Montreal, Canada

China’s Three Gorges Dam is in the midst of a bear market in water levels. That means more contract work for local and possibly, foreign water companies and engineers to bridge the gap at the world’s largest hydropower dam. It also implies rising oil imports to supplement the power lost from the Three Gorges.

On Monday, some of the top-performing stocks in Shanghai belonged to the water and electric utility sectors even as equities continued to struggle on the broader market.

China ordered operator of the world’s biggest dam to begin disgorging about 5 billion cubic meters of water to replenish the Yangtze River and counter the Hubei region’s lowest rainfall in half a century, according to Bloomberg news.

Water tables across most of China are in a secular decline. Some of the country’s most fertile plains are dry and many more aren’t getting enough water to boost or even sustain current trends in agricultural output.

Approximately 4.4 million people and 3.2 million farm animals are already suffering shortages of drinking water.

Water is already running scarce in many countries and historically, nations have gone to war in order to protect their supplies.

In many ways, water is the “new” oil. But whereas individuals and companies can replace oil capacity – although at a more expensive rate – you can’t substitute water.

Water companies in most countries are already trading at expensive levels and investors should wait for a correction.

One of the most popular in the United States, Aqua America (NYSE-WTR), has been a superb investment since going public more than fifteen years ago (see chart). But prices for stocks in this high-flying sector are not cheap. The stock trades at 22.9 times trailing earnings and more than 2.5 times price-to-book.

Another peripheral agricultural trade, however, is much cheaper.

Archer Daniels Midland (NYSE-ADM), the largest publicly-traded U.S. grain processing company, has declined sharply this month and now sits more than 34% below its all-time high. The stock trades just north of book-value and has grown its earnings and dividends every year over the past decade.