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The Most Overlooked Commodity
Over the last eight years, just about every commodity has gone through the roof – that is, all except one.Drinking water.
Fresh water is getting scarce, and it has no substitute. There’s no more water today than there was a million years ago – yet 6 billion people share it.
In many ways, clean drinking water is more precious than oil. Water is the one commodity everyone on the planet needs to survive, and there’s not enough to go around.
That spells opportunity for us.
Water, Water Everywhere, But…
Only 2.5% of the world’s total water supply is drinkable. The rest is saltwater and unfit for human consumption. Moreover, most fresh water is stored in glaciers, groundwater and soil, leaving less than 1% for humans, crops and livestock.
At our current rate of consumption over half of the global population could face water shortages within the next 50 years.
China is already dealing with a water crisis. About 20% of the world’s population lives in China but only 7% of the fresh water supply is located there. After decades of double-digit economic growth and the movement of hundreds of millions of villagers to the cities, China is struggling to meet the rise in demand for water.
Presently, China has 449 cities with inadequate water supplies. A fourth of those cities are at critically low levels. Even Beijing falls short of meeting its water needs by 1 billion cubic meters every year – or the equivalent of 440,000 Olympic-size swimming pools!
The country also has a growing water pollution problem. Its resources were scarce to begin with, and pollution has made clean water even scarcer.
The World’s Water Crisis
Water isn’t like other commodities. It doesn’t trade on a commodity exchange. And since government agencies and local regulators usually set the price, nobody really knows water’s true underlying cost. One recent survey in California – the most-populous U.S. state – shows that water prices increased more than 300% from 2000 to 2010.
So we can assume water would be in a secular bull market if it was a tradable commodity.
But that doesn’t mean we can’t make money from this incredible demand!
A Shrinking Water Supply is the
Government’s Problem –
but You Can Profit from the Solution
Water is a fundamental resource, and it’s often taken for granted. But governments around the world are quickly realizing that it’s only a matter of time before their wells run dry. This has led to a tidal wave of demand for water infrastructure and purification.
The OECD (Organization for Economic Cooperation and Development) estimates global spending on water projects to reach $800 billion over the next decade. That figure is expected to increase by another $1 trillion between 2020 and 2030! Less money is spent on electricity, telecoms, railways and roads.
Global Water Intelligence reports the United States will spend the most on water improvement systems this year ($110 billion), followed by Japan ($60 billion) and China ($50 billion). However, newly expanding economies will also be big spenders: Brazil is expected to commission work valued at $16 billion, India $6.4 billion and Indonesia $2.6 billion.
Governments across the globe are pumping money into water filtration, desalination and purification projects over the next several years. And the company I have for you this month will receive many of those government-funded contracts. It’s sure to make an absolute killing!
Water Opportunities That Could
Double Your Money in the Next Three Years
Whether it’s through purifying existing water supplies, offering wastewater management services or building up water infrastructure, companies working to prevent the global water shortage offer you the perfect opportunity to pocket some nice returns.
As leaders around the world increase their spending on water infrastructure in the coming years, the United States only makes up a tiny part of the total demand. So it also pays for investors to think internationally.
Water companies with a global footprint are in the best position to capitalize on the waste management and water needs of emerging markets. In fact, the Chinese water market alone is growing at an annual clip of 20%… which means huge revenue potential for any foreign-service provider that can satisfy the country growing demand.
You can also play the water theme from a different angle … metering. As water prices climb globally, companies are looking for new ways to conserve, clean and meter consumption. Meters are a valuable asset, especially to water utilities, because they make it possible to charge customers for the amount of water they consume. This also helps make customers more aware of their usage, encouraging conservation in the process. So the metering industry is becoming an increasingly integral part of the solution to the global water problem. And investors should keep their eye on this niche business for emerging opportunities.
Water is a basic necessity of life. That alone makes it a precious investment theme if you can find the right vehicle to ride that trend.
Eric Roseman
Editor, Commodity Trend Alert
Blog: http://roseman.sovereignsociety.com/
P.S. One little Australian company just unearthed the biggest rare earth metals discovery in 83 years – worth an estimated $58 Billion. When the news hits mainstream, this penny stock should go ballistic. This video has full details.
Other Posts from the Author
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- Europe's Boat Springs another Leak - July 11th, 2011
- Poor Brazilian Crop Threatens Sugar Supplies - July 7th, 2011
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Eric,
Do you have a recommendation on a play for a metering company or metering technology?
Thanks,
John