Q: I thought water would be a fantastic investment given the drought, population growth, etc. But I am not eligible to buy the water I wanted, and I discovered that it has dropped in value significantly, even during this drought! What's going on?

A: The three major water investments available in our area are Water Supply and Storage (WW&S), Northern Colorado Water Conservancy District (Big-T), and North Poudre.

The value of WW&S stock has held steady or risen slightly from $285,000 per share a few years ago to around $310,000 to $325,000 a share. But there have been rumors of a $350,000 sale and even a $450,000 sale, but those seem to be aberrations, if true. There are some restrictions on who can own the stock and on share transfers. Additionally, not all the water users (such as certain cities) will accept this water. But the high price of the stock probably means that this investment opportunity is beyond the means of most of us.

Big-T water is generally considered the water of choice to buy by many water user districts. But recently the value of a unit has dropped from a high of around $16,000 per unit to less than $11,000. (A while back I was involved in a sale for just under $19,000 a unit.) But there are major restrictions on who can own the units. For those who qualify, there seems to be a large supply of units available for purchase.

North Poudre value is tied to around four times Big-T, thus rising and falling with Big-T's price. Ownership is much less restricted than with Big-T units.

Finally, there is other water available but usually it is not acceptable to water user districts, or company restrictions on transferability limit its mobility and use, thus explaining why such water sells for the equivalent of several thousand dollars an acre foot.

So what are the prospects of water investments increasing significantly in the short term? Who knows, but if history is any guide, and since purchase pressure is moderate to low, not very good, according to the water owners and brokers that I have talked with.

When Big-T was at its historic unit price levels of $3,000 to $4,000 per unit, many water user districts and developers started stockpiling their inventories of Big-T units. I have been told that especially among developers, it will be a while to work through current inventories.

Secondly, the use of water has dropped and new developments are now tapping "other" water sources such as water wells to handle such activities as landscape watering, thus reducing the need for treated water. That is one of several reasons why the old rule of thumb that an acre foot will serve a family of four for a year is now occasionally changed to refer to two families of four.

Cities seem to feel that for a while renting water during the peak usage periods is preferable to owning water year around. In fact, recently one city has reportedly sold Big-T units.

Finally, several water user districts and water supplier districts and companies have plans either to build or to expand reservoirs or delivery systems, thereby increasing the supply of water by tapping water that is already owned but not yet used.

Given all of these factors, to match other possible investments, water would need to more than double in value in the next seven years before any real gain could be seen beyond current conventional investments.

So your initial thoughts have merit, but in water's wild, wacky world, the counter-intuitive result probably best reflects reality. It might be wise to look elsewhere to make money.