Bet on Natural Gas With a Water ETF

NEW YORK (TheStreet) -- ETF investors looking for an unconventional proxy play on the growth of the natural gas industry may want to take a look at the various firms responsible for providing the U.S. and the rest of the world with potable drinking water.

For a while now I have promoted instruments like the First Trust Revere-ISE Natural Gas Index ETF(FCG) and the JPMorgan Alerian MLP Index ETN(AMJ) as the best ways to play the expanding U.S. natural gas industry.

Thanks to the advent and development of unconventional natural gas drilling techniques, analysts now estimate that the natural gas reserves in the U.S. could adequately supply the nation for a century.

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However, despite the optimistic forecast for this fuel source, there remain a number of critics, many of whom are concerned over the detrimental effects natural gas production can have on the United States' water sources.

The hydraulic fracking method of natural gas extraction involves the pumping of water and chemicals deep underground in an effort to break up the underlying shale, allowing natural gas to escape.

Although many natural gas companies insist the depths these producers are drilling are far below levels where consumable water is extracted, many remain concerned about the long-term negative implications this process could have on water, which is essential for crops, livestock and citizens.

The ongoing debate between natural gas proponents and environmentalists highlights the important, albeit often overlooked, potable water industry. Because there is little chance that natural gas is going to go away any time soon, something is going to have to be done to ensure that we continue to have adequate access to drinkable water well into the future.

Fortunately, today there are a number of companies like Nalco(NLC), Veolia(VE) and Itron(ITRI) that focus on preserving our water supply. Even Warren Buffett has a hand in this industry. According to the most recent Berkshire Hathaway(BRK.A) 13-F filing, the Oracle of Omaha has amassed a significant position in Nalco.

ETF investors looking for access to this important industry have a number of plays to consider.

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