A meeting of international dignitaries will determine the course of action humanity faces in dealing with the water sector, which may very well determine the outlook of global water related exchange traded funds (ETFs).

In the 5th World Water Forum, more than 27,000 people from 120 or more countries will meet to discuss ways to adapt the water sector to face climate change, lack of sanitation and dearth of drinking water in many developing countries, along with increase demand for water for basic consumption and in water-intensive energy technologies, reports Lauren Morello for The New York Times.

Historically, water managers looked at records of streamflow, rainfall, and snowpack to determine if communities have enough water for everyday needs. Climate change is changing the regular patterns, which could mean more severe droughts or floods, and it is causing different melting periods for glaciers and snowpacks.

Periods of drought coupled with increased demand for water have been detrimental on all sources of water. The European Environment Agency released a report that states Europe is “living beyond its means” in regards to water use. It is predicted that climate change will create worsening conditions in water sources, along with more frequent and severe droughts across Europe.

These dire conditions could lead to more demand for the companies contained within the underlying indexes of water ETFs. Holdings consist of companies that focus on the provision of potable water, treat water, as well as technologies and services that directly relate to water consumption.

  • PowerShares Global Water (PIO): down 0.4% for the last week; up 10.7% in the past two weeks

ETF PIO performance

  • PowerShares Water Resources (PHO): up 0.6% in the last week; up 4.1% in the last month

ETF PHO performance

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.