Obama is Bush part 3

Water: The New Oil

While potable water supplies are shrinking the world over, and water might be a good investment (in the medium / long term) -- the two ETFs you proposed are made up of companies kinda sorta but not really in the water business. Investing in water meters is not the same as investing in water -- if the water dries up, there is nothing to meter. Same thing with the filter companies (who by the way mostly filter air and liquids other than water). In short, even if your investment hypothesis (limited supply of water) turns out to be 100% correct, it will not necessarily benefit the companies you recommend (it probably won't).

The municipal water utilities are politically controlled and are guaranteed a certain return on assets by law (the utility is, not necessarily the utility investor). Existing capital will get no less than the legislated return, but also no more. If the utility needs to expand, it underwrites more capital.

Lastly, as many private land owners in the west are discovering, water rights extend only straight down. If someone buys land that shares an underground aquifer with you, you have zero legal control over how much water he can draw. About a year ago, ranchers in Nevada sued the municipality of Las Vegas. LV went and secured land (and water rights) that were downhill (geologically speaking) from the rancher's land and began drawing as much water as they could. The ranchers had been ranching on their land for generations -- long before the city of Las Vegas was even imagined. None the less, the grass their herds eat is brown and dry, and the wells their cattle drink from depleted.

The ranchers may not have had the best legal counsel, but the problem is more politicial. If thousands of city voters want water, and thousands of jobs (and state revenue) depend on that water -- legal water rights become rather fluid (pun intended). Water ownership rights don't have the legal protection that oil / natural gas fields do