Since water is not an actively traded commodity with a listed futures market, such as oil or gold, investors have fewer options available for how to invest in water. As a result, they need to be more creative when discerning how to do so profitably.
Perhaps the most important way of investing in water in the past, and a strategy that is still used by some water investment funds today, was to purchase water rights from a landowner or to buy real estate that came with such water rights.
When investing in water rights or in land with established water rights, the most desirable form of such water rights is appropriative water rights since they permit the holder to remove water from the property. The less desirable type of water rights is riparian water rights that permit the holder to use water flowing over or collecting on the property, but only on the property itself.
Furthermore, testing the water to assure its suitability for household and/or industrial use would be essential, especially since some water is radioactive or tests high in undesirable elements like mercury, for example.
Such water would not be considered healthy to drink without filtration, even if it was sterilized to neutralize bacteria like fecal coliform, which is considered an indicator of the presence of even less desirable bacteria.
Another type of highly desirable water property to invest in would be land with hot springs or mineral springs. Hot springs can be used as a foundation to develop a resort nearby, while potable mineral water can be bottled on-site or sold to other mineral water bottlers.
For those interested in how to invest in water without getting their feet wet or wading through the hundreds of stocks issued by companies that derive a substantial portion of their revenue from water, the possibility now exists of purchasing shares in a mutual fund that specializes in holding a diversified water portfolio. Such funds are currently available to investors in both the United States and abroad.