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The world is running out of water. Water covers 79% of the Earth’s surface. But only 2.5% of the world’s water is fresh water, and more than 99% of that is buried in glaciers or underground aquifers — leaving us to get by on a fraction of 1% of the water on Earth. A booming global population, economic growth, and massively disrupted weather patterns created by man-made climate change mean the water that helped humanity develop for millennia is now under serious threat. Water demand is up some 40% over the past 40 years and is estimated to increase another 25% by 2050, even as supply has more than halved since 1970. The implications for the economy are frightening: $70 trillion of global GDP could be exposed to what the water world calls “high water stress” by 2050, up from $15 trillion in 2010.

The United Nations estimates that 2 billion people around the world lack access to safe drinking water. And 3.6 billion people (more than a third of the Earth’s population) lack safe sanitation services, according to the World Bank, which notes that economic growth is a “thirsty business” and water is a key part of helping economies grow — from irrigating crops to cooling data centers.

And it’s not just the amount of water causing a global water crisis, it’s the infrastructure that makes water available, from dams to pipes to sewers to treatment plants. In its quinquennial report card on the state of U.S. infrastructure, the American Society of Civil Engineers gave a bunch of Ds to America’s water infrastructure. By the group’s scoring system, D means in poor condition and at a strong risk of failure. A C means it’s in mediocre condition and requires attention.

• Dams: D
• Stormwater diversion and treatment: D
• Wastewater treatment: D+
• Drinking Water: C-

More sobering still is the money that the engineers project is needed to bring America’s water infrastructure up to snuff. Together, drinking water, wastewater, and stormwater infrastructure need more than $1 trillion by 2029, of which about $611 billion has been appropriate — leaving a funding gap of more than $400 billion, according to the 2021 report. Fixing America’s leaking dams would require $93.6 billion, of which only $12.5 billion has been funded, leaving a yawning gap of $81 billion.

President Joe Biden’s Infrastructure and Jobs Act promises $55 billion toward water infrastructure — which while, not quite a drop in the bucket (pardon the pun), is a start, particularly if it can unlock private investment. But one person’s crisis can be another person’s investment opportunity. So let’s take a quick look at some ways to make money off the water crisis and simultaneously help to resolve it.

Getting your feet wet with water investing

Given the size of the global water crisis, the demand for investment — and the opportunities for profit by helping to resolve the crisis — are massive. “On the opportunity side, we have the technologies and tools in place that can really help us solve the water crisis,” said Madeline Ruid, a research analyst at GlobalX ETFs, which has several exchange-traded funds focused on drinking water. “Working to address the crisis could create opportunities for those different companies that are producing or using those different tools throughout the water supply chain more generally, including those involved in storage, transport, efficient use, treatment and distribution of water.”

According to the ASCE Report Card, There is a water main break every two minutes, and an estimated 6 billion gallons of treated water is lost each day in the U.S. — enough to fill over 9,000 swimming pools. Desalination and smart metering — installing water meters that tell individual households how much water they are using for each tap or water-thirsty appliance — are two of the newer high-tech ways to invest in water.

But picking specific companies can be tough, and most investors find it easier to make a water play with an exchange-traded fund. According to Vetta Fi, a firm that tracks ETFs and other equities, the top pure-play water indices this year are listed below. Apart from Invesco’s ETF, they don’t compare well to the Dow Jones Industrial Average, which is up about 4% this year, and the S&P 500, which has risen about 17%.

Some interesting water plays

When Goldman Sachs speaks, people listen. The world’s most influential investment bank has been investing in water for nearly two decades on the theory that financing water infrastructure is a lucrative business. “By providing capital necessary to develop innovations providing water solutions to key sectors from agriculture to energy, we believe investors can play a role in securing a sustainable water future,” Luke Barrs, Goldman’s global head of fundamental equity client portfolio management, wrote in a December note. “Demand for advanced technologies to conserve water and manage the complex water needs of businesses has been growing,” added Barrs, creating what he called “compelling opportunities” for investors.

Goldman identifies a handful of water-related areas that abound in investment opportunity

• Agriculture represents 70% of global water consumption, and about 40% of the water used to irrigate crops is wasted, evaporating from irrigation canals or flooded fields, or leaking from pipes. Pesticides in runoff further deplete the water available for farming. Goldman sees opportunities in renewable energy-powered irrigation systems, precision-engineered spray nozzles for crops, apps and drones that monitor wind, humidity, and soil temperature, and solar-powered pumps that let farms and vineyards maximize water flow at key moments in the growing cycle
• In energy, new ways to reduce the intense water use of nuclear power plants, biofuel manufacturing and carbon capture technology are vital to slowing global warming and maintaining water supplies while generating the electric power needed for growth.
• Water purification and reuse are key to the growth of the semiconductor industry. Chipmaking processes use vast amounts of highly purified water to make and clean chips, and often the water carries away toxic solvents. And the data centers that use these chips are increasingly relying on water to cool them, creating opportunities for water savings in cooling.

One of the most interesting opportunities is desalination. The explosive population growth in water-poor areas from the coast of China and the Arabian Peninsula to Southern Africa and the Caribbean means great opportunities to develop low-energy solutions for what has traditionally been a very energy-intensive industry.

Some startups are focused on renewable energy solutions, from solar power to wave motion, while others are looking at bio-mimicry, adapting the way plants and fish extract water from the sea, using a minimal amount of energy, and new permeable membranes that trap salt and let only freshwater molecules through.

Thanks for reading, and have a wet weekend.