forbes.com: By William Pentland

In 2001, a water shortage in America’s Pacific Northwest wiped out nearly a third of the U.S. aluminum industry. Low precipitation levels in the Cascade Mountains during the preceding winter robbed local reservoirs of the water needed to turn the massive turbines inside the region’s main hydroelectric power plant, the Bonneville Power Administration. Electricity prices skyrocketed. Over the course of a few months, roughly a dozen aluminum plants closed. Nearly a decade later, only one has reopened.

Like oil, water is an essential part of doing business in almost every industry, and unexpected shortages can trigger potentially catastrophic consequences. The trouble for investors: Companies disclose very little if any information about their exposure to water-related risks.

“This is not an area that companies like to discuss quite frankly,” says Marc Levinson, an economist at J.P. Morgan and the principal author of the recent report Watching Water: A Guide to Corporate Risk in a Thirsty World. “They don’t want to call attention to a vulnerability and that applies very much to the water scarcity issue. Investors in general know very little about what is going on in companies’ supply chains.” [ read more ]