Pro-Life
14 years ago
The James Bond Investor: Water!
By Matthew Brown November 8, 2010
http://www.fool.com/investing/general/2010/11/08/the-james-bond-investor-water.aspx
I love James Bond. I also love that the film series has generated some investment ideas, which may seem odd if you think I'm talking about a tricked-out Aston Martin that fires missiles. I'm not.
In fact, the villain in Quantum of Solace offers a Foolish investment strategy in plain English. One of his goals is to control Bolivia's water supply. That's when it hit me: The villain goes to such great lengths to control fresh water because it's just like oil – the world doesn't have an endless supply. There are secular movements afoot that could restrict water supply going forward, such as population growth, with some estimates putting annual increases at 57 million.
So it occurred to me that I could become a super-villain super-investor if I could figure out how to profit from a world where water might become scarce.
Muuu-wahahahahaaha!
Rubbing my hands together, I hunted for desalination providers. Consolidated Water Company (Nasdaq: CWCO) caught my eye. It produces desalinized water for Cayman Islands, the Bahamas, Belize, the British Virgin Islands, and Bermuda. Analysts project five-year earnings growth of 20%, the company produces modest free cash flow, and has $25 million of net cash. The company also feels confident enough in its business to pay out a 2.9% dividend.
On the larger side, a French company called Veolia (NYSE: VE) also makes sense. They are more diversified, also operating in Environmental and Energy Services as well as Transportation. They partnered with IDE Technologies Ltd., an Israeli company, built the world's largest desalination plant in Israel. Makes sense putting one in a desert region, no? Thanks to an aggressive efficiency plan, Veolia's financials are increasingly solid, the company shows a profit, and has strong free cash flow. Plus it merits a full five-star rating in Motley Fool CAPS.
As Fools know, sometimes it pays to invest in the companies that provide the nuts and bolts for other businesses. Somebody has to provide the technology for desalination plants to work, so that's why Energy Recovery (Nasdaq: ERII) is potable. The company "serves engineering, procurement, and construction firms, which design and build desalination plants, as well as original equipment manufacturers that supply equipment and packaged solutions for small to medium-sized desalination plants." Energy Recovery is still small, and its profits have been erratic, but free cash flow is at $5 million in 2009, and the company has over $55 million in cash and virtually no debt.
Purification technology is another big milestone for liquid-driven villains. Calgon Carbon Corporation (NYSE: CCC) goes beyond purifying water. They also purify and deodorize air, food, and other beverages. Analysts project nearly 23% compounded earnings growth over the next five years, the company has a net cash position, and over $30 million in 2009 free cash flow.
Even villains must diversify
For those not ready to make the pure-play leap into super-villainy, there are more diversified alternatives. Heck, even General Electric (NYSE: GE) is into desalination, along with purification and wastewater infrastructure. PowerShares Global Water (NYSE: PIO) and Guggenheim S&P Global Water (NYSE: CGW) are ETFs that invest in a variety of water-related companies.
The takeaway is that there are plenty of ways to take advantage of water scarcity. Small-cap loving Fools can find opportunity in this sector, while more conservative investors can scoop up diversified plays. If pressed, I'd personally go for Calgon. Purification of multiple liquids for consumption is built-in diversification, and I like the financials.
Of course, Fools should engage all the resources of Her Majesty's Secret Service when investigating companies with complex technologies like these. A lack of due diligence can derail even the most evil of plans.
frenchee
16 years ago
Water: Investing in the World's Most Precious Resource
by: Nick Hodge posted on: August 10, 2008
There is a giant bull market that hardly anyone knows about.
It has people grappling for a scarce resource. It has businesses fighting for rights to it. It has pitted neighbor against neighbor, and state against state.
And it might make you an absolute fortune.
Of course, being such a huge bull market, there are examples of it everywhere—in the headlines and news stories one reads everyday.
Yet nobody seems to put the pieces together; no one has yet connected the dots in a meaningful way for investors.
