Repairs to Aging Infrastructure Could Support Water ETFs

June 17th at 11:15am by Tom Lydon

America’s aging water system will require an extensive touch up job. As the U.S. overhauls its infrastructure, water industry related exchange traded funds could pump out big returns.

The Environmental Protection Agency calculates that the U.S. water infrastructure will require $384 billion in upgrades from 2011 through 2030, reports Mark Koba for CNBC. The non-profit American Water Works Association estimates that more than $1.7 trillion will be needed to fix the water system between 2011 and 2050. [Water ETFs to Play Infrastructure Needs]

“Every two minutes there’s a water pipe breaking in the U.S.,”¬†Shafiqul Islam, a professor and director of the Water Diplomacy Initiative at Tufts University, said in the article. “We’ve been putting band aids on this, but we can’t do that anymore.”

“A lot of these systems have passed their shelf life,” Cindy Wallis-Lage, president of Black & Veatch, said in the CNBC report.

Meanwhile, the cost of doing nothing is starting to stack up.

“The American Civil Engineers said that gross domestic product losses from not upgrading could be $416 billion by 2020 from the constant system breakdowns and constant repairs instead of doing it right,” Islam added. “We lose about 1.7 trillion gallons of water a year from pipe breaks.”

While our planet has a bountiful water supply, the main problem is extracting enough for human consumption.

“The main issue moving forward is not generally scarcity of water, but how to have fresh water for human consumption and clean water for manufacturing processes,” Jose Lopez, assistant professor of physics at Seton Hall University, said in the article.

Those who are interested in investing toward the growing water industry can take a look at the PowerShares Water Resources Portfolio (NSYEArca: PHO), which tracks U.S. companies that create products designed to conserve and purify water for homes, business and industries.

Other water-related ETFs include:

  • Guggenhiem S&P Global Water Index ETF (NSYEArca: CGW)
  • PowerShares Global Water Resources Portfolio (NSYEArca: PIO)
  • First Trust ISE Water Index Fund (NSYEArca: FIW)

For more information on the water industry, visit our water category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.