Water is life. Yet as the world population grows, climate change accelerates, and infrastructure ages, clean water is becoming harder—and more expensive—to access. At the same time, technology is quietly transforming how we find, clean, move, and manage this precious resource.
From desalination plants that turn seawater into fresh drinking water, to smart purification systems and data-driven leak detection, a wave of innovation is reshaping the water industry. And for forward-thinking investors, that opens the door to exciting opportunities.
In this post, we’ll explore how cutting-edge water technologies are solving global problems—and how you can invest in the companies leading the charge.
Why Water Is the Next Big Investment Theme
Unlike oil, tech, or crypto—water is not optional. Everyone needs it. And that unshakable demand makes water one of the most stable and essential long-term investment opportunities.
Here’s why investing in water is more relevant than ever:
- Rising global demand: The world’s population is expected to reach 10 billion by 2050.
- Droughts and water stress: Climate change is intensifying droughts, particularly in already water-scarce areas like the U.S. Southwest, India, and Africa.
- Aging infrastructure: Much of the world’s water delivery systems were built decades ago and need urgent upgrades.
- Government and corporate investment: Trillions of dollars are being allocated to modernize and secure water systems.
And here’s the big opportunity: Technology is stepping in to help bridge the gap between rising demand and limited supply.
Three Key Innovation Areas Driving Water Investing
Let’s take a closer look at three of the most transformative trends: desalination, purification, and innovation in water management.
1. Desalination: Turning Saltwater into Freshwater
Desalination is the process of removing salt and other minerals from seawater to make it drinkable or usable for agriculture and industry. While the concept isn’t new, recent advancements are making it more energy-efficient and cost-effective.
Global leaders in desalination are deploying reverse osmosis and membrane-based systems to convert ocean water into clean water for millions.
Companies to watch:
- IDE Technologies (private) – A global leader in desalination with plants in Israel, California, and Asia.
- Xylem (XYL) – Though best known for water treatment and infrastructure, Xylem also works with advanced filtration systems used in desalination plants.
- Energy Recovery Inc. (ERII) – Makes pressure exchange devices that dramatically reduce the energy cost of desalination. Their technology is used in plants around the world.
Desalination is especially important in water-scarce regions like the Middle East, California, and Australia—making it a global investment theme with long-term legs.
2. Purification: Cleaning Water for a Safer World
Water purification systems are essential for removing bacteria, viruses, heavy metals, and industrial chemicals from drinking water and wastewater.
From municipal treatment plants to point-of-use home systems, purification is becoming smarter, cheaper, and more efficient.
Companies to watch:
- Pentair (PNR) – Specializes in residential and industrial water filtration systems.
- Danaher Corporation (DHR) – Owns several water-focused subsidiaries, including Trojan Technologies, which focuses on UV disinfection systems.
- A. O. Smith (AOS) – Known for water heaters but also a leader in residential and commercial water filtration and treatment systems.
As concerns over contaminants like lead, PFAS (forever chemicals), and microplastics rise, demand for effective purification solutions will continue to grow.
3. Innovation: Smart Water Management and Data Analytics
Managing water efficiently requires more than pipes and pumps. It requires data, software, and real-time monitoring. This is where innovation is happening fastest.
Technologies now help detect leaks, monitor water pressure, reduce waste, and optimize entire city systems.
Key innovation areas:
- Smart meters that track usage and detect anomalies
- AI-driven leak detection that saves utilities millions
- IoT devices that help monitor infrastructure remotely
Companies to watch:
- Badger Meter (BMI) – A leader in flow measurement and control solutions, including smart water meters.
- Itron (ITRI) – Provides smart meters and analytics for water, electricity, and gas utilities.
- Trimble (TRMB) – Offers geospatial and data solutions for managing water systems and infrastructure.
This is the “tech” side of water investing, and it’s helping cities and industries do more with less—boosting both efficiency and profit potential.
How to Invest in the Future of Water
If you’re excited about the possibilities but don’t want to pick individual stocks, you’re not alone. The smartest—and easiest—way to invest in this essential sector is through water-focused ETFs (Exchange-Traded Funds).
ETFs allow you to own a basket of water-related companies with one simple investment. Here are three of the best:
1. Invesco Water Resources ETF (PHO)
This is one of the oldest and most popular water ETFs. It focuses on U.S. companies involved in water purification, flow control, infrastructure, and treatment.
Top holdings: Danaher, Xylem, Pentair, Roper Technologies
Why it’s great: Broad exposure to top-tier water companies with a long track record and solid liquidity.
2. First Trust Water ETF (FIW)
This ETF tracks a modified equal-weight index of 36 U.S. companies in the water industry.
Top holdings: IDEXX Laboratories, IDEX Corp, Ecolab, Badger Meter
Why it’s great: More balanced exposure, giving mid-sized innovators the same weight as industry giants.
3. Invesco Global Water ETF (PIO)
For international exposure, PIO tracks companies worldwide that work with water supply, treatment, and technology.
Top holdings: Veolia Environnement (France), Kurita Water Industries (Japan), Suez (France)
Why it’s great: Provides global diversification and access to international water leaders not available in U.S.-only funds.
Who Should Consider Water Investing?
Water investing is a great fit for:
- Retirees seeking long-term stability and income
- Younger investors looking to align investments with sustainability
- Anyone who wants exposure to a resource that will never go out of style
Because water investing includes essential infrastructure, utility-like reliability, and exposure to cutting-edge technology, it combines the best of both worlds: defensive stability and growth potential.
Many water stocks and ETFs also pay dividends, offering another income stream for those in retirement.
Final Thoughts: A Clear Path Forward
Water is no longer just a utility—it’s a crucial investment theme for the 21st century.
As climate change strains supplies, and innovation unlocks new ways to purify and deliver clean water, the companies leading this charge will play a pivotal role in shaping the future. And smart investors who recognize this trend early can benefit from both financial returns and the satisfaction of supporting a life-sustaining cause.
Whether you invest in individual water tech companies or choose a diversified ETF, the time to tap into the future of water investing is now.
If you’d like to learn more about how to build a smart, sustainable, and profitable portfolio around water, check out my book:
Liquid Gold: Investing for a Thirsty Future – available at Amazon.com in paperback or eBook formats.
Disclaimer: This post is for informational purposes only and does not constitute financial advice. Always consult a qualified financial advisor before making investment decisions. All investing involves risk, including the risk of loss. Past performance is not a guarantee of future results.