When I returned from the 68^th Annual International Water Conference this weekend, I had the crisis of the global water shortage fresh on my mind.

The crisis is a lack of fresh water, but in my basement I found the reverse problem. While I was away, Mid Atlantic states were getting pounded with several days of heavy rain. And, for some reason, my sump pump decided not to turn on.

The damage wasn't too bad—an inch or two of water in the unfinished half of my basement—but I couldn't help noticing the irony, especially with what's been going on lately in the world of water.

Water Shortages

"An epic drought in Georgia threatens the water supply for millions. Florida doesn't have nearly enough water for its expected population boom. The Great Lakes are shrinking. Upstate New York's reservoirs have dropped to record lows. And in the West, the Sierra Nevada snowpack is melting faster each year. Across America, the picture is critically clear—the nation's freshwater supplies can no longer quench its thirst."

That's the first paragraph of an Associated Press story, "Many States Seen Facing Water Shortages."

Of course, this is what I've been telling you for months. And it's only going to get worse. So the savvy investors a killing on investments in the water sector by capitalizing on the companies that will be providing the solutions to this problem.

In the next five years, the US government predicts, at least 36 states will face water shortages, with causes ranging from climate change to population growth. But the water crisis isn't monopolized by the US—it's worldwide.

The article continues, "Australia is in the midst of a 30-year dry spell, and population growth in urban centers of sub-Saharan Africa is straining resources. Asia has 60 percent of the world's population, but only about 30 percent of its freshwater."

And by 2050, the Intergovernmental Panel on Climate Change believes, up to 2 billion people could be facing water shortages.

In Florida, where I went for the conference, the problem is particularly complex. Because of its low altitude, Florida is forced to pump millions of gallons of surplus water into the ocean to avoid flooding.

Plus, rising seas brought on by climate change are forcing salt water into underground aquifers and other sources of groundwater—a phenomenon known as salt water intrusion.

To quell some of these problems, many states are initially turning to the most economic solution, conservation. Florida, for example, uses reclaimed water for irrigation, rather than wasting valuable fresh water that can be used for other applications.

These new uses and conservation efforts, though they may seem routine, are actually bringing in profits to investors in the know. This will increasingly be the case as such schemes are used more and more.

Other Water Issues

In some places pollution is the problem, as opposed to salt water intrusion or just a general lack of fresh water sources.

China, which is undergoing a vast rural-to-urban population migration, is emblematic of the places where water has become scarce. It has the same amount of water as Canada but 100 times more people.

Per-capita water reserves there are only about a fourth of the global average, according to experts. Of its 669 cities, 440 regularly suffer moderate to critical water shortages.

Recently, China announced a $14.5 billion plan to clean up just one of its severely polluted lakes. That should give you some idea as to the amount of money we're talking about in this industry.

That multibillion-dollar plan is to clean up Lake Tai, where a massive algae bloom has caused a water supply interruption to millions of people.

But Lake Tai isn't the only body of water in desperate need of clean-up.

According to the latest figures from the state environmental protection agency, an estimated 70% of China's main rivers and lakes are so polluted, the water is completely undrinkable.

In fact, a number of hydrologists, government officials and industrial leaders have declared water and waste pollution the single most serious issue facing China.

And if the efforts to clean up all of China's water problems come with price tags like the one for Lake Tai, you can bet there will be serious money to be made.

Heavy investment is coming outside of China as well.

The estimate just to upgrade water pipes in the US is $300 billion over the next 30 years.

Green Chip readers are seeing the gains from that kind of investment firsthand. They have access to my Green Chip Water Index, which serves as a barometer of the profits being made in this industry.

Of the companies I hand-picked for the index, nine are already sitting on gains in excess of 30% for the year. Four of those companies are up over 50%.

And let's not forget about WorldWater & Solar Technologies Corp. (OTC:WWAT), the water-related company that has already delivered gains of 630% for Green Chip readers.

Editor's Note:

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Until next time,

Nick