How to Invest in Water. Today, approximately 20 percent of the world's population is without potable drinking water. The situation may get worse with the threat of global warming. Many people see the need to find efficacious ways to purify and distribute water. Some companies are on the cutting edge of this technology, making them good investment opportunities. Read on to learn more.
Identify companies that have strong connections to various regions of the world where water is most scarce. For example, China has over one-fifth of the world's population and only 7 percent of the world's fresh water. As China attempts to provide potable water to its population, it will rely on companies within its borders or companies with strong connections to the government. The same is true for India and various Middle Eastern countries.
Invest in several different kinds of water companies. Water companies involved in purification and distribution each play different roles. For example, Calgon Carbon Corporation is involved in removal of carbon compounds from water and air using granular activated carbon. Other companies focus on desalination or water infrastructure.
Look for the formation of new mutual funds such as the PFW Water Fund, which trades under the ticker symbol, BEGAX or the Powershares Water Resources Portfolio (PHO). These funds should be highly focused on companies that participate in the water industries, while also being broadly diversified with respect to different aspects of water.
Watch for large companies that are beginning to focus on desalination. These facilities will become more necessary as fresh water sources dwindle. General Electric and Hyflux are 2 companies that have become major players in desalination and purification.