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Privatization Of Water
Many people believe that water will be privatized in the next few decades. Without question, we’ve already seen a move in that direction just by the dominance of bottled water in the beverage industry, and private companies taking over the water needs of many cities, states and countries.
There are a lot of things to consider when it comes to investing in water such as investing in companies, municipalities, land, and the ethical aspects. Some of the ideas in here are quite straight-forward and others are a bit off the beaten path, but this is not unorthodox when considering investment angles for potential, but not guaranteed upcoming scenario.
These ideas are intended to get your investment creative juices flowing, more than they are to be an investment guide. These ideas are intended for illustration purposes only, and are not intended to be followed.
Beverage Companies
Without a doubt, an easy way to invest in water is to invest in the companies that already control aquifers and water management facilities. Companies like Coca-Cola, Pepsi, and Dr. Pepper Snapple Group. By picking a company that is well rooted in the water industry then you can invest solidly in water privatization.
If water became privatized, do you think Coke or Pepsi would be victims? We’re pretty sure Coke wouldn’t throw in the towel, they would either already have their water needs covered or they would get them covered. We also have a more in-depth article on investing in water with Coca-Cola.
Water From Air
You may have heard that there are new machines coming out that retrieve water from the air. Investing in companies that create these machines may be a good move when water prices begin to creep up. Many of the companies are currently private, but they may need investment capital, or if they do an IPO, you can be sure to watch it closely. If water becomes privatized, many people will immediately seek self sufficiency.
Municipalities
He who has the Gold makes the rules, and he who has the water pays the bond interest. If you can invest in municipalities that have privatized their water system then you may be sitting on a Gold mine.
If water becomes privatized then you can be sure that the price will go up and the municipalities you’ve invested in may very well end up being a supplier to other cities and states. What this means is that you have a dependable bond that will be able to pay their interest.
This could drive up the demand for that municipalities bonds because they will be safe, stable, and profitable. Your bonds, on the secondary market, could easily shoot through the roof in value just because they control their water.
Municipalities Could Backfire
This particular municipalities scenario probably would not occur for quite some time after the overall privatization of water just because we imagine it would take a while for the effects to set in.
Something to consider is that a rush to a municipalities bond would depress the bond rate, so it would be important to get in early. One last consideration would be that if a municipality experienced such great success, it may not need to issue bonds any further.
Invest In Water Companies
Then there are companies that outright service the water needs of cities, states, and countries. We are including some links below to well-known companies that do exactly this. There are many more companies out there and if you click on the links below you will see a list of related companies.
Ethical Considerations In Water Investment
Investing is all well and good but you should also consider the ethical side of water privatization. Investing in a company because it will advantage you if water is privatized can be considered a vote for water privatization. For many, water privatization can mean starvation due to lack of water for crops, dehydration because of the lack of clean drinking water, and it can hinder a developing country’s growth.
Ethical investing, as this ideology is called, is a hard thing to enforce in your portfolio because you can look at nearly any company and find a way that it negatively impacts something. It is up to you to determine if investing in water privatization is too much for your conscience.
Disclaimer: All links to companies within this article is not an endorsement by us to purchase the company, or to even consider the company. They should be treated only as examples. We are not responsible for the outcomes of any investments that you decide to make. We believe that water privatization will eventually occur, but we do not make any guarantees. Just like you, we can’t predict the future and do not make any claims to this. In other words: Invest at your own risk.
Disclosures: We are long Coca-Cola.
Photo Credit: CAPL
