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.”
Sign up for Kiplinger’s Free E-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
-
A Meteorite May Have Hit a Home in Georgia. Would Insurance Cover the Damage?In a rare event, a meteorite may have crashed through the roof of a Georgia homeowner. Here’s what home insurance would cover.
-
My Car Was Stolen — Here’s What I Did and How You Can Protect YourselfDon’t wait until it happens to you. Learn how to prepare for auto theft, protect your vehicle and respond quickly if your car is stolen.
-
Why Smart Retirees Are Ditching Traditional Financial PlansFinancial plans based purely on growth, like the 60/40 portfolio, are built for a different era. Today’s retirees need plans based on real-life risks and goals and that feature these four elements.
-
To My Small Business: Well, I've Been Afraid of Changin', 'Cause I've Built My Life Around YouWhile thinking about succession planning might feel like anticipating a landslide (here's to you, Fleetwood Mac), there are strategies you can implement to manage the uncertainty and the transition.
-
These Are the Key Tariff Issues to Watch in Coming MonthsWhile they're not dominating headlines right now, tariffs are not over. Some key dates are coming up fast that could upend markets all over again.
-
Technology Unleashes the Power of Year-Round Tax-Loss HarvestingTech advancements have made it possible to continuously monitor and rebalance portfolios, allowing for harvesting losses throughout the year rather than just once a year.
-
The Fiduciary Firewall: An Expert's Five-Step Guide to Honest Financial PlanningArmed with education and awareness, you can avoid unethical people in the financial industry by seeking fee-only fiduciaries and sharing your knowledge with others.
-
How Private Capital Could Be the Key to Rebuilding AmericaPrivate capital investment in infrastructure could be a more efficient and effective alternative to government funding, potentially stimulating the economy during uncertain times, creating jobs and delivering projects on time and within budget.
-
Real Estate Bridge Funds: An Expert Guide to Investing in a Volatile MarketInvestors looking for passive income are buying into these funds, which offer capital to borrowers for short-term financing.
-
Bill Bought a Fridge, and Then His Nightmare BeganA Lowe's customer reached out to me after he encountered the retailer's 48-hour return window for major appliances when his brand-new fridge turned out to be defective.
