#-ad_banner-#Although the Earth has more water than land, only 1% of the vital liquid is actually potable. Across the globe, limited supplies of clean water are in danger as demand surges.

The only solution: better management of existing fresh water and cheaper, more efficient methods of turning undrinkable water into pure H2O.

Welcome to a three-part look at this vital issue. The problem will not be solved overnight (or any time soon), making this a long-term source of global concern, while generating serious profits for savvy investors.

Today’s essay is an overview of the topic. Part two centers on companies working to improve irrigation techniques. The final piece focuses on desalination and the companies reducing costs and improving efficiency in the industry.

Water, Water, Everywhere
The ongoing drought in California has brought home a clear reality for many Americans. Although residents of the nation’s most populous state will never die of thirst, their ability to serve as one of the nation’s primary agricultural hubs has become imperiled. Pull back the lens to a global scale and the problem is more apparent: agriculture accounts for approximately 70% of total global water consumption. 

Nonetheless, human consumption has a direct impact. For billions living below the global poverty line, clean drinking water is a luxury most can’t afford or access. And that’s only projected to get worse. The World Bank estimates that by 2050 water availability per capita will fall by half, and countries in the Middle East and North Africa will be among the first to feel the squeeze. 

It’s not just about water scarcity. Water quality is also a growing concern. In China, heavily polluted water resources are leading to radical and expensive fixes, while energy and food demands continue to climb. 

In response, a broad range of companies are pursuing innovation in desalination and irrigation, along with water transport systems. These technologies and methods will provide lucrative opportunities for the firms that can cost-effectively target the problem.  

Is Desalination A Panacea?
For coastal areas, desalination seems to be a logical solution to create a sustainable water supply. Desalination is the process of separating salt and other impurities from ocean, brackish or otherwise salty water sources. 

Desalination has been around for centuries. One of the original and simplest methods is to evaporate the salt water, resulting in clean water in the form of condensation. Modern desalination is more high-tech and typically uses reverse osmosis, which forces saltwater through a filter at high pressure, separating the water from the contaminants.

Governments and companies have been using this technology for some time to provide water to parched communities. A desalination plant in Sydney, Australia provides 15% of the city’s water and another in Algiers supplies the city with 53 million gallons of fresh drinking water every day. 

In California, taxpayers are shelling out $1 billion for a desalination plant being constructed in Carlsbad to reduce the reliance of San Diego County on snowpack and rainfall. Desalination is expected to supply about 7% of the county’s water, or 50 million gallons a day.

In the United Arab Emirates, Masdar, an energy company, is building the world’s largest solar-powered desalination plant.

So if this technology is readily available, then why isn’t desalination being used on a grander scale?

Desalination’s biggest drawback is its massive consumption of energy, a problem engineers the world over are racing to tackle. For example, Lockheed Martin Corp. (NYSE: LMT) is currently developing Perforene, a molecular filtration membrane made with graphene, which could reduce the energy cost of desalination by as much as 99%. This thick mesh-like web allows water molecules to pass through while blocking salt ions. 

Companies involved in the development and management of water filtration and purification systems should see increased demand for their products and services in the years to come, as regions with dwindling water reserves seek to recycle more water (and countries like China attempt to reverse the effects of heavy water pollution). 

It is estimated that around 60% of China’s underground water is polluted, a catastrophic byproduct of the nation’s rapid industrial expansion. In order for China to boost living standards, it will need to invest heavily in water filtration systems. 

Thirsty Crops
On the agriculture front, improved irrigation techniques are being utilized by farmers and homeowners alike. Highly-efficient drip-irrigation systems, which first saw widespread use in Israel, are now being implemented in many parched regions of the world.

Micro-irrigation systems, which consist of drip and small sprinkler methods, use less water, reduce weed growth and increase crop yields by providing optimal water levels to the plant’s roots.  These irrigation systems are automated and operate at times of the day when less water is lost to evaporation.  Analysts from market research firm Technavio estimate that the market for global micro irrigation systems will grow at an 18% compound annual growth rate through 2019. 

It’s clear that continued innovation and capital investment are needed in order to achieve a more sustainable water supply in the years ahead.  Companies that develop the most advanced desalination, filtration and irrigation systems should see increased demand (from both government and the private sector) for their products and services, resulting in huge gains for water-savvy shareholders. 

In the coming articles of this series, we’ll delve into the companies that are best-positioned to tackle the global water challenge.   

P.S. — I’ll be sharing my findings on the companies best positioned to profit from solving this crisis soon. But I’d be remiss if I didn’t mention that my colleague Andy Obermueller recently shared the name of a little-known company that addresses this crisis with readers of his Game-Changing Stocks newsletter. To learn how to get the name of his pick, as well as learn about Andy’s latest game-changing research that could result in triple-digit gains, simply follow this link.