Today is World Water Day, and I’d argue that there’s no more critical time for individuals to consider investing in this natural resource.
As many across the country continue to bear the effects of climate change by way of increasingly tempestuous seasons, impact investing is top of mind as it gets closer to home.
According to a report by the 2030 Water Resources Group (a public, private, civil society multidonor trust fund hosted by the World Bank Group), “By the year 2030, global freshwater demand is expected to outstrip supply by 40%, and an estimated 1.6 billion people will lack safely managed drinking water.”
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
I’ve previously written about the myriad ways to invest in water, including water-related funds directly, utilities, water testing and metering, desalination and infrastructure.
Here’s why I’m still bullish on the commodity.
1. There’s inelastic demand.
The world needs water, but there is only a finite supply of the resource. Indeed, according to the Intergovernmental Panel on Climate Change, “Roughly half of the world’s population is experiencing severe water scarcity for at least part of the year.” Therefore, it becomes incumbent on governments, humanitarian organizations and impact investors to find sustainable solutions to maximize the supply our planet has.
Although we know how critical water is for human consumption, we often forget how necessary it is for crops like beef, chicken, corn, potatoes or cotton that propel necessary industries like agriculture and textile production.
In our tech-forward world, we forget the cyclical nature of energy — that water use requires energy, and energy production needs water. Perhaps we’re producing less paper, but what’s the bandwidth looking like on our Wi-Fi networks? We must sense the invisible strain on this resource.
When basins and lakes are parched, we’re reminded that healthy rivers do more than promote summer recreation, they also support urban vitality.
When you pick up your next glass of H2O, recall its power in transforming the world around us.
2. It’s a hedge against poor health outcomes.
In February, NPR reported that the Environmental Protection Agency (EPA) recently moved to categorize nine new PFAS (per- and polyfluoroalkyl substances) — more commonly referred to as “forever chemicals” — under the Resource Conservation and Recovery Act. These substances are known to cause certain cancers, affect immune systems and negatively impact cholesterol levels, among other issues.
Modern medicine has made incredible advances in the past few years, and yet, too many (and increasingly younger) Americans are afflicted with hereditary diseases and those brought on by lifestyle choices and increasing amounts of stress.
As health challenges continue to ebb and flow through our personal lives, it’s a good reminder to find alignment in the missions of the companies you’re investing in.
3. The U.S. government continues to heavily invest in infrastructure.
Since the Biden administration’s Bipartisan Infrastructure Law was announced in 2021, it has sunk $400 billion into 40,000 projects across 4,500 communities in our country. Most recently, in September the initiative drew $180 million to launch a water recycling program.
Water shortage supplies are a serious matter, and the stunning images of Lake Mead over the past two years have been a solid frame of reference for the toll it has taken on our local economies and communities. Looking at investing opportunities for water management agencies is a smart place to start to find alignment with the Biden administration’s ambitious goals. Indeed, government investment in the water sector further strengthens the investment case.
When investment dollars go to work in the water sector, it improves access to clean water, revitalizes infrastructure and improves overall water conservation for future generations. That’s a long-term wealth building strategy that we all can get behind.
ALINE Wealth is a group of investment professionals registered with Hightower Securities, LLC, member FINRA and SIPC, and with Hightower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities, LLC; advisory services are offered through Hightower Advisors, LLC.
Related Content
- Best Water Stocks to Buy
- Why You Shouldn’t Ignore Investing in Commodities
- Five Downsides of Investing in Alternatives
- Why Investors Should Be Patient With Commodities
-
Stocks End Strong Month on a Down Note: Stock Market TodayThere was likely a bit of profit-taking ahead of a historically weak September.
-
The New Rules for Student LoansWhether you’re paying off education debt now or planning to borrow in the future, get ready for bigger payments and lower loan limits.
-
The Seven-Day Financial Reset: A Simple Plan to Get Control of Your Money, From an ExpertSometimes, getting unstuck requires a reset. These practical steps can help you tackle your money issues and feel less overwhelmed by it all.
-
Three Pros (and Four Cons) of Hiring Multiple Financial Advisers: The View From a Financial AdviserThere's nothing to stop you from working with several financial advisers instead of just one. But take a balanced view of the risks and rewards first.
-
Here's Why Munis Aren't Just for Wealthy Investors NowBuyers of all levels should be intrigued by municipal bonds' steep yield curve, strong credit fundamentals and yield levels offering an income buffer.
-
I'm a Financial Planning Pro: Do Your Family a Final Favor and Write Them a Love LetterSpecify your preferences in this personal document that shares your wishes on how you want to be remembered and celebrated. Your family will thank you for easing an emotional time.
-
The Future of Financial Advice Is Human: Gen Z Trusts Advisers, But AI Skills MatterGraduates entering the workforce trust human advisers more than AI tools with their financial planning. But AI can still enhance the client/adviser relationship.
-
I'm a Wealth Adviser: If You're a DIY Investor, Don't Make These Five MistakesEven though you may feel confident because of easy access to investing information, you may be making mistakes that could compromise your long-term performance. Here's what you should know.
-
Building a Business That Lasts: The Critical Steps to Avoid Blunders'Another Way' author David Whorton offers advice on how to build an 'evergreen' business that endures by avoiding common pitfalls that can lead to failure.
-
I'm a Financial Pro: Why You Shouldn't Put All Your Eggs in the Company Stock BasketLimit exposure to your employer's stock, sell it periodically and maintain portfolio diversification to protect your wealth from unexpected events.
