11/04/2013 | Emerging Markets

Forget Bitcoins, trash is the next big investment. At least that’s according to some strategists who believe this unusual asset class is set to grow

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Amid talk about bubbles in gold . major central banks adopting extremely loose monetary policies that lower yields on nearly every safe asset, and stock markets hitting historic highs, strategists at Bank of America Merrill Lynch draw attention to garbage as the next big investment boom.

Emerging markets . which are growing faster than developed countries, are the place to look for opportunities as they will have to deal with the challenges posed by increasing waste products, the strategists said in a report headlined No time to waste.

The waste management market is worth $1 trillion currently, and it includes municipal solid waste (MSW), industrial waste, waste-to-energy and sustainable packaging, as well as other areas, according to the report.

But by 2020, the waste industry’s value could be worth $2 trillion, with Europe facing the toughest strategic challenges and Asia and South America seeing the fastest growth, the equity strategists estimate.

We see opportunities across waste management, industrial treatment, waste-to-energy, wastewater and sewage, E&C [engineering and consulting], recycling, and sustainable packaging among other areas, they said.

At a global level, waste production is estimated at between 4 billion and 6 billion tonnes, with the highest levels in developed countries – two or three times more the level in emerging markets.

However, emerging markets will present the greatest waste generation and waste management challenges and opportunities going forward, the strategists said.

With some 70% of global waste ending up in landfills and only between 25% and 30% being recycled, there is large scope for opportunity, they added.

BRICS TO THE FOREFRONT

The strategists identified exciting opportunities in the BRICS countries.

In Brazil, the sanitation sector requires substantial investment, with coverage levels of 81% in water, 46% in sewage collection and 38% in sewage treatment.

The country needs to invest $180 billion to reach 100% coverage, especially in sewage, they estimated, adding that at the current rate of investment, this would take 60 years to achieve.

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