The past couple of weeks or so have been crazy for anyone in the market. For one, Bernanke has started Quantative Easing Round 2 (or simply QE2). For those not familiar with economics, this is simply buying U.S. treasuries to drive down interest rates in hopes of stopping deflation and “hopefully” rejuvenating the economy to pre-crisis growth. While I do not agree with the policies Ben Bernanke is pursuing, apparently I am not the only one, the market has rallied. While a market rally benefits everyone as new wealth is created, it’s definitely not good if you are trying to find assets that are priced attractively. This has forced me to look at places very few individuals bother to look, and that means getting creative such as looking at the current water crisis.
While the United States is spoiled with water, the truth is evidence is increasing that the world has a water shortage and if it doesn’t, we are very close. The main problem with water is most of the water is saltwater opposed to fresh water. Saltwater constitutes 97% of the world’s water, whereas fresh water constitutes the remaining 3%. But, that’s only part of the problem. The world is currently demanding more water each day and at the same is contaminating the fresh water. While the water crisis has not hit the United States, other countries and regions around the world are have severe water shortages.
According to the Wikipedia Water Crisis page there are several principal manifestations of the water crisis.
- Inadequate access to safe drinking water for about 884 million people
- Inadequate access to water for sanitation and waste disposal for 2.5 billion people
- Groundwater overdrafting (excessive use) leading to diminished agricultural yields
- Overuse and pollution of water resources harming biodiversity
- Regional conflicts over scarce water resources sometimes resulting in warfare
True, Wikipedia might not be the most reliable source when conducting research on something important such as a water crisis, but it’s usually a great place to start any kind of research as it usually leads to various research papers. In the case of the Water Crisis, it led to some interesting sources such as the 2006 United Nations statement on water crisis and the Food and Agriculture Organization which states that there is no water crisis- but many developing countries will face water scarcity.
Water ETFs
- PowerShares Water Resources Portfolio (PHO)
- PowerShares Global Water Portfolio (PIO)
- Claymore S&P Global Water Index ETF (CGW)
- First Trust ISE Water Index Fund (FIW)
See the Water ETF List to see which water index each ETF tracks.
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