Thanks to subpar winter rain and snow in the Northern California mountains, the Southwest appears to be headed for another summer of water rationing -- something nearby Texas is already familiar with.
And water shortages abound elsewhere.
Across the globe, the Chinese government is building a massive pipeline to ship water from the country's humid south to the increasingly arid cities in the north, some 1,000 miles away. In the Middle East, battle lines are being drawn over the few vibrant fresh water supplies that remain.
But there is good news to all of this doom and gloom: There are some greatto be had.
For this ever-thirsty planet, technology may come to the rescue. Huge desalination plants are coming on line; inland municipalities are gearing up to filter waste water, turning it back into fresh water; and farmers are learning how to use advanced irrigation methods to grow crops with less water.
This isn't a fast-growing business. Governments have slowly addressed the emerging water crises, so industrytypically grow less than 10% a .
Yet spending on water treatment should grow over the long haul as equipment is upgraded and pockets of water scarcity emerge. Booz Allen estimates that $20 billion in global spendingbe needed on water infrastructure through 2030.
And that may be an understatement.
"The United States Environmental Protection Agency (EPA) has projected that by 2019, $150 billionneed to be spent on drinking water infrastructure, and another $180 billion for clean-water infrastructure in the United States alone," according to at the International Securities Exchange.
The ISE'sadd, "The Chinese government alone plans to spend $120 billion over the next several years to ensure all of its citizens have access to clean, dependable supplies of drinking water."
What does thisfor you and your portfolio? As the world's water infrastructure grows, now's your chance to invest in a necessary .
Here are some ways to invest in the world's thirst for water:
The Water Niches
You can cherry-pick the best of the companies that dominate their respective niches according to which area of water scarcity you think is most compelling. For example, American Water Works (AWK) now generates roughly $3 billion in annual through its management of more than 1,000 water treatment, storage and wastewater management facilities across the U.S. It's a fairly opportunity (annual growth is usually below 10%) but nicely profitable, as American Water Works generates 30% operating .
In a similar vein, U.K.-based United Utilities (Pink Sheets: UUGRY) offers the same services throughout Great Britain. In France, Veolia Environnement (VE) designs, builds and operates a variety of water treatment plants throughout Europe.
In the U.S., as farmers in the Midwest and Southwest grapple with ongoing drought LNN), which makes highly efficient irrigation equipment. The company's base doubled from fiscal 2007 to fiscal 2012 (to about $560 million), and expect to rise by 20% this ., they are increasingly turning to Lindsay Corp. (
Rather than focus on one company, investors canexposure to the whole group by owning the water-focused exchange-traded ( ).
The Guggenheim S&P Global Water CGW), which carries a 0.65% expense ratio, owns companies such as Pentair (PNR), which sells components used in water treatment systems, along with wastewater treatment companies noted above. According to Morningstar, this has outperformed the MSCI World (a for all globally listed ) on a one-, three- and five-year .(
Investors can also check out the PowerShares Water Resources PHO), which carries a 0.62% expense ratio and is mostly focused on U.S.-based companies. (There is also the PowerShares Global (PIO), which focuses on Europe-based companies). Top holdings in the PHO include Pentair, Flowserve (FLS), Pall Corp. (PLL), Waters Corp. (WAT) and Watts Water (WTS). These companies make the filters, flow control and monitoring devices that major wastewater treatment firms use.(
The First Trust ISE Water FIW) tracks the ISE Water . The 's says it is made up of global companies that derive a substantial portion of their from the potable and wastewater industry, including niches such as water distribution, infrastructure (pumps, pipes and valves), water solutions (purification and filtration), and ancillary services such as consulting, construction and metering.(
The Answer: The key driving the global water trends are just now deepening here and abroad. That makes these companies and well-positioned to on the long-term trend of heightened fresh water scarcity.
- Utility Industry
- Natural Resources
- water scarcity