face water quantity/ quality risks.

3.

Exit markets are actionable, including a wide range of corporates and private equity seeking to acquire innovations that help industry & society adapt to water risk in our new climate reality.

$58bn

spent in 2024 by owners of linear assets (roads, rail, pipelines) on technology solutions that manage climate-change-induced water risk

43%

of total spending on technologies to manage water risk is in the 4 sectors Mazarine Climate is focused on

56% vs. 44%

Private sector spending on climate-change-induced water risk is outpacing the public sector

So, is this the ‘water industry’?

No. This is Water Risk, which is a cross-sectoral market encompassing industries that face increasing water-related risks due to climate change, extreme weather, and shifting hydrological patterns.

Unlike the traditional water industry, which focuses primarily on drinking water supply, municipal wastewater, and select industrial applications, the water risk industry includes sectors such as finance, insurance, real estate, power generation (Photo to the right of a Hydroelectric power plant), agriculture, aquaculture, transportation, and coastal infrastructure – all of which must manage risks like drought, flooding, storm surges, sea level rise, and harmful algal blooms.

These industries do not produce or distribute water, or treat wastewater, but are fundamentally exposed to water-related disruptions, requiring the utilisation of the Industry 4.0 toolbox to realise risk management and resilience objectives, as well as adaptation strategies to sustain operations and economic stability in a changing climate.

What about drinking water utilities and agriculture?

While public and private water/wastewater utilities face significant challenges in a changing climate, Mazarine Climate does not invest in companies who have a primary focus on this market. While there are some forward-thinking utilities, many remain bureaucratic and risk-averse, with slow procurement cycles that make it difficult to introduce new solutions. Strict regulations, budget constraints, and a preference for proven technologies further delay adoption, making this sector less suitable for Mazarine Climate’s focus.

Agriculture and aquaculture also face increasing water risks due to climate change, yet farmers and agribusinesses tend to be risk-averse, prioritising proven methods over new technologies. Tight profit margins and complex supply chains make adoption of innovative technologies slow, as agricultural customers are cautious about unproven solutions that could impact yields or financial stability.

The three types of water risk

TOO MUCH WATER

Rising sea levels, floods, and extreme rainstorms are disrupting infrastructure, supply chains, and property values.

TOO LITTLE WATER

Droughts and water scarcity threaten power generation, supply chains, and business operations.

COMPROMISED WATER

Harmful algal blooms and saltwater intrusion result in public health & safety threats and biodiversity loss.

Industry & society will experience one or more of these water risks depending on where they are and what they are doing. These 'water' risks go far beyond the water industry.

Water Risk = Pain & Suffering

Water risk is more than just an environmental risk, it’s a human, economic, and biodiversity risk.

Fatalities and injuries

Water-related disasters claim lives, harm employees, and increase liability risks for businesses and governments alike.

Business disruption and loss

Supply chains collapse, operations grind to a halt, and insurance claims skyrocket as companies struggle with climate-change induced water-related risks.

Weakened economic development

Flooded roads, unreliable water supply, and drought-stricken regions repel investment and cripple infrastructure.

Biodiversity loss

Harmful algal blooms, fish kills, and invasive species destabilise local economies and threaten businesses that rely on healthy and safe surface water assets.

Water risk is a massive risk,
but it also presents a compelling opportunity

Water risk investment is accelerating, and Industry 4.0 technologies are driving the transformation.

$171bn

spent in 2024 on Industry 4.0 solutions supporting industry & society manage water quantity risks (eg: floods, droughts, etc)

66%

of spending on managing water quantity risks was on data 'producing' innovations, compared to 34% on innovations that 'consume' data, eg: modeling, etc

4.8x

is how many times larger CAT spending is on managing water risk ($425bn) over wildfire risks ($88bn) globally, not including insurance payouts

Why Mazarine Climate is uniquely positioned

We are the only venture capital fund exclusively operating in the water risk vertical of Climate Adaptation Technology (CAT). We know this space, we know the key players, and we know how to position portfolio companies for success.

Deep expertise in water risk & Industry 4.0 solutions

Strong industry network with corporates & follow-on investors

Highly specialised investment thesis

Adaptation is the next big wave in Climate-tech, and water risk is the most compelling investment opportunity

Forward thinking climate investors are refining their Adaptation thesis. It would be hard to not allocate towards the water risk vertical.

1.

2.

3.

$58bn

43%