'Smart' water meters. The manufacture and sale of smart water meters that monitor and manage water usage is a fast-growing business. Eventually, there will be more meter use when more U.S. consumers are billed for water based on a meter reading just as they are for electricity consumption, Berlant says.
Meter maker leaders Badger Meter Inc. in Milwaukee and Itron Inc. in Liberty Lake, Wash., manufacture products that help measure and control water flow. WaterTech Capital's Hoffmann estimates that this niche will grow 14 percent to 16 percent annually for the next several years.
Agriculture irrigation systems. About 70 percent of all fresh water is channeled into agriculture for growing corn, wheat and other crops. So, the efficient delivery of water is very important, as water availability shrinks, Berlant says. "And the newer equipment is far more water-efficient."
Two leading irrigation players are Valmont Industries Inc. and Lindsay Corp., both of Omaha, Neb. Hoffmann forecasts that agriculture irrigation revenues will grow by almost 20 percent annually over the next 10 years.
Water rights. Companies with water rights also will prosper as water rates rise, Berlant says. So, listed farming companies such as J.G. Boswell Co. of Pasadena, Calif., and Limoneira Co. of Santa Paula, Calif., which own extensive farmland tracts with water rights, could see their values rise. For example, J.G. Boswell, the country's largest cotton producer, owns 150,000 acres in California, along with lots of water rights.
Hoffmann says that for investors with deep pockets, private equity funds might make sense as they plow more money into water rights.
By 2016, private sector water investments eventually will account for 30 percent of investments in drinking water and wastewater compared to 19 percent now, according to the independent Global Water Fund consultancy.
For example, NGP Global Adaptation Partners, a private equity firm in Irving, Texas, whose parent firm, Natural Gas Partners, has $10.8 billion under management, has started investing in water. "We invest in water rights in the western U.S.," says Jud Hill, an operating partner at NGP. "We buy farms and farmland, which have senior water rights."
Hill says it's a great time to invest in water as people rethink how they use water and how much they need. "We have a fixed amount of water and growing demand," he says.