H2oAlliance

Water Market For Investors

To understand how big water business, or investment opportunity is, you must first understand a day-in-the-life of the world. Everyone is scrambling to get their hands on freshwater. And for businesses and investors, freshwater holds some great opportunities.

Companies, communities, and governments are trying to solve freshwater problems. The problem is growing more serious by the week and has made freshwater more precious than oil in many places around the world. Water is everything, and people are willing to fight over it. Planners are fighting to quench the growing population, and businesses are fighting for economic zones. Water promises to be for the 21st century what oil was for the 20th.

Like gold and oil, freshwater is a commodity - and it happens to be rather scarce. Water has become an important issue and as a result, increasing number of Asset Managers have launched Water Funds which attract worldwide investment from institutions. There is an increase in the demand for investments that seek to profit from the need for clean water.

Recent years have seen an upswing in the demand for investments that seek to profit from the need for fresh, clean water. If the trend continues, and by all indications it will, investors can expect to see a host of new investments that provide exposure to this precious commodity, and to the firms that deliver it to the marketplace.

As global warming and climate change fundamentally alters the world in which companies generate their earnings, it’s creating new opportunities for investors who seek to identify those companies that can mitigate the risks, and capitalize on opportunities.

Supply Sources

Finite supplies of freshwater mean that major investment is required in water technologies, monitoring, delivery and distribution systems, as well as in water recycling facilities, and the development of new supply sources.

• United States will require estimated $150 billion investment in its water infrastructure by 2016.

• China's government plans to spend $125 billion by 2010, to build wastewater treatment plants, and upgrade water distribution infrastructure.

• Alternative investments, particularly in areas such as freshwater, are rapidly becoming a mainstream choice.

• Green, Eco, and Ethical water investments have moved into the mainstream, and are no longer a narrow specialist field of investments.

• Environmentally concerned companies, large and small, are making an effort to protect the earth, and our freshwater resources.

• Whether it is by implementing a company water monitoring program, recycling water, or eliminating toxic materials from their products, more than ever before, companies are getting involved in the environmental movement.

• The environmental movement is gaining steam as corporations join the "Green Wave" with the involvement and dedication of more and more companies.

• The estimated $400 billion global water industry ($100 billion in the U.S) has provided reliable, steady returns to investors. Today, the industry as a whole is growing at 4-6% a year, except for certain sub-sectors.

• An estimated 1 trillion people are desperately required to repair, upgrade and build infrastructure worldwide. The 100-year old US & European water, and wastewater infrastructure consists of a million miles of pipes - thousands of which are eroding and leaking.

• In the developing world, new infrastructure is sorely needed to serve the billion people who currently lack access to freshwater.

• The technology is available to fix the problems; money is needed to pay for it.

• Water is currently managed through subsidies and low prices.
  

• Water utilities need to be upgraded, the infrastructure continues to decay, and individuals, businesses and farms have to conserve, and change their inefficient practices.
  

Global Water Resources

• Only 0.01% of the Earth's total water is readily available for human consumption.

• 97.5% is salt water unfit for human use, and the rest is locked into glaciers and ice caps. Simply if the world's water supply were stored in a five-liter container, available freshwater would only fill a teaspoon.

• Saltwater cannot be used for drinking, crop irrigation or most industrial uses.

• Currently about 20% of the world's population is facing water shortages, expected to rise to 30% in 2025.

• China has 22% of the world's population but only 7% of the world's fresh water.

• New innovative technologies have emerged that help ease water shortages.

• Water-related technologies are expected to see significant growth, of 15%-30%, over the next three to five years.

• Desalination market includes estimated 100 countries that currently rely on desalination for at least part of their freshwater consumption needs.

Freshwater Shortage

• The real problem is that not only is the world running out of fresh water, new reserves can't be discovered. We have a fixed amount. Couple that with a surging population, expanding business base, parched lawns, golf courses...
  

• Rapid industrialization, urbanization, and increasing agricultural use have contributed to worldwide water shortages.

• Areas that have experienced freshwater shortages include China, Egypt, India, Israel, Pakistan, Mexico, parts of Africa and the United States (Colorado, California, Las Vegas and the East Coast), to name but a few.

• Pollution also highlights the need for clean freshwater. In the U.S., the dead zone off the Gulf Coast highlights the impact of fertilizer runoff, and methyl tertiary butyl ether (MTBE), an additive in unleaded gasoline, can be found in well water from California to Maryland. Overseas, highly publicized incidents in Russia, China and elsewhere demonstrate that pollution isn't limited to the West. Of course, fouled water supplies further limit the amount of fresh water available for human use.

• Like any other scarcity, the freshwater shortage creates investment and business opportunities, and interest in freshwater is at an all-time high.

United States

• American businesses flush more than one billion gallons of freshwater down the toilet every working day. While these statistics are startling, the list goes on and on. Our natural resources are diminishing at an alarming rate, and the state of the environment is in jeopardy due to the practices and policies of many businesses and corporations in America today.

• There's a critical shortage of the world's most precious, absolutely essential commodity - and it's occurring in the fastest-growing and driest part of the United States, the Southwest.

• The US 100 billion water industry in the United States has provided reliable, steady returns to investors. Today, the industry as a whole is growing at 4-6% a year, except for certain sub-sectors.

• Companies from blue chip to micro cap are all seeking a piece of the water market.

• In addition to direct stock purchases, some of the larger firms offer dividend reinvestment plans.

• Firms seeking to profit from water-related businesses include technology, beverage, utilities, water treatment & purification firms, and equipment makers such as pumps, valves and desalination units.

• Bottled water market is growing, and demand on the rise internationally. The bottled water market in the U.S. grew 19% in 2004, and U.S. consumers drank 26 gallons of bottled water per person in 2005, up from 11.7 gallons in 1995.

• ETFs, mutual funds and unit investment trusts (UITs) also provide plenty of opportunities to invest in water.

The Most Popular Water Indexes

These indexes are designed to track various water-related investment opportunities:

• Palisades Water Index - This index was designed to track the performance of companies involved in the global water industry, including pump and filter manufacturers, water utilities and irrigation equipment manufacturers. The ticker symbol for the Palisades Water Index is ZWI.
  

• Dow Jones U.S. Water Index. The ticker for the Dow Jones Water Index is DJUSWU.

• ISE-B&S Water Index - Launched in January 2006, this new index represents water distribution, water filtration, flow technology and other companies that specialize in water-related solutions. It contains 20 stocks. The ticker for the ISE-B&S Water Index is HHO.

• S&P 1500 Water Utilities Index - A sub-sector of the Standard & Poor's 1500 Utilities Index, this index is composed of just two companies, American States Water (ticker: AWR) and Aqua America (ticker: WTR). In 2005, the S&P 1500 Water Utilities Index rose in excess of 45%.

• The Bloomberg World Water Index and the MSCI World Water Index provide a look at the water industry from an international perspective, although it can be rather difficult to find current information about either index. There are also a variety of utility indexes that include some water stocks.