"China can solve this problem in a way that creates economic value as opposed to economic cost," said Joerss in an interview. "There is tremendous, though largely untapped, opportunity to meet China's enormous need for water resources by focusing on better managing demand."

Investments in technologies to ease China's water deficit are expected to reap 131 billion yuan ($19 billion) in profit a year, according to the McKinsey report.

Asian water-related companies have benefitted from the demand for treatment and supply and have potential for further gains, said Pictet's Bisschop. He said profit on water investments in China may be about 8 percent to 12 percent a year, with even higher returns in some cities.

"We are looking for companies, for example, which provide beverage companies water-efficient technology in cleaning the bottles," Bisschop said in a phone interview.

"Water is a resource under great pressure in China and globally," said Kenth Kaerhoeg, a spokesman in Hong Kong for Coca-Cola Pacific, which has water recovery systems at its 39 plants in China to reduce consumption. "Economic development, climate change and population growth will increase pressure on freshwater resources in China."

'Serious Depletion'
In March, a panel from the southern Indian state of Kerala recommended suing Coca-Cola bottler Hindustan Coca-Cola Beverages Pvt. for 2.16 billion rupees ($48 million) damages for contamination and "serious depletion" of water in the town of Palakkad. In an April 26 e-mail, the company denied that its plant, shut since March 2004, depleted or tainted the town's water.

"Water and water treatment is going to be the next growth story after power," said M. S. Unnikrishnan, managing director at Pune, India-based Thermax, which makes water-recycling equipment. Thermax shares have almost doubled to 670 rupees on the Bombay Stock Exchange in the past year, compared with a 16 percent gain in the benchmark Sensex.

C. K. Sandeep, vice president, corporate marketing at Mumbai-based Ion Exchange (India) Ltd., which set up India's largest desalination plant in the southern city of Chennai, said he expects rising demand for the technology. Ion had sales of about 5 billion rupees in the year ended March, 2009. Its shares have risen 32 percent in the past 12 months.

Eoin Treacy's view Water remains central to the supply inelasticity meets rising demand theme. However, as a sector it has been overshadowed by industrial metals, precious metals and energy over the last decade. This is at least in part because so many of water companies markets are dependent on government owned utilities and increases in public spending. Too often, governments have other priorities.

I am increasingly coming to the opinion that while there will undoubtedly be a number of additional success stories in the water sector, the greater opportunity is likely to be with the effects of higher input prices in food and fibre production over the medium to long term.

There are a number of water related funds in the Chart Library which can be found using 'water' as a keyword in the Chart Library's dedicated search engine. The Pictet Water Fund has one of the more consistent uptrends with a succession of relatively equal sized reactions, one above another. A sustained move below €125 would be required to question the consistency of the medium-term uptrend. .