By David Brough LONDON, Oct 5 (Reuters) - Climate change, increasing desertification and growing populations will increase the appeal of investment in water, but authorities' grip on supplies will limit opportunities, experts said on Thursday. "Demand (for water) is rising, and supply is under pressure," Kimberly Tara, chief executive officer of FourWinds Capital Management, an investment marketing group, told a conference. Delegates said global warming and increasing desertification due to soil erosion in many parts of the world, made water an increasingly valuable commodity. Growing populations and urbanisation in developing countries have put a premium on investments in water infrastructure and industrial processing of water. Agriculture accounts for about 70 percent of global water consumption, with a further 22 percent used by industry, said Greg Smith, executive director of Global Commodities, a trade house. "We need to start thinking about increasing yields per litre of water consumed," he said in a keynote speech, noting hefty water requirements to produce grain crops and livestock. Four million litres of water are needed to produce a single head of cattle, Tara said. "It's very hard to reclaim desert land without a huge amount of water and fertiliser," Smith said. "In some parts of the world we are consuming up to 30 times the replenishment rate of the water table." Tara said the scarcity of water meant that authorities in many countries kept a tight control of supplies and price, limiting investment opportunities. "If you have a shortage of water, governments take over the supplies," she said. She said Indian water infrastructure was a promising investment because water systems were working poorly in some cities such as New Delhi. "India is a very good opportunity for water for businesses going forward," she said, referring to inadequate infrastructure. "Many people do not get water out of their tap, even in New Delhi." Increasing urbanisation in countries such as India and China, as well as rising populations and incomes, would ensure increasing pressure on water supplies. "Water is a very inelastic, essential commodity for any central area of human activity," Tara said. Apart from investments in water-related shares such as utilities, which have performed consistently, some mutual funds and hedge funds now focus on water, she added. The three-day Commodities Investment World conference, organised by Terrapinn Ltd, ends on Thursday.