Take, for example, an article I came across recently in the Los Angeles Times:
Across the countryside of this nation on the heel of the Arabian Peninsula, the pumps and drills roar. Wildcatters bore as much as 1,000 feet into the earth and draw out the valuable liquid. They pump it into tankers and haul it away to sell to the highest bidder.
Any rational person would assume this article was about oil. But it's not.
It's about water. The world's most precious resource.
Water Scarcity
That L.A. Times article was about Yemen, and its current struggle to provide enough water to satisfy both its population and its agricultural business. It's a task that's proving to be harder and harder each day.
The article continued:
As Yemen's exploding population draws out more and more water from the parched land. . . the bone-dry nation's very existence is threatened. The country faces its greatest water crisis, with underground levels dropping dramatically, scientists and government officials say.
Instead of conserving water as it becomes scarcer and more precious, more and more Yemenis are rushing faster and faster to extract it from the earth and capture it from rains for profit, pushing the country toward an ecological nightmare.
Interestingly, this is the same scenario that's currently being played out with oil or, more specifically, peak oil. So it begs the question: Are we about to face peak water?
More and more, the answer is yes. The Yemeni water problem isn't an isolated event. It's one being witnessed by most countries in the world, both developed and undeveloped.
Certainly you've heard about the ongoing droughts in the American Southeast and Southwest, and in Australia, China, Africa, and the rest of the Middle East.
The Growing Water Problem Is A Factor of Many Issues
First of all, water is a finite resource. There is no more water on the earth today than there was hundreds of millions of years ago. There is no less either. We can't make it or destroy it.
And while our planet may be over 70% covered with water, less than 2% of it is freshwater. . . you know, the stuff we need to survive.
Of that tiny 2%, some water is perpetually tied up as atmospheric moisture or as frozen saturated soil (permafrost) that we can never use. Put another way, if all the world's water were in a one-gallon jug, fresh water wouldn't account for even a teaspoon of it!
The second part of the problem is the growing human population.
Water was first formed about 4.5 billion years ago. We've been around for only 60,000 years. But in that time, our population has exploded.
And we've done it rather quickly. It took us all of history to break the 1 billion population barrier at the beginning of the 19th century. Since then, the world's population has grown exponentially to over 6.5 billion. We now add about 75 people every 30 seconds.
And most projections put world population at about 10 billion by 2050. That's unsustainable to say the least, unless we can come up with market-based approaches to lessen water consumption, use water more efficiently, and derive freshwater from saltwater resources via desalination, which is currently a very capital and energy intensive process.
If nothing is done, by 2025 nearly two-thirds of the world's population will be water stressed due to greater demands on freshwater resources by burgeoning human populations...the diminishing quality of existing water resources because of pollution...and the additional requirements of servicing our industrial and agricultural growth.
That's less than 20 years away.
Water Right Now: Shortages and Investing
Ironically, two-thirds of the world's population lives in areas that receive only one-quarter of the world's annual rainfall, while the most water-rich areas of the world, such as the Amazon and Congo River Basins, are sparsely populated.
Right now, about 450 million people in 29 countries are facing severe water shortages.
According to the UN, water and sanitation deficits affect about 50 percent of all people in the developing world and lead to the deaths of 1.8 million children each year.
Much like easily accessible oil, all the readily available water resources are in full use:
All surface and ground freshwater resources in Jordan, Israel, the West Bank, Gaza, Cyprus, Malta and the Arabian Peninsula are fully used.
It's now possible to wade across Lake Chad—which was once one of the largest lakes in the world and thought to be the source of the Nile.
Once the fourth largest lake in the world, the Aral Sea's surface area has shrunk by 60% and its volume by 80%. . . and it's still shrinking.
The Yangtze, Ganges, and Colorado, don't flow to the sea for much of the year because of upstream withdrawals.
In some places, the Ogallala—which supports America's breadbasket—is declining at the rate of five feet per year. Optimistic predictions say that the Ogallala will be depleted by 2020.
Perhaps an image of the current drought conditions here in the U.S. can give more tangible insight as to just how severe the problem currently is:
I could go on and on about the doom side of the water story. There is more than enough solid information and analysis to convince any sane person that there is real problem going on.
