Water is one of the world’s most precious resources. Because it’s scarce and population numbers are growing, there’s now more demand for water supply than there’s ever been before. For this reason, it’s become a popular investment option.
But should you invest in this industry? We’ll tell you both sides of the story.
Why Should You Not Invest in Water?
Pipelines Require Maintenance
Before you consider investing in your local water supplier, it’s important to consider that the condition of the pipelines may require maintenance. If they’re rusted or leaking, this could cause bursts which will only result in you losing money that you’ve invested. Repairing entire city mains can cost up to $5000 per line, which can add up to a hefty sum.
As an investor, it might be your money that goes toward repairs. Luckily you can prevent loss and take control of the situation. Hire professionals who can fix faulty lines rather than replacing the entire system.
Inflatable pipe plugs are affordable means of sealing up sections of pipes so repairs can be done without wasting water. They can also be used to check water pressure and make sure everything is working efficiently before any issues arise.
Why Should You Invest in Water?
Water Is Always in Demand
The current U.S. population is over 328 million and every single one of those people need water to survive. Although some people have access to clean water from other sources, most people living in cities and towns rely on municipal water supplies to get clean water in their homes.
As a result, the water industry is receiving a regular flow of income. Unlike other businesses where success relies on how trendy their products are, water will never go out of style. With the increasing number of droughts in certain countries, the growing demand for water makes it even more of a commodity than before.
Other Businesses Rely on Water
Farming industries require large volumes of water to feed their livestock or irrigate their fields. Food companies use water as a central ingredient in their food processes and all businesses need a steady supply of water to accommodate their staff.
If the water industry fails, it will cripple all of these businesses. As a result, most water suppliers ensure that their companies are running smoothly to prevent any economic disruption. This also makes water more valuable as an investment as you know it’s something the other shareholders will always look after.
Water Is Profitable
Businesses such as the American Water Works Company and Aqua America earn massive profits for only selling water to public facilities. But even investing in smaller water treatment utilities will guarantee a return on your investment.
Although most governments spend $20 billion on water supply annually, the estimated return on this is expected to grow by 5-8% every year. This shows that there is potential for income by getting involved in the water supply industry.
Final Thoughts
It’s clear that there are advantages to investing in the water industry. With any investment, there’s always a risk. Why not start with something small such as your local water facilities or an ETF? Before you know it, your involvement with this precious commodity could be turning a profit.
