Water Problems

The Era of Cheap and Abundant Clean Water Is Coming to a Close

By Lee Bellinger

I've got something important today for both preppers and investors!
Let's start with the clueless general public's expectation of cheap, available water at their fingertips in perpetuity. The situation flows like a river of potential profit! After all, we've enjoyed a lifetime of turning on a tap and having access to as much clean water as we want for drinking, cooking, or cleaning – and at a relatively negligible cost.

Yet that's not the norm globally. Today, aged U.S. water systems are near the top of the list in terms of our nation's antiquated infrastructure.

Unfortunately, our public school system has yielded a generation of bubble-brains. Which I define as people who don't pay attention to the world around them and have no critical thinking skills. They devour whatever crapola and excuses the political class feeds them. One of the biggest unreported stories of our time is the rise of global shortages of clean, potable water close to major population centers. Another political mess – decades in the making!

Thirty years of expanding green regulations and other artificial legal hurdles have diverted money away from investment in water reclamation and treatment technology.
The result is a brittle supply system that most of us won't notice until, well, it fails to the point that it actually inconveniences people. And when it causes food prices to rise (as it is already doing), most won't make the connection. More on this in a moment.

The population control people blame fresh water depletion on growing population levels. But as with energy and most other shortages, the root causes are mostly political.

Take agricultural squandering of fresh water due to political boondoggles like corn-based ethanol. Estimates show that producing a gallon of gasoline uses 2.5 gallons of water, while ethanol refineries use about 4.2 gallons of water to produce the same gallon of fuel.

Don't overlook the need to hedge yourself against shortages and price spikes in this most essential life-giving resource of all. Whether you personally are dependent on a municipal water source or get it for "free" from your own private well, the reality is that the costs of obtaining and transporting water are built into the costs of all food products and many other things people consume.

Ongoing, Severe Droughts and Weather Patterns – Temporary but Costly...
The U.S. Climate Prediction Center (CPC) says we can expect, "considerable month-to-month variations in temperature, rainfall, and storminess across central North America during the winter and spring seasons." Long-term weather analysts say it's possible to experience "average" monthly temperatures, but it would be the result of an average of extremes – severe cold balanced with unusual heat.

These variations in weather are due in large part to a strong La Nina. According to global weather expert Evelyn Browning Garriss, "The most important result of a strong La Nina... is the change in precipitation. The Pacific jet stream is veering north. It mingles with the Arctic jet stream, creating more moisture in the north. It also creates more droughts in the southern U.S...

"At this point, 43% of the contiguous United States is in drought and 8.1% is facing the most extreme conditions. Almost all of this land is in the South, the regions that normally can produce winter crops. In a time of rising food prices, our lands that normally can still grow food are paralyzed by drought. This will also have profound effects on energy prices."

La Nina-caused drought is expected to continue at least through the first half of 2012. So far, Texas has gotten the bulk of the press regarding the U.S. drought because of its very visual wildfires. However, the impacts on agricultural production today and the near future are equally devastating:

The drought has caused $5.3 billion in losses in the agricultural sector and counting;

Texas produces about 50 percent of U.S. cotton (the U.S. grows up to 25% of world cotton) and yields from irrigated crops have dropped nearly 60 percent;

Texas is the largest U.S. producer of beef. Garriss says severe weather and long-term drought is forcing ranchers to "sell off large parts of their herds as the grass dries and water becomes scarce," while others buy hay from "farms a thousand miles away, despite the high cost of shipping."

Staying with the beef example for a moment, retail beef prices rose 10% in 2011 to reach an all-time high, and are forecast to climb another 4-5% in 2012. Live cattle prices are up 20% in the past year. While some grocery chains claim to be "absorbing the difference," there's little doubt they are making up their losses in the other aisles of the store. Some ranchers report double-digit profit growth and say they are investing their windfall in – you guessed it – improving their water supply resources.

Water Costs Rise 2 to 3 Times... Even without Drought

The American Water Works Association (AWWA) recently released a report that found that fixing and expanding the U.S. underground drinking water system will cost at least $1 trillion over the next 25 years. This investment to keep water flowing will translate into a double or triple increase in water bills.

The problem is with a soft economy, much of the needed investment, repairs, and expansions are being delayed. Putting off the work will almost guarantee higher costs in the future. The association calculates that spending on water systems will double from $13 billion a year today to $30 billion a year in 2040. New York City alone is spending $6 billion constructing a new water-supply tunnel, a public-works project so massive that 24 people have died in construction-related accidents.

According to the AWWA report: "Because pipe assets last a long time, water systems that were built in the later part of the 19th century and throughout much of the 20th century have, for the most part, never experienced the need for pipe replacement on a large scale... The dawn of an era in which the assets will need to be replaced puts growing stress on communities that will continue to increase for decades to come."
Do Water Related Companies Need a Catalyst to Explode in Profitability?

The U.S. water infrastructure is in disrepair and in need of large amounts of direct investment to fix it, improve it, and take America into the future.

Investing in water related projects is something not often talked about, despite its importance and profit potential. Water is the one commodity that has no replacement in agriculture, industry, or in our daily lives.

Quinlan believes there could soon be a catalyst that wakes up the investment community. One would be an active M&A market where large conglomerates pay big money for smaller, unknown water-related companies, and the other is an ominous level of demand that cannot be ignored:

"One day California doesn't have enough water to drive its agriculture sector... or China announces, 'we're going to grow at 4% growth instead of 8% growth because we don't have enough water for our agriculture industry or residential use.'" That day is fast approaching, and probably already here...

Lee Bellinger, Publisher Independent Living