Water: The Next Big Commodity for Investors


Imagine if the next big thing in your investment portfolio wasn’t tech stocks or cryptocurrencies, but something as essential and everyday as water. It sounds a bit surprising, right? But as the world faces increasing water scarcity, investors are starting to see water as a valuable commodity. Let’s dive into why water is becoming the next big thing in the investment world.

The Global Water Crisis

Water scarcity is a growing problem around the globe. Did you know that by 2025, two-thirds of the world’s population may face water shortages? Factors like climate change, population growth, and industrial demand are straining our water resources. Countries like South Africa and India are already experiencing severe water shortages, highlighting the urgent need for sustainable water management.

Why Invest in Water?

So, why should you consider investing in water? For starters, water is essential for life, and its demand is only going to increase. Unlike other commodities, water has no substitute. Investing in water is not only a bet on the future but also a stable long-term investment. Historically, water utilities have shown steady performance, often outperforming other sectors during economic downturns.

Types of Water Investments

There are several ways to invest in water:

  • Water utility stocks: These companies provide water and wastewater services, making them a direct way to invest in water.
  • Exchange-traded funds (ETFs): These funds focus on companies involved in water-related businesses, offering diversified exposure.
  • Water rights and ownership: Investors can buy rights to water sources, a common practice in places like the western United States.
  • Infrastructure and technology companies: These firms develop and manage water-related infrastructure and technologies.

Water Utility Stocks

Water utility stocks are a great entry point for water investments. Companies like American Water Works (AWK) and Aqua America (WTRG) are major players in this space. Over the past decade, American Water Works has delivered annualized returns of about 12%, making it a solid performer. Investing in these stocks offers steady dividends and growth potential, with the added benefit of investing in a necessity.

Water-Focused ETFs

If you prefer a diversified approach, water-focused ETFs might be your thing. ETFs like the Invesco Water Resources ETF (PHO) and the First Trust Water ETF (FIW) include a range of companies in the water sector. These funds spread risk and provide exposure to multiple companies, making them a safer bet for those new to water investments.

Investing in Water Rights

Investing in water rights can be a bit more complex but potentially lucrative. Essentially, you’re buying the legal right to use water from a source. This practice is common in agriculture-heavy regions like California. For instance, water rights in California’s Central Valley can trade for thousands of dollars per acre-foot, reflecting their high value and scarcity.

Infrastructure and Technology Companies

The role of technology in water management cannot be overstated. Companies like Xylem (XYL) and Danaher (DHR) are leading the way with innovations in water purification, distribution, and conservation. Xylem, for example, has been growing steadily, with a market cap reaching over $20 billion. Investing in such companies not only supports technological advancement but also taps into the growing need for efficient water management solutions.

Risks and Challenges

Like any investment, water investments come with risks. Regulatory changes, environmental issues, and market volatility can impact returns. For instance, prolonged droughts can affect water supply and rights value. However, by staying informed and diversifying your investments, you can mitigate these risks.

Impact Investing and ESG Considerations

Water investments align perfectly with Environmental, Social, and Governance (ESG) criteria. By investing in water, you’re not just seeking financial returns but also contributing to sustainable and ethical practices. Impact investing in the water sector supports initiatives like clean water access and conservation, making it a feel-good investment.

Geopolitical and Regulatory Landscape

Water is a highly regulated commodity, influenced by both local and international policies. Geopolitical tensions can arise over water resources, especially in regions where water is scarce. Understanding the regulatory landscape is crucial for water investors. For example, the Clean Water Act in the U.S. sets standards for water quality, impacting how companies operate and comply.

Case Studies and Success Stories

Let’s look at some success stories. The California Water Service Group (CWT), one of the largest regulated water utilities in the U.S., has shown consistent growth, with its stock price increasing by over 50% in the past five years. Another example is the success of the water infrastructure project in Singapore, which has turned the city-state into a global leader in water technology.

Future Trends in Water Investments

The future of water investments looks promising. Emerging trends include advancements in desalination technology, smart water management systems, and increased focus on water recycling. By 2030, the global water market is expected to reach $914 billion, reflecting the growing importance and value of water as a commodity.

How to Get Started with Water Investments

Ready to take the plunge into water investments? Start by researching water utility stocks and ETFs. Look for companies with strong financials and a track record of growth. Consider diversifying your portfolio with a mix of stocks, ETFs, and possibly water rights. Staying informed about industry trends and regulatory changes will also help you make smarter investment decisions.


Water is fast becoming one of the most valuable commodities for investors. With growing global demand and increasing scarcity, investing in water offers both financial returns and the opportunity to support sustainable practices. As the world continues to face water challenges, the importance of water investments will only grow. Dive in and consider adding water to your investment portfolio today.

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