What's more interesting for investors, though, is that there's a boatload of money to be made from investing in the companies that are providing solutions to water scarcity issue.
Take, for example, the current state of the water infrastructure here in the U.S.
The nation has 800,000 miles of water pipes and 500,000 miles of sewer pipes. Generally, these pipes are supposed to last fifty years. The most comprehensive research to date suggests that the average age of water infrastructure pipes in the US is 43 years.
Just this single piece of data implies that nearly the entire water pipeline system in the US will soon have to be replaced.
To overcome these obstacles, an investment upwards of $1 trillion will need to be made in the next twenty years. That breaks down to over a 150% annual increase over current spending amounts of $60 billion annually.
Water Company Stocks
Essentially, this is a massive wealth building opportunity. By staking your claim early in the water utilities, pipe and valve manufacturers, and desalination companies that will be providing lifeblood to billions of people, one has the chance to rake in hefty profits.
Just this week Mueller Water Products (NYSE: MWA), which makes water infrastructure and flow control equipment , announced its third quarter results. The result was net income of $20.3 million, much better than the $1.3 million loss in the third quarter of 2007.
Net sales from their U.S. Pipe segment surged 9.4% higher than the same quarter in 2007—a prime illustration of the infrastructure work currently underway.
Since the announcement of the results, Mueller's stock has gained as much as 25%. And there's probably more to come.
But Mueller certainly isn't an isolated incident. I expect this trend to continue for year. This is just the beginning.
Just look at Flowserve Corp. (NYSE: FLS), which develops, manufactures, and sells precision-engineered flow control equipment. That stock has been on an absolute tear over the past twelve months:
Indeed, there is much more to come from this sector.
frenchee
16 years ago
The Spigot Reopens at American Water Works
By JACK WILLOUGHBY
American Water Works will be a major beneficiary of a flood of new investments in water infrastructure and the push for better tap water.
SHARES OF AMERICAN WATER WORKS HAVE BARELY treaded water since the utility holding-company went public April 22. Last week, they were trading at around 20, below an already-discounted 21.50 at the offering. Weighed down by a poor IPO market and a confining rate agreement between its European controlling owner and U.S. regulators, North America's biggest public water and waste-water service provider hasn't seemed capable of making much headway.
Brad Trent
"We've come public in a very tough time," says CEO Don Correll, but "we're in the business of investing in infrastructure with a long-term horizon."
But some of the drag on American Water Works ' (ticker: AWK) performance is gradually subsiding as political and financial currents shift in its direction.
The company doesn't own water; it provides the infrastructure to clean and deliver it to homes and businesses across the U.S. The holding company derives almost 90% of its roughly $2.2 billion in revenue from regulated utility subsidiaries like Kentucky American Water, which is about to build a new water-treatment plant, pipeline and booster station to improve water delivery. Unregulated businesses, such as providing water services for the U.S. military or managing desalination plants, as the company does in Tampa, Fla., constitute about 10% of sales. In many cases American Water owns the pipes or other facilities it runs; in some it signs long-term contracts to manage them for other entities.
GERMAN UTILITY GIANT RWE (RWE.Germany) was so attracted to American Water's prospects that in 2003 it paid $8 billion, including debt, for the company, a price that now looks hugely inflated. In order to get approval for the transaction, RWE also agreed to freeze rate increases for five years in many states, effectively capping the company's ability to lift revenues. With that agreement now expired, the company can focus on growing its rate base again. (After selling $1.25 billion in the IPO, RWE has said it hopes to take its remaining 58% stake below 50% by year end, an overhang that will impede share performance.)
The pricey acquisition also left American Water Works with about $1.7 billion in goodwill on its balance sheet, along with some other charges that regional water authorities will no doubt monitor closely to make sure capital levels remain stable.
Under new CEO Don Correll, however, American Water is not only free to seek rate hikes, it is playing to a more sympathetic audience. Popular interest in good, clean tap water is growing as concerns about transportation and fuel costs, not to mention the adverse environmental effects of commercial bottled water, rise. Public utility commissions are encouraging water companies to upgrade aging pipes, management facilities, scrubbing equipment and other delivery mechanisms that outfits like American Water Works provide. Increasingly water itself is viewed as a scarce resource.
