The Top 5 Desalination Stocks To Buy In 2022

As the global population grows, more people move to cities, and the climate gets hotter, the world needs more clean water. So water – and water desalination in particular – could make sense as a long-term investment. Learn how to find desalination stocks.

SustainFi   Updated February 8th, 2022

Some of our posts may contain links from our affiliate partners. However, this does not influence our opinions or ratings. Please read our Terms and Conditions for more information.

Why invest in desalination?

Water scarcity is already a problem today – nearly 2 billion people experience water stress. But with a growing global population and warmer weather, this problem will only get worse. According to estimates from the United Nations, global water demand will increase by 30% by 2050. At that point, almost half of the world’s population will lack fresh water.

However, 97% of the world’s water is seawater; only 3% is fresh. Desalination, or the process of converting seawater into freshwater, seems like the obvious solution to increase the supply of drinking water. It is particularly effective in dry coastal areas like parts of the Middle East. (Saudi Arabia, which has no permanent rivers or lakes, is the world’s largest producer of desalinated water.)

There are roughly 16,000 desalination plants in the world producing 95 million m3/day of desalinated water. About half of that production takes place in the Middle East and North Africa, the most freshwater-deprived regions. 70% of Saudi Arabia’s drinking water already comes from the sea.

However, according to the International Water Federation, freshwater produced using desalination supplies only 1% of global needs. So there is likely room for more, especially given that 40% of the world’s population lives within 100 km from the sea.

What do the critics say? Desalination continues to be expensive and energy-intensive, so it’s not that attractive for communities that have other options. Producing water accounts for one-fifth of Saudi Arabia’s energy consumption, though the environmental impact can be reduced with better technologies and renewable energy.

Make an impact with your money

Best robo-advisor for green investing

Fees

0.25%

Minimum

$10


Get a green credit card

Fees

$60/year

Minimum

$0

Build custom portfolios for free

Fees

$0

$125 for M1 Plus

Minimum

$100

Save and invest spare change

Fees

$3-$5 / month

Minimum

$5

Work with human advisors

Fees

0.49%-0.89%

Minimum

$100,000

How to invest in desalination

It’s not easy to invest in water desalination. Desalination is a small business for many industrial conglomerates or water utilities. For example, Veolia, the world’s desalination leader, is also a water and wastewater utility. Desalination companies like Israel’s IDE Technologies are private. Hyflux, a Singapore-based desalination innovator, has gone out of business.

Water-themed exchange-traded funds (ETFs) or mutual funds are not a good way to bet on desalination either. They mostly invest in water utilities or technologies that have nothing to do with desalination.

So if you want a pure-play desalination stock, that leaves riskier, small-cap companies like Consolidated Water (CWCO).

Publicly traded desalination companies

  • Veolia Environnement SA (VEOEY)
  • Consolidated Water Co (CWCO)
  • Energy Recovery Inc (ERII)
  • Acciona SA (ACXIF)
  • ACWA Power Co (TADAWUL: 2082)

What are the best desalination companies to invest in?

Read more about each company:

1. Veolia Environnement SA (VEOEY)

  • Market capitalization: $25.7 billion
  • 1-year performance: 37%

Veolia is a French company that provides waste and water management and energy services. Although Veolia isn’t a pure-play desalination stock, it is the world’s leader in desalination, with a water treatment capacity of 13 million m3/day. Veolia runs over 2,300 water treatment sites in over 100 countries. In 2020 alone, they supplied 95 million people with drinking water.

The company builds desalination plants of all sizes, including nearly 2,000 reverse osmosis desalination plants and systems, producing 6.75 million m3 of fresh water daily. As an example, Veolia’s reverse osmosis desalination plant in Sydney, Australia, provides up to 15% of Sydney’s daily water needs.

The Paris-listed business reported €26 billion in sales in 2020. Note that Veolia is merging with Suez SA, a French water utility that has pioneered reverse osmosis desalination technology.

2. Consolidated Water Co (CWCO)

  • Market capitalization: $150 million
  • 1-year performance: -26%

CWCO is the only pure-play desalination stock listed in the U.S. Consolidated Water develops and operates reverse osmosis seawater desalination plants in the Caribbean, where seawater is abundant, but the supply of fresh drinking water is lacking.

Established in 1973 as the private water utility in the Cayman Islands, the company operates 11 water plants in the Cayman Islands, the Bahamas, and the British Virgin Islands. The plants have a total capacity of 25.5 million gallons. CWCO also supplies treated water to end-users under an exclusive government license in the Cayman Islands. Although CWCO is a small company, with only $152 million in market cap and $73 million in 2020 sales, it is profitable and pays dividends. The current dividend yield is 3.4%.

3. Energy Recovery Inc (ERII)

  • Market capitalization: $1 billion
  • 1-year performance: 30%

California-based Energy Recovery Inc makes energy recovery devices, which help industrial companies reduce energy costs. They started out with water desalination: their PX Pressure Exchanger ERD device recovers wasted energy in the seawater reverse osmosis desalination process.

According to the company, it saves its water desalination clients around $2.6 billion in energy costs each year. Devices don’t emit greenhouse gas when operating and help reduce carbon emissions. This $1 billion market cap company reported $118 million in 2020 sales.

Make an impact with your money

Best robo-advisor for green investing

Fees

0.25%

Minimum

$10


Get a green credit card

Fees

$60/year

Minimum

$0

Build custom portfolios for free

Fees

$0

$125 for M1 Plus

Minimum

$100

Save and invest spare change

Fees

$3-$5 / month

Minimum

$5

Work with human advisors

Fees

0.49%-0.89%

Minimum

$100,000

4. Acciona SA (ACXIF)

  • Market capitalization: €8 billion
  • 1-year performance: 3%

Acciona is a Spanish conglomerate that develops and invests in projects in energy, transport, water, social, cities, real estate and finance. Although it’s not a desalination pure-play, Acciona designs and constructs reverse osmosis desalination plants. Their plants can treat about 5 million m3/day – enough fresh water for 25 million people. Acciona has nearly €8 billion in market cap, €7.3 billion in sales, and a nice dividend.

5. ACWA Power Co (TADAWUL: 2082)

  • Market capitalization: 73 billion SAR
  • 1-year performance: 50%

Saudi Arabia’s ACWA Power develops and operates 64 desalinated water plants and power generation plants in the Middle East, Africa, and Southeast Asia. Although most projects are in energy generation, including both oil and gas and renewables, about a third are in water desalination. The desalination projects, most of which use the reverse osmosis technology, produce 6.4 million m3/day of desalinated water.

It’s up to you if you feel comfortable investing in Saudi Arabia, the world’s top oil producer. The company doesn’t have a U.S. listing, so you will need a broker that lets you trade foreign stocks.

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

🔔 Looking for other water-related investments? Learn about investing in water stocks and ETFs.

Read more

Invest in the climate transition. Sign up for our newsletter

Frequently Asked Questions

Are desalination plants a good investment?

Desalination plants could be a good long-term investment. The global population is increasing while the climate is getting warmer. According to estimates from the United Nations, global water demand will grow by 30% by 2050. Even though it’s relatively expensive, desalination seems like an obvious (if not the only) solution in dry, coastal areas where other sources of freshwater are not available.