Do We Take Water for Granted?

Here in the United States whenever we turn on the tap on our sinks, bathtubs, etc. out comes a flow of water. The United States is a water rich nation compared to many others, and a developed nation at that. This means that for now, water resources have been adequate to meet demand.

It is estimated that of the over six billion people in the world though, one billion lack access to potable water. Most of these people are in underdeveloped nations that lack the resources to develop new potable water sources. But for the average American, these problems are miles and worlds away right? Well, perhaps for now, but is it possible that water shortages may be arriving to the world's richest nation? The signs of shortage are already beginning to show and something will have to be done in order to stop it.

The graph below shows just how severe the water shortages have been worldwide and just how fortunate we have been here in the United States thus far.

With the population of the United States and the world on an ever increasing trend, the demand for water rises every year. The unfortunate problem is that for those who rely on rainfall as part of their water supply needs, droughts have been occurring in record numbers lately. If global warming is real as most experts now agree is the case, then the predicted effect of global warming will be to reduce rainfall even further and produce even more drought.

There is more to blame for rising water demand than just an increase in population. The increased demand for water guzzling electricity production and inefficient uses of the current water supply are to blame as well.

Nuclear E\energy production uses tremendous amounts of water to cool the super-heated uranium rods and this demand is only likely to rise with politicians beginning to call for an increased reliance on nuclear power. Thermal energy is an extremely large water user and virtually all power production facilities such as coal or natural gas, use water in their production process.

According to Shiney Varghese, a senior policy analyst at the Institute for Agriculture and Trade Policy, 80% of our nation's freshwater is put to use for irrigation. According to Varghese, this high percentage is due to the inefficient usage of water in irrigation. Large portions of irrigation water still flow through open ditches, which allows water to soak into the ground surrounding the ditch and to rapidly evaporate.

As if that weren't enough to prove that a water crisis is approaching then the rampant court battles between states over water rights may be. For the past 18 years, Georgia, Alabama and Florida had been feuding over Georgia's right to draw excess water from Lake Sidney Lanier. The lake is in Georgia but flows downstream and provides water to consumers in both Alabama and Florida. Georgia just lost this battle in February.

This is not an isolated case though, the Kansas Supreme Court has just agreed to hear a case involving 1.2 billion gallons of groundwater from the Kansas River Valley. The area water district is seeking to exercise eminent domain in order to pump the groundwater to rapidly growing Johnson County, but the farmers who own the land are contesting. Furthermore, States in the Western United States have been feuding for years over the usage of the Colorado River and to emphasize that this is not just a localized problem, the countries of Turkey, Syria and Iraq are also feuding over the usage of the Tigris and Euphrates Rivers.

The signs are here that water shortages may be looming, estimates cited by Shiney Varghese claim that there is a 50% chance that Lake Mead will be dry by 2021 if current trends continue. Lake Mead along with nearby Lake Powell provide water to nearly 25 million residents in the Southwestern United States.

This problem can be fixed though. Not only will water conservation efforts be key, but a movement to privatize water utilities is gaining steam as well. If the utilities were privatized then the development of available technology would be able to proceed much faster and more efficiently. For example, the technology of desalination, which very well could be the best way to supply water for future uses, is currently underutilized in the United States. Currently there are only about 250 desalination plants in the United States and about half of them are in Florida. The issue is that the municipalities seem too concerned with saving money and moving money into other politically popular causes rather than focusing on a technology that could help avert a coming water crisis.

There is money to be made for investors in the privatizing of water infrastructure. Just take a look at oil-turned-water baron T. Boone Pickens if you need proof of the potential profits. Mr. Pickens would likely not be putting large investments, not to mention a few court battles of his own, into water infrastructure and supply if there weren't potentially high profits in the works.

If you don't have the amount of capital that T. Boone Pickens has and can't afford to create your own water infrastructure then don't despair there are several companies out there that specialize in water supply and as the movement to privatize water utilities grows stronger these companies all stand to profit immensely.

Companies that supply water utilities include:

• Aqua America (WTR) operates mainly in the northeast as well as the Carolinas and Florida. It specialize in providing both water and waste water services.
• American States Water Company (AWR) operates in various locations, most notably California, and also offers electric and contracted services.
• California Water Services Group (CWT) operates in California, Hawaii, New Mexico and Washington. The bulk of its revenues comes from the distribution and sale of water for domestic, industrial, irrigation and public uses. As a more traditional utility, it stands to benefit as water becomes more scarce, driving the price higher and it also will likely look to enter new markets if municipalities decide to privatize their operations.
• SouthWest Water Company (SWWC) owns water production operations in California, New Mexico, Texas, Oklahoma, Mississippi and Alabama.
• Energy Recovery Inc. (ERII) is the specialist in seawater desalination and is likely to profit immensely once desalination is relied on more heavily as a source of water.
• Consolidated Water Company (CWCO) is also a specialist in desalination technology, who also stands to profit if desalination becomes the "go to" method for producing potable water.

The bottom line is that water can be gold if you know where to look. There is a water shortage approaching and its signs are already starting to show. This crisis can be averted, however, with smart management. All the while, investors look like they may just be able to profit from a renewed interest in the water utilities.

Comments

[ocassiuso]

What about HOO?

[h2oworks]

If history is any indicator of the future, acting on our water shortage will be similar to our acting on our fossil fuel energy/enviroment problems. Not much will happen until we are in crisis mode.
That said, I hold a position in WTR and other such utilities. Most of these have been taken down in price during the past six months and present decent entry points.

[john s.gordon]

encourage water reuse. wash your dishes by hand & throw the used dishwater on you lawn.
> jack

[donal1]

As is the status quo in our pandering pro-business United States Government Representatives zero preventative measures will be implemented and we the people will experience yet another horrific crisis of magnitude--even more horrific than the present energy crisis. We just cannot seem to grasp the concept of non-finite natural resources!