It is an often observed truism that if you want to know what is really going on, you should follow the money. With this in mind, the massive surge of interest in water investment over the last few years should convince even the most skeptical that the water issue is here to stay.
This year's Global AG Investing conference took place on June 22-23 in New York, featuring a roster of big investment names. The hot topic of this year's gathering was: water.
The business community is well aware that there is a fortune to be made from any resource that is both essential and hard to obtain. Oil has been the watchword of the last century, as society has become more and more dependent on it and its many by-products. However, all eyes are now on an even more fundamental form of liquid gold. As water becomes scarce, those who control it hold the keys to life itself.
This is not just because we need it to drink. Around 70% of the world's freshwater use is in agriculture. Freshwater is indispensable to human survival, industry and food production. Yet an array of compounding factors is causing water shortfalls around the globe. Of these, the principal causes are shifting weather patterns caused by global warming and population expansion.
The effects of warming are felt first in the developing world, in environments in which water supply is fragile. It is especially pronounced in areas which rely upon the buffering effect of snow melt and glaciers. Anywhere local rivers are fed by runoff from mountain ranges, temperature is crucial. The ideal situation is steady melting of ice throughout the warm season, resulting in a constant flow of water into rivers and lakes. If the temperature rises too swiftly, accelerated melting leads to flash floods and exhausts the ice bank, leading to drought in the latter part of the summer.
Just as significant, however, is population. Fresh water on planet earth is a finite resource. However, global population is currently around 6.7 billion, and the United States Census Bureau estimates that it will reach 9 billion between 2040 and 2050. Given that many parts of the planet already struggle to find sufficient freshwater for their populations, the numbers just don't add up.
In addition to this, demand from already massive populations in India and China is causing a spike in world water usage. As both countries become more affluent, it is unsurprising that consumption of water-intensive luxury foodstuffs, such as meat, has rocketed. The effect of future population expansion may be negligible in comparison to the effect of our current world population starting to adopt the luxuries of western lifestyle.
The problem is now becoming seriously pronounced in parts of the developed world. Australia has been experiencing serious droughts for five years, and the east and western seaboards of the US look set to follow suit.
The Colorado River, stretching through seven states on its long journey to the sea, is the artery that carries the lifeblood of the mid-west. Despite what one may be lead to think - walking the lush golf courses of California - the western states exist in a tenuous state of dependency upon their shared watercourse.
The river, however, is fed almost entirely by snow melt throughout the summer. As the weather patterns shift, the dry season is getting drier. Lake Mead, the enormous man-made reservoir just outside Vegas, has shown record lows over the last few years. There is no problem containing the early rush of snow melt in a reservoir of this magnitude, but evaporation massively depletes the water stock throughout the season. Scientists at the Universities of California and San Diego estimate that there is a 50 percent chance of the lake running dry by 2021.
While the west has always been a difficult place to find water, the east coast expects regular rainfall throughout the summer months. However, recent years have been marked by unprecedented droughts, with the states of Georgia, Alabama and Florida fighting over water share from Lake Lanier, another artificial reservoir built in the '50s by the Corp of Engineers and still maintained by them.
The situation has been so pronounced in recent years that in 2007 Georgia Governor Sonny Perdue made the unusual move of convening a gathering outside the Capitol building in Atlanta, with the avowed intention of 'praying up a storm'. Accompanied by a youth choir and several local pastors, he led local constituents in supplicating the heavens.
While climate impact varies from east to west, the issue of population is massively significant on both coasts. The driest states also have the fastest rate of population growth, partly due to the attractions of a balmy, sun-kissed lifestyle. These are good places to be when there is water. Nevada leads the way, with a population that increased by 66 percent during the '90s.
The seven states that draw on the Colorado River system reached an accord in 2007, regulating the use of the waters during the dry summer months, and there is hope of a similar resolution around Lake Lanier. State governments have so far addressed the problem mainly by looking at ways of improving infrastructure and managing water usage. California, which has a history of piping in water from wetter states, has built a 12-inch wide, 44 pipeline, running south from the Sierra Nevada, to help catch runoff water.
America is a world leader both in CO2 production and in climate change denial. It is also one of the best resourced nations on the planet and a leader of the international community. With the water problems of the developing world making themselves felt in the American homeland, there is hope that policy-makers will start to look beyond short-term solutions and address the issue of water sustainability as a global issue. When they get there, however, they are likely to find that other great American export, the investment industry, waiting for them with open arms and bulging wallets.