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Supply and Demand to Boost Three Water ETFs


Continued population growth around the world has set the stage for an influx in investment into domestic and international water sectors.

Supply and demand forces dictate that the global water sector will witness growth and positive price support in the future, making the PowerShares Water Resources (PHO), the PowerShares Global Water (PIO) and the Guggenheim S&P Global Water Index (CGW) attractive investments.

According to the World Resources Institute, consumption of water has been growing more than twice as fast as population growth. Demand for the essential commodity is expected to increase by more than 50% over the next 15 years in developing markets and by more than 15% in developed markets like the US.

This demand in developing nations is emerging as incomes are rising and people are moving out of rural areas into more developed parts of their countries. In fact, a report by the United Nations indicates that nearly 50% of the world's population currently lives in cities, and over the next 35 years, this number is expected to rise to more than two-thirds.

Most recently, the world's population broke the 7 billion mark and it expected to surpass the 9 billion mark within the next 40 years. Much of this growth has been, and will likely continue to be, witnessed in the developing nations of Africa and Asia.

On the supply side, water scarcity and water stress has already prevailed in parts of Russia, China, and the US. Furthermore, the expected impact of Mother Nature's doing -- more severe flooding and droughts -- is expected to curtail the supply of potable water.

The world has a large amount of water; however, only 2.5% of it is fresh water, and a mere 33% of this fresh water can be used for agricultural purposes and human consumption.

At the end of the day, a supply and demand imbalance in the most important commodity around the world prevails and is likely to continue to do so, setting the stage for an influx in investment into the sector on both the domestic and international stage.

Editor's Note: This article was written by Kevin Grewal, founder of

No positions in stocks mentioned.

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