Water as a Commodity Investment

As in most commodities, the best play going forward for investing in water is to find the closest to the most direct play you can in order to maximize your profits, as many companies investing in water are either limited by regulation, as in water utilities, or by huge companies like General Electric, wish are heavily invested in water, but is diluted by so many other parts of the company that it doesn't much good for those who want to invest in water as a commodity like they could in oil, gold, wheat, rice or silver futures.

Some of the more direct ways to invest in water would be in utilities that produce, treat and transport water, but other industries offering services in pollution management and smart grids are also possibilities. Other agriculture commodities like wheat, corn, soybeans and rice are other ways to invest in water, which we'll talk about a little later.

Another unique way to invest in water is in a company which helps decrease energy us at desalination plants that are used to clean up water for use. One decent company in that arena is Energy Recovery Corp. a small-cap stock which builds equipment for that purpose.

As far as agricultural commodities, wheat, corn, soybeans and others could be invested in in relationship to water similar to how gold is being invested in to protect against inflation and the weakening U.S. dollar. Whatever agricultural commodity you're investing in, you would do it the same as usual, but with the understanding of what higher water prices could eventually mean to the food prices; an indirect but very real way to take advantage of those changes in water prices probably coming fairly soon.

So when considering investing in water, it would probably be best to do it in reference a variety of grains and other soft commodities which will partake in the eventual increase in water prices.

With a lot of regulation and markets being fragmented, the thought is products that use water will increase in price before water itself, which will more than likely lag the overall market. So investing in products that use water, rather than water itself is a good way to think in terms of investing in the commodity water. In the long term water itself will rise in price, which will ensure those in it for the long haul should enjoy solid returns.