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
-
How to Navigate Your Medicare Advantage Plan in a DisasterIf you're a Medicare Advantage member in an area that has been impacted by a disaster, you might be worried about access to care and medicine. Here's what you need to know.
-
Older Investors: Boost Your Savings and Retire EarlierThis one measure can help older investors retire up to two years earlier and potentially double their retirement savings.
-
I'm a Financial Adviser: This Is How You Could Be Leaving Six Figures in Social Security on the TableClaiming Social Security is about more than filing paperwork and expecting a check. When you do it and how you do it have huge financial implications that last the rest of your life.
-
The Big Pause: Why Are So Many Americans Afraid to Retire?While new research sheds light on Americans' growing reluctance to quit work in later life, can anything be done to help those with the retirement jitters?
-
Five Under-the-Radar Shifts Investors and Job Seekers Can't Afford to Ignore Under the OBBBBeyond the headlines: The new tax law's true impact for job seekers and investors lies in how it will transform industries and create opportunities in areas such as regional accounting, AI and outsourced business services.
-
I'm a Financial Professional: It's Time to Stop Planning Your Retirement Like It's 1995Today's retirement isn't the same as in your parents' day. You need to be prepared for a much longer time frame and make a plan with purpose in mind.
-
An Attorney's Guide to Your Evolving Estate Plan: Set-It-and-Forget-It Won't WorkWhen did you last review your will? Before kids? Before a big move? An update is essential, but regular reviews are even better. Here's why.
-
For a Richer Retirement, Follow These Five Golden RulesThese Golden Rules of Retirement Planning, developed by a financial pro with many years of experience, can help you build a plan that delivers increased income and liquid savings while also reducing risk.
-
Time for a Money Checkup: An Expert Guide to Realigning Your Financial GPSEven if your financial plan is on autopilot, now is the perfect time to make sure it's still aligned with your goals, especially if retirement is on the horizon.
-
Five Things to Do if You're Forced Into Early Retirement (and How to Reset and Recover)Developing a solid retirement plan — before a layoff — can help you to adapt to unexpected changes in your timeline. Once the initial panic eases, you can confidently reimagine what's next.
