More than 2 billion people don't have access to clean water, and millions are dying from drinking polluted water. Even in the U.S., shortages are increasing and industrial activities threaten the clean water we do have. Not surprisingly, many investors see the chance to make money on ideas to solve the problem and on a commodity that will surely become more valuable as the world population grows and the crisis worsens. But investors beware; water is not a "safe" investment, warned a leading expert who spoke at the 2010 SRI in the Rockies conference last week in San Antonio.

Some investment advisors are telling client there are "buckets and buckets of money" to be made on privatizing the delivery of water, but this is a highly contested area and there's been a huge backlash to this idea, said Maude Barlow, who chairs the board of Food & Water Watch. Barlow, the national chairperson of the Council of Canadians, has received 10 honorary doctorates and many awards. She's also written 16 books, including Blue Covenant: The Global Water Crisis and The Coming Battle for the Right to Water.

Some cities, such as Atlanta, Ga., and La Paz in Bolivia, have taken back their water systems from private contractors, she noted, and in January 2010 the water system in Paris became publicly managed. Other places, like Vermont, have imposed regulations on groundwater, maintaining that groundwater is a public trust, she added.

There's also been a backlash to drinking bottled water, which in developed countries is no cleaner than the water you can get from the tap, Barlow says. Another reason for the backlash: the trash created by the plastic bottles. If you laid all those bottles end to end they would reach 65 times between the earth and moon, Barlow says. Even in North America, only 35% of those bottles get recycled. Also more people are refusing to drink bottled water because many of those bottles contain Bisphenol A, or BPA, a chemical that can cause serious health problems. Vancouver and Toronto are two cities that have gone bottled-water free, she said.

Barlow added that most people in the United States don't realize that one-third of our clean water is being "exported" in products that need water to be produced. Computers, for example, need "amazing" amounts of water to be manufactured, and the making of biofuels, like corn ethanol, destroys huge amounts of clean water, she added.

No only that, but massive amounts of drinkable water are being used today to extract natural gas from shale formations in many states--Wyoming, Colorado, Pennsylvania and West Virginia, as well as others. The process, hydraulic fracturing or "fracking," injects chemicals and millions of gallons of water into each well to release the gas. But regulations are lacking, and wells have been contaminated in some areas from the process. As a result, activists are calling for a halt or at least better regulation.

The promise that big technology can easily solve the world's clean water shortage is a false one, Barlow maintained. She pointed to desalinization plants, many of which are planned in California, as an example that won't live up to the promise. She's not saying there's no place for such plants, but she noted that the technology is controversial--the plants typically are big, dirty and use huge amounts of energy that create greenhouse gases, she says.

Add to all these issues the resolution adopted in July by the United Nations that recognizes access to clean water and sanitation as a human right, and one sees how attempts to deal with water shortages will be scrutinized and have the potential to be highly controversial, making even seemingly positive efforts more risky than some investors may realize. Sure, some companies will undoubtedly make a profit on helping people access clean water, but the growing public outcry over the right to clean water and how much people should have to pay to access it is likely to increase regulation and lessen profits.

So what might be the better opportunities for investors? Barlow says companies will be needed to build more pipelines so that safe water can be delivered. Municipal bonds that are issued for water systems might be attractive. Also companies that develop technology that allows water to be reused and reduce its use may have a bright future. Barlow noted that industrial agriculture is the single biggest water user, and technology to reduce what it uses could have a big impact on conserving drinkable water.

"We see water as a resource for our pleasure, convenience and profit ... we don't clean it and return it to the earth," Barlow commented.

Companies that are developing technologies that do that--clean and return water to the earth--may just be a water investor's best bet.