When individuals think about commodities and their exchange traded funds (ETFs), they generally think of gold or oil, but don’t consider one of the most valuable commodities to mankind: water.

Water is so valuable because it is absolutely essential for survival and it’s becoming scarce.  What’s even more amazing is the fact that while more than 70% of the Earth’s surface is covered by water, only 3% is fit for human consumption.  Of this 3%, only 1% is readily available for consumption.

As a result of global population increases, rapid industrialization and increasing agricultural use water is rapidly being depleted.  Nations such as India, China, Egypt, Mexico and parts of the United States are witnessing water shortages and are part of the reason that the demand for water is on the rise, states James E. MccWhinney of Investopedia.

From an investor’s perspective, a common index that is looked at is the Palisades Water Index, which is designed to track the performance of companies involved in the global water industry.  This index can be accessed through the PowerShares Water Resources Fund (PHO), up 8.4% year-to-date. PowerShares also provides the PowerShares Global Water (PIO), up 20.8% year-to-date.

A second way to watch the water markets is through the ISE-B&S Water Index which focuses on water distribution and companies that specialize on water technology.  One could take a look at the First Trust ISE Water Index Fund (FIW) which is up 9.8% year-to-date.

A third way to access water is through the S&P Global Water Index, which holds a universe of companies listed on global developed market exchanges. The index is represented by the Claymore S&P Global Water Index (CGW), which is up 15.3% year-to-date.

For more stories on water, visit our water category.

Kevin Grewal contributed to this article.

Tags: Commodity ETFs, FIW, PHO, Sector ETFs, Water