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How to profit from the drought of this precious commodity

by , 27 July 2015

The world is running out of water. Demand is soaring, but drought is keeping supplies in some regions of the world extremely tight.

As the world faces this growing crisis, there are opportunities to profit from companies that are providing solutions to deal with the lack of water.

Read on to find out more…

The growing strain on water supplies

The UN predicts that demand for water will grow 40% by 2030. And more than half of the world’s population could be facing “water scarcity”.

But with this growing crisis comes opportunity. Governments the world over need to address the problem and companies are jumping on the bandwagon to come up with solutions.

And it’s these solutions that offer you investment opportunities…

Desalination plants offer a solution and investment opportunity

Desalination plants take sea water and convert it into freshwater. Over recent years, the technology behind this process has become much more sophisticated.

In China, there are huge scale desalination plants. China’s dealing with water shortages in some of its main cities, including Beijing.

But desalination is expensive and has environmental impacts. And the process uses a lot of energy.

Despite the drawbacks, Global Water Intelligence, a research group, anticipates the industry will grow by 20% a year, Matthew Partridge in Money Week explains.

Opportunities from moving water

In many circumstances where there are plentiful supplies, the water needs moved to areas facing drought. This includes pipelines, aqueducts and using transport such as ships to move water.

This also comes with high costs, but modest projects are already on the go. Take Turkey, which already transports water to Northern Cyprus.

Recycling water

Recycling water may not seem like the most appealing method of dealing with a water shortage. The idea is that sewage is treated and filtered until it is fit for drinking.

With a far lower salt content than sea water, this is actually a cheaper alternative than desalination. Orange County in the US is already recycling 70 million gallons a day of sewage.

How to profit from water

If you want to try to profit from the growing water shortage, you can look to companies that specialise in the different aspects mentioned above. The majority of the industry leaders are US-listed.

Companies include:

  • Cadiz Inc [NASDAQ:CDZI], which specialises in piping underground supplies to areas in need of water;
  • Tetra Tech [NASDAQ:TTEK], which specialises in desalination projects; and
  • PowerShares Water Resources Portfolio [NYSE:PHO], which is an exchange traded fund focusing on water technology and related processes.

So there you have it, how to profit from the drought of this precious commodity.

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How to profit from the drought of this precious commodity
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