Ongoing global droughts are causing a scarcity of water, but it’s enough to gain the attention of exchange traded fund (ETF) investors as a workable solution to the problem is increasingly sought after.The opportunity for better water efficiencies is huge in both the emerging and developed world. Along with these concerns, the capacity for investment interest is on the rise, too. The potential for efficiency gains in water transmission and use are enormousm given that about half of water used for irrigation is lost to evaporation and waste, according to a report by the World Economic Water Initiative.
FP Trading Desk for Seeking Alpha explains that water usage is rising all over the world. Changing diet patterns, primarily to a shift toward more meat consumption, doubles the need for water for production relative to a vegetarian diet. Energy production also requires water, and it’s an area that’s projected to see very rapid growth in the next few decades.
There are specific areas that can be accessed through ETFs for investment in the water shortage. Water-related businesses, such as those that work to build up infrastructure, is one area. Another is water filtration, making potable water clean for drinking.
- PowerShares Water Resources (PHO): up 4.5% year-to-date
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.