"We've come public in a very tough time, and I'm happy about the IPO and what's happened since," Correll says. "We're in the business of investing in infrastructure with a long-term horizon. We don't worry much about what happens in just three months." He is a veteran of New Hampshire's Pennichuck and New Jersey's United Water, and he joined 122-year old American Water in 2006.
The tide is turning for North America's biggest public water utility. And its stock is cheap, reports Barron's Jack Willoughby. (Aug. 11)
Investors were understandably reticent about diving into the IPO in light of lousy stock- market conditions in April and the near-moribund new-issues market. RWE originally hoped to raise $1.8 billion but had to cut the size of the deal by 25% to get it sold. Now, however, the shares trade at 16 times forward earnings, a discount to the industry average of around 22. What's more, American Water sports a 4% dividend yield, so investors are getting a decent payout while waiting for RWE's remaining issues to be worked through.
Ryan M. Connors, an analyst at Boenning & Scattergood, one of the underwriters of the IPO, has a Buy recommendation on the stock and a price target of $26, about 30% above recent levels. Other analysts put the projected 12-month price closer to 24.
The company earned $1.04 per share last year, and Connors is expecting the company to earn $1.15 this year.
There's little argument that the U.S.' infrastructure for managing its water resources is getting worse. The American Society of Civil Engineers has said that its grade for U.S. water infrastructure has fallen from B-minus to D-minus over the past 15 years; waste-water plants are in similar straits.
By necessity the investment to upgrade the facilities will come in the form of higher rates to consumers. One government study estimated that by 2020 almost $1 trillion needs to be invested to replace the failing infrastructure. Another government survey of U.S. drinking water pegs water capital expenditure needs through 2022 at $280 billion, or about $20 billion a year.
Table: Plumbing the NumbersTrying to cope with these needs are small and mostly old municipal and regional treatment facilities. The U.S. has about 53,000 water systems, 85% of which serve fewer than 3,500 people. All must contend with federal, state and local regulations about both water quality and infrastructure. In many cases, the government entities lack the manpower and expertise to handle bigger projects and systems.
AMERICAN WATER IS BY FAR THE biggest provider, serving 16 million people in 32 states via 45,000 miles of water mains. On the company's latest quarterly conference call in May, Correll noted that: "Our scale allows us to capitalize effectively on growth opportunities across our service areas while helping to insulate us from adverse conditions in any one geographic area."
And the company's long history has given it a strong base of contacts and technical know-how. Cash-strapped regional governments will have to become more innovative in partnering with financial firms and companies like American Water to find cost-saving solutions. The Buffalo Water Board, for instance, signed a contract with American Water to upgrade, operate and maintain its water system more than 10 years ago. It's estimated the change has saved the city $21 million; residents' water rates have fallen by 8%.
American Water's plans call for $900 million in annual capital expenditure -- twice the annual level it had from 2003 to 2005. All this should eventually translate into "superior earnings growth," says Boenning & Scattergood analyst Connors.
Although cost increases are politically sensitive, particularly today, water-services' bills remain small in comparison to other utilities', notes Correll. About 90% of customers pay between $1 and $1.50 per day. "The consumer doesn't even notice the water bill," he says. After all, most Americans don't think twice about paying more than that for a single bottle of water from some supposedly natural therapeutic spring.
Ron Sorenson, CEO of money manager W.H. Reaves in Jersey City, N.J., has been a big buyer of the stock. "Before being acquired, American Water Works was one of the country's prime moderate growth utilities. We expect the company to regain it premier status now that it is once again public."
It shouldn't be too long till company profits are fully flowing once more.
frenchee
16 years ago
Part II below...
Water, The New Oil
By Thomas Rooney
The population is consuming a dramatic amount of water in an unprecedented fashion, and the water supply is limited and going down fast. The other critical element is that the distribution systems that we use are in abject failure mode.
Booze Allen Hamilton published a study on infrastructure about a year ago. I think it was called, "Lights, Water, Motion." Basically it was a study in the spring of 2007, in the wake of intensive collapse of infrastructure around the world.
