Is water new gold? Why investors are turning to water companies

Human behavior follows a simple paradox: people tend to value what they lack more than what they possess. For decades, water has been treated as an inexhaustible and inexpensive resource. Yet history shows that abundance is often an illusion. As climate change, population growth, and industrial demand intensify, water, once virtually free, may soon rival gold in economic, political, and strategic importance.

The shift is already visible. Water that was once consumed freely is now metered, priced, and regulated. In many countries, households pay for water services that were previously subsidized or uncharged. Even access to "quality" drinking water increasingly comes at a premium. In extreme cases, water has already entered the realm of luxury consumption.

The most striking example is the Acqua di Cristallo Tributo a Modigliani, recognized as the world’s most expensive bottled water. Sold for $60,000 per 750 ml, the bottle - crafted from 24-karat gold - contains a blend of spring water from Fiji, France, and Icelandic glaciers. While this example belongs more to symbolism than necessity, it highlights a broader reality: water is no longer viewed solely as a public good, but increasingly as a market asset.

Beyond luxury narratives, hard economic data confirms water’s rising value. The global water and wastewater market was valued at $351.4 billion in 2024, while the bottled water market alone is projected to reach $372.7 billion in 2025. Long-term forecasts are even more revealing. By 2032, the overall water and wastewater sector is expected to grow to $617.8 billion, with some projections placing the market above $524 billion by 2033.

This expansion is driven by infrastructure modernization, population growth, urbanization, and rising regulatory standards. In the United States, leading water utilities such as American Water Works ($5.07 billion in revenue) and Essential Utilities ($2.38 billion) have emerged as stable, high-revenue enterprises. Notably, the sector recorded a 38.5% revenue increase in Q2 2024 compared to 2019, underscoring water’s transformation into a strategic investment domain.

Water-related industries are rapidly becoming economic powerhouses. Infrastructure operators (American Water, Veolia), bottled water conglomerates (Nestlé, Danone, Coca-Cola, PepsiCo), and technology firms specializing in water efficiency and recycling are all positioning themselves for long-term growth. The bottled water market alone is projected to reach $606.7 billion by 2035, signaling sustained demand even amid environmental criticism.

Investment activity reflects this momentum. In the first three quarters of 2024, 334 water-related investment deals were recorded globally, with a strong focus on desalination, filtration, reuse, and leakage reduction technologies. Scarcity, not abundance, is now the primary driver of innovation.

Despite covering 71% of the Earth’s surface, water availability for human use is remarkably limited. Only 2.5–2.6% of global water is freshwater, and nearly 70% of that is locked in glaciers and permanent snow cover. Much of the remainder lies underground. Rivers, lakes, and surface water, the most accessible sources account for less than 1% of global water resources.

This imbalance has profound consequences. Today, around 4 billion people experience severe water shortages during parts of the year, and more than 25 countries operate under "high water stress," consuming over 80% of their available freshwater annually. Over the past 50 years, freshwater availability per capita has steadily declined, raising the risk of food insecurity, forced migration, and geopolitical conflict.

Beyond economics, water scarcity is increasingly emerging as a geopolitical risk. While large-scale "water wars" remain rare, competition over shared rivers and water systems is already shaping regional tensions. Disputes in the Nile Basin, the Tigris-Euphrates system, Central Asia, and South Asia illustrate how climate change, population growth, and upstream infrastructure projects can strain diplomatic relations. One of the most closely watched cases is the rivalry between India and Pakistan, which share the Indus River system under the long-standing Indus Waters Treaty. Although the agreement has survived multiple conflicts, Pakistan’s heavy dependence on Indus waters and India’s expanding hydropower projects have heightened concerns over downstream flows. Analysts increasingly describe water not as a direct cause of conflict, but as a strategic stress multiplier - capable of intensifying existing political and security tensions in an increasingly water-constrained world.

The strategic importance of water is increasingly evident in corporate balance sheets. As of January 2024, ACWA Power, headquartered in Saudi Arabia, was recognized as the world’s largest private water desalination company. The firm operates 111 assets across 15 countries, producing 9.3 million cubic meters of water per day, with a total investment portfolio exceeding $114 billion. While firms like Ecolab Inc. also hold significant market value, industry data confirms ACWA Power’s dominant position in water desalination capacity.

Is investing in water companies worth it?

For investors, water represents a rare category of asset: one driven by necessity rather than economic cycles. Demand for water remains stable regardless of market conditions, making water-related companies, particularly utilities among the more defensive segments of the infrastructure sector.

Rising population, urbanization, climate pressure, and growing industrial demand from sectors such as data centers, clean energy, and advanced manufacturing continue to underpin long-term growth. In many markets, regulated pricing frameworks provide revenue visibility, supporting steady - though typically modest - returns.

At the same time, water investments face structural constraints. Heavy capital requirements and regulatory oversight limit pricing flexibility, while political intervention can affect profitability, especially in emerging economies. As a result, water stocks tend to favor income stability over rapid capital appreciation.

Higher-growth opportunities are more often found in water technology and efficiency companies, including desalination, recycling, and leakage management. These segments benefit from tightening environmental regulations and aging infrastructure but are more exposed to policy shifts and investment cycles.

Overall, water investments are best viewed as a long-term strategic allocation rather than a high-growth trade, reflecting the sector’s growing economic relevance in a world of increasing resource scarcity.

Policy risks and structural challenges

Yet the water economy is not without risks. Aging infrastructure remains a critical weakness - some systems lose up to 30% of treated water through leakage. Regulatory pressure is intensifying, particularly in Europe, where stricter standards on micropollutants, PFAS, and water reuse are driving up compliance costs. The EU’s Corporate Sustainability Reporting Directive (CSRD), despite a recent reduction in coverage, will increase long-term reporting and investment obligations.

Macroeconomic factors add further strain. In the U.S., fluctuating trade policies complicate supply chains for water infrastructure. Although the EU plans to raise annual water investment to €75 billion by 2030, economic uncertainty may slow implementation.

Despite these challenges, necessity is driving innovation. Water circularity - reuse, recycling, and efficiency -is no longer optional but strategic. Companies such as Coca-Cola have demonstrated near-total water reuse through closed-loop systems in Greece and Nigeria, while PepsiCo is investing heavily in rainwater harvesting to offset groundwater depletion.

More than 90% of leading food and beverage companies have now adopted formal water targets, reflecting rising regulatory, financial, and reputational pressures. The energy sector faces even greater scrutiny. While U.S. coal plant retirements have reduced thermoelectric water withdrawals by 26.8% since 2014, new industries - hydrogen production, lithium-ion batteries, and AI-driven data centers are driving fresh demand.

Data centers alone are projected to consume up to 8.5% of total U.S. electricity by 2030, significantly increasing water demand for cooling. This convergence of energy, technology, and water risk forces corporations to rethink resource planning in integrated terms.

However, the rise of water as an economic asset raises a fundamental question: can humanity use water more efficiently before scarcity defines its value entirely? Recycling, desalination, digital monitoring, and policy reform offer solutions, but their success depends on political will and long-term investment.

Water may never replace gold in form - but in function, necessity, and strategic value, it already has. The future will not be defined by who owns the most precious metals, but by who secures sustainable access to the world’s most essential resource.