With the global population soon to reach 7 billion, ensuring supplies of clean water is a pressing concern. The United Nations (UN) estimates that half the world’s population will experience water shortages by 2040.

Continued industrialization in developing economies will exert enormous pressure on already-strained water supplies. Consider the recent history: The global population increased fourfold during the 20th century, but industrial demand boosted fresh water consumption by 900 percent during the same period. The UN’s 2009 World Water Development Report found that water scarcity has already curtailed economic growth in areas as far flung as California, Australia, China and Indonesia. 

More troubling, though, is that much of the available drinking water isn’t safe for consumption. In developing countries–where 90 percent of sewage and 70 percent of industrial waste are discharged directly into waterways–almost 80 percent of illnesses are related to poor water and sanitation.

Given the dire nature of the situation, expect a drastic increase in infrastructure spending in upcoming years, with an emphasis on water-related projects.

PowerShares Water Resources (NYSE: PHO) holds a portfolio of 32 companies that manufacture pipes, pumps and other water infrastructure equipment, as well as water utilities and treatment outfits.

The fund charges a reasonable annual expense ratio of 0.64 percent and yields a slight 0.5 percent. One potential drawback: A large portion of the fund’s holdings are engaged in non-water related businesses, which means the fund is hardly a perfect proxy for water. Still, the overall portfolio will benefit from the global build out of water-related infrastructure.

PowerShares Water Resources is the newest addition to the Growth Portfolio and rates a buy up to 25.

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