How to invest in water. Will water be the new oil?

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Water water everywhere, nor any drop to drink From “Rime Of The Ancient Mariner”

We tend to take water for granted. We are used to  turning on the tap and having it come out. But for a growing number of people around the globe it is becoming more precious than any other resource.

As countries such as China and India grow and new modern cities spring up, even more of this precious resouce will be needed in those countries.

In the United States we have our own water wars going on. In countless courtrooms across the west there are battles for the control of surface water and groundwater.

In Nevada where the once mighty Colorado river has been diverted to supply the needs and excesses of Las Vegas (and which is now being diverted by pipeline to faraway cities in California), to Atlanta, which came within six weeks of running out of water this past summer.

Only a salty trickle of the Colorado river makes in to the Sea Of Cortez in Mexico and Lake Lanier in Georgia may run dry next summer’s if rains do not arrive on time.

As the cities like these run short of surface water there is only one solution and that is to make water from seawater. Those few companies that make the equipment to do so will reap large profits in coming years.

How can you profit from the coming shortage of water? One way is to invest in companies that make treatment and desalinization equipment.

A water ETF or Exchange Traded Fund is one option that will allow you to invest in a number of water related companies and diversify your portfolio.

Invesco Powershares offers two popular water funds, which follow the Palisades Water Index.

The water infrastructure fund with the symbol PHO is composed of mostly domestic (US) companies that produce equipment used to treat, transport and meter water.  It also is composed of about ten percent water utilities.

Powershares also offers the a fund with the symbol PIO. This water ETF is composed of approximately 75% non U.S. based companies.

Investing in water is one way to invest in infrastructure.  Given that President Elect Obama is planning on spending as much as one trillion dollars on infrastructure, including water related projects, now may be a good time to look into ETF’s such as PHO and PIO.

Water may very well become as profitable as oil has been in the past few decades.


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