Editor's Note: Right now, Sam Hopkins is on assignment in San Francisco, where — ironically — the state has had record rainfall. . . and yet water scarcity is actually its most persistent resource problem. Sam wraps up his week of travels to Nevada and California by bringing you on-the-scene coverage of water policy in his new report below... and how it could affect your portfolio. Throughout the fall, Sam will be bringing you plenty more "off-the-Richter" opportunities from his travel and network of global green investors.
Enjoy,
Jeff Siegel
California is about to unleash a deluge of spending — right into your portfolio.
Right now, state lawmakers here are pushing forward with a $9.4 billion bond initiative that will make precious water resources more accessible and secure. . .
At the same time, representatives in Washington are helping turn a trickle of money into torrents going to water stocks and ETFs.
Why is this being done now, and why is there so much money at stake for investors?
It's mainly because there is so much money at stake for the Golden State, and for the United States as a whole.
The World's 8th Largest Economy is Thirsty
Even when stacked up against entire countries, California has the world's eighth largest economy.
The Golden State generates more than 12% of America's GDP, and its agricultural output is twice that of any other state.
All that is worth much more than just the sale price of the produce and dairy products that California's farmers send around the nation — the California Department of Food and Agriculture says the state's $33 billion/year ag industry leads to triple that amount in total economic activity.
That's a multiplier effect Sacramento can't afford to ignore. So Governor Arnold Schwarzenegger has demanded a special session of the state legislature to change a dismal record of dawdling in the capital when it comes to water issues.
The Governator is calling for action on California's "crumbling water system," refusing to mince words about the status quo, since he knows that without water, nothing grows.
"Water is jobs for California, water is food, water is our future, water is our economy," he said in his weekly radio address.
We know that far beyond California, water infrastructure investments are now an essential part of any resource investor's portfolio.
$21 Billion and Counting in Water Upgrades
My colleague Nick Hodge has reiterated the reality and the inevitability of government-led water investment profits for years now. Most recently, Nick combed through pages of data from the federal stimulus package to pull out no less than $11.8 billion in commitments to water infrastructure upgrades across the country.
Include the pending $9.4 billion bond package currently being negotiated in California's State Capitol, and you've got over $21 billion within reach.
That's a big enough number to change the fortunes of dozens of companies, and you can capture bullish market movement easily via water ETFs.
Exchange-traded funds, like the First Trust ISE Water Index (NYSE:FIW), capture the performance of companies that operate from seaside to spigot.
FIW's holdings make money as they upgrade old pipes, filters, and irrigation setups, but they will do best developing brand-new systems to ensure water's flow through America's economic veins.
Of course, water is a worldwide issue. That's why FIW is tapping France's Veolia Environnement (NYSE:VE), whose reach lets you benefit from everything from San Francisco Bay Area projects to Abu Dhabi's $15 billion Masdar green city plan.
Whether you're reading this in the desert, on the coast, or at river's edge, you know how important water is to economic vitality and quality of life.
Why not make some money for yourself as governments spend to keep the H2O flowing clean and clear?
Nick Hodge and I are preparing a special report on what we think will be the most profitable water stock in the world over the next five years. It's based abroad, but it's as easy to invest in as IBM.
As a Green Chip International subscriber, you can get the first crack at this winner in just a few days, and of course you'll have access to a portfolio full of global growth stocks that harness cleantech, renewable fuels, and infrastructure stocks to keep your investment accounts from drying out.
Just click here to check out GCI for yourself, risk-free.
Sam Hopkins
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