Summary: As a basic necessity for human life on earth, there are always potential opportunities for investing in water. This page has been written for us by the editorial team at TotallyDrinkable.com in December 2009, we hope you find it to be interesting and useful.
With water being essential to us all, there has always been and will always be the potential to make consistent profits from this resource. However, with the preventative costs of climate change looming large, and the advancing requirements of a rapidly increasing global population, the opportunities may not be so clear-cut.
As an essential resource, the utility companies that supply our water are mostly well regulated. Within geographic areas, utility companies usually have a monopoly over supply, meaning that we 'the consumer' need to be protected from unfair price rises.
While the profits being made by these companies has historically been above average, they will need major assistance from governments in the coming years if they are to be able to assist society as we need.
With temperatures rising in some parts of the world, there is new and additional strain being made on available water supplies whilst in other areas, deforestation is having terrible impacts on local populations as both their supply and quality of water is falling.
These changes are forcing new techniques and strategies to deal with these challenges. For example, some parts of the world - Cyprus comes to mind - are now using desalination technology to supply a substantial portion of their clean drinking water.
But this is not all, seawater is having a greater impact on many millions of people worldwide as storm surges and floods are increasing in both frequency and strength. Events that were once occurring every 100 or more years are now happening twice per decade!
This adds dramatically to the requirements of utility companies since their - often - old and outdated drainage systems are unable to cope and need updating. The cost to update and replace the drain system for an entire city can often be in the hundreds of millions of dollars. This is a price that current water companies and shareholders are simply unable to bare.
All this means that governments now have to consider legislation for the water industry much more seriously - our futures depend upon it! For example, the EU has in place two separate water directives to provide guidance to EU Member States in the hope that best practices can be shared and improved throughout the Union.
Of course, this does not mean that there is no investment opportunity in water, far from it. These new trends and changes almost certainly mean that some entrepreneurs will become very wealthy! But it does mean that more government assistance is needed and that we as taxpayers need to accept a greater responsibility for the supplies on which we depend.
Once again, we would like to thank TotallyDrinkable.com for sending us these thoughts.
To read more about ethical investment topics, please follow these links:
What Is Ethical Investment?
The Ethical Investment Dilemma
What Are The Main Ethical Investment Strategies?
How And Why Does Positive Engagement Work?
Are Ethical Investment Funds Higher Risk Than Other Similar Funds?
What Activities Does Negative Screening Filter From Ethical Investment Funds?
What Is Positive Screening?