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Recession Doesn’t Slow Water Problems, Investment

Nick Hodge | Friday April 17th, 2009 | 1 Comment

water dropWater problems are mounting. You see the evidence everyday.

Droughts in California. Disappearing aquifers in the Southeast. Tightened water restrictions in Perth.

The problem is elementary, yet most are too stubborn to comprehend it, or to deal with it.

We only have a certain amount of water but we constantly require more of it. Increasing population and the industrialization of the second and third world are the main culprits, but pollution and misuse of done their share of damage.

It’s all very Malthusian.

And the recession is making it worse. Delayed investment in water infrastructure due to tightened credit and lending means sever water problems could surface sooner than once thought.

We’re All at Risk

Generally, when we hear about water problems, we think they are isolated occurrences. The problem doesn’t really exist until it affects us personally.

I can tell you, it soon will. The U.S. has been a bit more sheltered, but water woes are on the way. Nearly $6 billion of the recent stimulus was allocated to maintaining our clean water infrastructure. It won’t be enough by all measures.

Just this week the EPA announced where some of the funding would go:

  • $65 million to Florida

  • $132 million to Florida

  • $236 million to Michigan

Michigan? It’s a peninsula for crying out loud. Water issues don’t discriminate.

The water flavor of this week is a just-released report from the Asia Society. It claims one if five people don’t have access to safe drinking water. That’s about 700 million people, or 20% of the regional population.

The report, "Asia’s Next Challenge: Securing the Region’s Water Future," indicated that cross-border water disputes are already emerging between India and Pakistan and between the host of countries that share the inadequate supply of the Mekong River.

The report even coined a new term for the negotiations being used to solve riffs that I think we may see more of: hydropolitics. It begs the question, could we, as with oil, see hydrodollars?

In the end, the report concluded, as you’d expect, that "the majority of Asia’s water problems are not attributable to an actual shortage, but rather are the result of poor water governance."

The solution: "more investment, both public and private, in efficient water management and infrastructure."

I could’ve told you that without the report.

Going Beyond Water Infrastructure

Despite the recession, the water industry has held up surprisingly well.

According to a recent Reuters piece, "operating budgets for municipal utilities, which make up 85 percent of the water utility market, have remained intact."

But simply maintaining will soon not be enough.

Of course we need to maintain and upgrade our infrastructure and wastewater systems. But to really solve the water issue, we must alter the supply picture.

And that’s where desalination comes in. According to the Reuters article, desalination has long been "viewed as the Holy Grail in the quest to replace dwindling freshwater drinking supplies."

I guess so. What could be a better solution to water scarcity than getting it from the most abundant supply there is: the oceans.

But desalination has remained cost-prohibitive due to its high energy costs. New technologies are changing this, and the use of desalination will start to expand.

A recent report by Lux Research indicated "the global desalinated water supply will grow at a CAGR of 9.5% over the next decade, reaching 54 billion m3/year (cubic meters per year) in 2020 — 54 trillion liters/year — or triple what it had been in 2008."

Records show desalination capacity currently stands at about 14 billion cubic meters per year. A large sum, but only 0.26% of world demand.

Tripling in the next ten years would do much to alleviate global water issues, and will provide hefty investment returns.

Keep a close eye on this developing trend. The problem–and its solution–will affect us all.

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  • WK

    There is plenty of water to go around, with inreased demand and the need to dig more wells, more water treatment or sea water purification plants you will end up paying more