William Pentland 05.14.08, 6:00 AM ET

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.”

The water risks are most obvious in the food and beverage sector. Together, Nestlé, Unilever (nyse: UN - news - people ), Coca-Cola (nyse: KO - news - people ), Anheuser-Busch (nyse: BUD - news - people ) and Danone consume an estimated 575 billion liters of water every year, or roughly the amount of water needed to meet the basic daily needs of every person on the planet.

But “watergy,” as some are now calling it, is a very big deal for all industries. In the U.S., industry uses more water than agriculture thanks to its use in power generation. The industrial sector uses an estimated 45% of water in the United States, agriculture accounts for 42% and domestic uses, like drinking and sanitation, account for a mere 13%.