Major industries could be affected by a growing water scarcity problem, but there is little opportunity for investors to do their due diligence as disclosure of water supply risks is "seriously inadequate," according to a new study.

Investors may want to look at how much a company is spending on water efficiency through measures to reduce water demand or recycle waste water, according to Marc Levinson, an analyst with JPMorgan Chase (NYSE: JPM) and an author of the report.

"Many companies have adopted water efficiency targets at the plant or company level," Levinson said in the study, titled "Watching Water."

"However, it is important to focus on those places along the supply chain where water efficiency matters most."

The power generation, mining, semiconductor manufacturing, and food and beverage sectors are particularly exposed to water-related risks, according to the report.

Levinson said that exposure to water scarcity and pollution is not limited to onsite production processes, and could actually be greater in companies' supply chains than in their own operations.

The report said the food and beverage sector relies on irrigated agriculture for important inputs, and water scarcity in key production areas could lead to higher prices for grain, meat, and other inputs.

Aluminum manufacturers in the U.S. Northwest experienced the supply-chain impact in 2001, said the report, when water shortages led to cutbacks in hydroelectric power supplies, forcing the closure of several aluminum plants.

"In our opinion, corporate disclosure of water-related risks is seriously inadequate and is typically included in environmental statements prepared for public relations purposes rather than in the regulatory filings on which most investors rely," said Levinson.

Along with the growing scarcity problem, there's been growing activity in the water services industry, with mergers and public offerings showing up recently in the sector.

St. Paul, Minn.-based Ecolab (NYSE: ECL), which offers cleaning and sanitizing solutions, announced in February that it would acquire Victor, N.Y.'s Ecovation for $210 million (see Ecolab boosts water services with Ecovation deal).

Ecovation provides renewable energy solutions and effluent management systems, primarily for the food and beverage industry, which uses a lot of water that needs to be treated.

And earlier this week, two water companies made filings to raise cash on the public markets in the U.S.

Germany's RWE put its sale of American Water Works back on track by setting terms for an initial public offering that could raise as much as $1.9 billion, and San Leandro, Calif.-based Energy Recovery filed for a share sale to raise up to $175 million (see Cleantech water deals diving into rough market).

Voorhees, N.J.-based American Water Works is a water utility and wastewater treatment company, and Energy Recovery is a manufacturer of energy recovery devices for the water desalination industry.

According to the water report, companies that are at the most risk for shortages could be pushed to reveal their water supply practices.

"We anticipate that companies will come under increasing pressure to provide detailed disclosure of water-related risks to investors, including potential changes in supply or treatment costs, regulations, and costs arising from supply-chain disruptions," said Levinson.

Problems could show up in booming areas of the world such as China and India. Of the 1.1 billion people around the world who have no water access, 60 percent reside in Asia, said the report.

"China has approximately 300 million people still without water, and India approximately 140 million," said Levinson.

"Given the two countries' rising economic growth, there will likely be increasing pressure on water supplies for industry and agriculture and to sustain greater household consumption."

The report said water pollution is getting worse in many developing economies, which exacerbates the challenge of delivering sufficient water of the required quality.

Levinson said companies that are dependent on water supply could be hit by financial losses, higher costs, or delayed or suppressed growth due to water scarcity.

And as more countries increase environmental regulations, more companies could be hit by the water issue.

"In emerging economies, even where a particular company is not a heavy user of freshwater or discharger of polluted water, it may have to absorb the costs associated with improved local water-quality standards driven by higher incomes and increased environmental consciousness," said Levinson.

The report said there could be other areas of material impact for companies, such as worsening health conditions of workers or prospective customers, or even social conflicts.

Levinson said, "Water-related social conflicts that do not directly involve a particular firm may nonetheless interfere with routine operations. The risks of water, then, can take many forms."