Water Becoming a Commodity

In his recent Newsday article, “Liquid Assets: Why water is become a commodity”, Andrew Leckey discusses the recent developments affecting water and water-related investments.

“T. Boone Pickens has been buying water rights in the Texas Panhandle in the belief that water is going to become scarce and salable. This follows the logic that climate change, shrinking lakes and rivers, and population growth will make increasing portions of the world susceptible to water shortages.” Governments and companies are beginning to take steps to deal with the issue of water. The number of ways to invest in water and water-related companies has correspondingly increased.

“Only about 3 percent of the world’s water supply is drinkable, and much of that is in the ground or in ice”, says Stewart Scharf, equity analyst with Standard & Poor’s Corp. He adds, “Water is needed for agriculture, manufacturing and drinking, and awareness has been heightened by natural disasters such as tsunamis, cyclones, and earthquakes.”

The $2.4-billion PowerShares Water Resources (PHO) tracks the Palisades water index of companies in water treatment, water utilities, pipe and pump manufacturing and is up 1% over the past 12 months. The $34-million First Trust ISE Water (FIW), which tracks the ISE water index of companies that derive a substantial portion of revenue from water and waste-water industries, is up 2% over the past twelve months.

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