Will water slake a thirst for profits?
Investors weigh the ethical question of making money off an essential resource.
from the June 25, 2007 edition
Page 4 of 4
Water-sector analyst Joseph DiLillo at the Shemano Group in Los Angeles likes California water utilities because they're some of the few in the country that actually own the water they sell.
"If you want the safety of a utility with a bit of a [dividend] yield, to me this is the way to go: Buy California water utilities because they own 40 to 50 percent of the water they distribute," Mr. DiLillo says. "You get the best of all worlds," because the company owns both the commodity and the distribution channels.
Market watchers see opportunities
Investing to bring water to those who can already afford it may not thrill everyone with a driving sense of mission, but investors who require a financial return have few other options at this point.
"It is very difficult right now for people to make money in the global water space if they want to target people at the bottom of the economic pyramid," Mr. White says. "Investments seeing a competitive return on investment are generally not hitting people at the bottom."
But market watchers who trust private enterprise to solve social problems see a lot of opportunities – including many that steer clear of ethical controversy.
"Improved piping, valves, and monitoring helps detect and prevent leaks, improve efficiency, and – obviously – control costs," says Brian Dunn, a San Francisco adviser to high net worth investors with social agendas. "More efficient and effective treatment and storage technologies do the same. Private enterprise is essential to meeting these challenges."
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