CHICAGO (MarketWatch) — By 2025, two-thirds of the world population will experience water stress, according to resource consultancies. For investors, where shortages build, opportunities flow.

Think utilities, power generation, desalination of sea water, pumping clean drinking water to the underserved, plus industrial use — all categories that feature water as a commodity, yes, but also the pumps, valves, membranes, and electronics needed to move that liquid.

Feeding China's 1.3 billion people

Says Matt Sheldon, a portfolio manager at Kleinwort Benson Investors International, which runs the Calvert Global Water Fund CFWAX, +0.27% : “Two years ago, I would have said utilities presented the best opportunity. Now, it’s pump companies. It’s infrastructure.”

In fact, never mind what’s coming in a decade. For many companies, fund managers, and investors the time to act is now. Their focus is on technological improvements to stretch resources, given the population shifts and infrastructure demands in emerging and frontier markets — from parts of Asia and Latin America to the Middle East and Africa.

But water investment is a theme as old as the Great Depression. At its core, we’re talking about inelastic supply, non-cyclical demand and in some instances, monopolistic market holds.

The S&P Global Water Index has largely kept pace with the Standard & Poor’s 500-stock index SPX, -0.46% , up 9.5% over three years compared to the broader index’s 10.9% gain. The S&P Global Water Index gained 21% in 2012, bettering the S&P 500’s 16%.

For retail investors, exchange-traded funds offer several choices. Among the biggest, PowerShares Water Resource PHO, +0.35% tracks the Nasdaq OMX US Water Index, with a focus on products that conserve and purify water. There’s also its cousin, the PowerShares Global Water Portfolio PIO, +0.25% . Meanwhile, First Trust ISE Water Index Fund FIW, +0.35% keeps its focus largely on companies with revenues from the potable and wastewater industry. The iShares Dow Jones U.S. Utilities Index IDU, -0.08% provides some exposure to water-related stocks.

Big-drink thinking

Water has topped meeting agendas for global power brokers in recent months. For example, executives in environmental breakout groups at The World Economic Forum in Davos had water risk high on their list. Water issues also are bringing industry, banks, and policy-makers together; General Electric Co., Goldman Sachs, and the World Resources Institute convened a summit “Water: Emerging Risks and Opportunities” in early February. At the highest level, the United Nations has declared 2013 the International Year of Water Cooperation.

In many ways, water is the ultimate commodity. That is, investment in water is really an investment in the bigger “resources” theme. And that’s spawned a new buzz phrase: the food-water-energy nexus. The trio was one of the top four megatrends to watch in the recently released Global Trends 2030 report by the U.S. National Intelligence Council.

Andy Wales, senior vice president of sustainable development at SABMiller, has blogged on the topic. Says Wales: “Agriculture accounts for about 70% of global freshwater use and can pollute freshwater supplies if mismanaged. In the U.S., power generation accounts for about 50% of all freshwater withdrawals, and drought in countries that use hydropower — Ethiopia and Ghana, for example — can lead to black-outs. Energy, in turn, is needed to fertilize and transport crops, which can themselves be used as biofuel to create energy. Large amounts of energy are also required to pump water to drier regions and, as water scarcity increases, so will the energy needed for technologies such as desalination.”

Wales warns against viewing any one of these resource considerations independent of the others: “Given these trade-offs and interactions, successfully addressing the triple challenge of water stress, food security and energy supplies means taking a holistic view and balancing the many competing demands.”

Water log

If global brewing giants are watching water’s resource impact this closely, investors should be too. And technology can help.

The World Resources Institute offers an online mapping tool, the Aqueduct Water Risk Atlas, that uncovers water risks by geography using 12 indicators, including water quantity and quality and reputational and regulatory factors.

Even if you’re not ready for resource investing, you should at least track the wet stuff’s impact on the rest of your portfolio.

Water can have an indirect yet significant influence on most stock choices. That’s because smart water use can be the issue that separates the most efficient and adaptable companies from those likely to suffer from the added costs of resource shortages.

In the 2012 Carbon Disclosure Project Global Water report, for example, more than half of the 500 corporate participants noted “detrimental” water impacts such as drought and flooding extremes, clean water prices, and costs for pollution litigation.

Many investors didn’t need the report. They’d seen the pictures of barges stranded in a dried-up southern Mississippi River.

Rachel Koning Beals is a Chicago-based freelance writer.