I have been following companies involved in the development of water infrastructure and purification for a number of years. The global secular trends for this market have grown markedly. The more generic and somewhat less risky play to capture upside has been The PowerShares Water Resources Portfolio (NASDAQ:PHO). More specific targets are Fluor Corporation (NYSE:FLR), the Dow Chemical Company and Nalco Holding (NYSE:NLC) among others. GE is too clustered with its financial arm to consider but they do also have exposure.
Neil Berlant, Crowell, Weedon & Co. managing director on the water plight:
“The problem with talking about marketing water and transporting it and so forth presumes we have a genuine shortage of the availability of water; and I believe that’s kind of a misrepresentation of the facts. We really have plenty of water, only it’s not necessarily in the places where everybody wants to be, and number two, they don’t want to pay a fair market price for it. We can make water from desalination and other processes very effectively and very efficiently today.
… and you’re terribly resistant about paying more for it. That’s where water plays an entirely different role because we really don’t have an alternative to water, and as a consequence, we’re going to have to pay what it costs, what it takes to get it. Now, what affects the price that people overlook is not finding the water in the ordinary sense, it’s the distribution system. It’s what constrains the privatization of it, too, and we’re facing an enormous amount of expenditures necessary to fix what is in many instances a 150-year-old distribution system, which leaks and is decrepit. Bottom line, a lot of hurdles.”