I think water utilities will not appreciate much with a rising cost of water, any more than electric utilities would benefit from a rising cost of coal/oil/natural gas. Particularly in the developing world, if the cost of water increases, these utilities will be lucky to even pass on their increased cost to their customers. Politics and regulations will likely squeeze their margins in an attempt to hold consumer costs down.

A better play would be companies developing desalinization technologies or other methods to increase the supply of potable water. Anybody know any publicly traded companies doing this?