"So," you might ask, "what's the price tag going to be in the next 25-30 years to repair infrastructure around the world?Their study came up with a staggering number... I think it was around $40 trillion over a 30-year period. The scale of the number is interesting and I encourage you to read the study.
Now, what if I told you that water-related infrastructure represents 60% of the entire bill. The amount of money required to refurbish water infrastructure combined, in other words, is a staggering number. How do you get to that point? There are 700,000 miles of water lines in the United States alone, for starters. Add to that sewage line and you'll be more than double that. Currently, water systems, if they've maintained the way they are right now, will take somewhere in the order of 900 years to totally replace.
Water systems and water pipes and so on have a useful life of anywhere from 50-100 years. One would suggest therefore that you have to replace 1/75th of your water infrastructure every year. The very best places around the world are replacing about 1/200th of it, or operating on 200-year cycles.
Why do politicians do that? Well, because they can...and they've subsequently gone to horrific levels of failures.
Most of our world's infrastructure was built between the years of 1945-1965, the economic boom years after World War II. Whether if it was reconstruction in Europe or GI Joe coming home to suburbia in the United States, a tremendous percentage of this infrastructure was built in the two decades immediately after World War II. In the earliest years after the War, you couldn't get steel and some of the most common building materials. So new fangled building materials came about - reinforced concrete pipes and so forth.
You'll actually see certain cities where the water infrastructure is in horrible shape because some of it was built at the turn of the century...that's the 1900's, mind you. So we're seeing a jump in failure of water infrastructure. In fact, 15-45% of all drinking water is lost to leaks. That's a pretty wide spectrum, and it may actually be wider than that.
You take a look at places around the world, like New Deli in India, which loses between 60-80% of its water through its pipes. I'll actually argue with you that if you went to Wikipedia and punched in something that lost 80% of what goes through, you wouldn't actually call it a pipe, you would call it a sprinkler's system or something like that. The rational as to why it's so high is actually that the government in effect allows people to tap - they don't crack down on people that break into the pipes and take the water for humanitarian needs and reasons. But you'd still actually argue that the amount of water leaking out of pipes in India would be in the order of about 50-60%. Part of that is because there is a tremendous amount of infrastructure that dates back to its years as a British colony, some 50 years ago, that has been under-maintained since then.
Hong Kong loses roughly a third of the water that passes through its pipes... Sydney 35%... Philadelphia 30-35%. Places throughout the state of California lose 10-25%. You can go around the world and look at these locations. You go to London, England and see 35% water leakage. This is pretty interesting when you talk about something that is as precious as water. It's going through infrastructure that loses more than 1/3 of it and yet we don't take care of it.
Interestingly enough, the water cycle – when we take water out of a river or aquifers, put it through pipes, process it at a water treatment facility, put it through more pipes, send it to this hotel, or to your home, or to a business - typically gets used one time. It is then piped to sewage treatment facilities, then the sewage treatment facility treats it and it is typically routed back to the same river. It's rarely put back to an aquifer, by the way. That is not a closed loop, and its very hard to recharge an aquifer, or shall I say its expensive.
But has it reached the point where politicians even care? The fact is the matter is yes. If you take a look at global warming, it brought a lot of attention to these environmental issues. Interestingly enough, in Beijing, one of the most significant concerns the Chinese government has is with regard to the water supply. I think most people have heard about the Three Gorges Dam.
How many people know that they have spent $60 billion to dig a canal from the south to the north in time for the water for the Beijing Olympics. That's twice as much mony as the famous Three Gorges Damn. Why? Because a very large portion of the Chinese population lives in the north, where there is no water.
Then the news agency out of Beijing came out about a year ago and said, "Don't worry if you're an athlete and you come to the Olympics. We will have clean water in the Olympic village." Well, that is a very small area and they refer to bottled water for most of the other areas. Then recently it was disclosed that more than 50% of the bottled water in Beijing is counterfeit. Its just tap water! In fact, they showed an example of it and it's actually colored!
Certain ministers were executed in china over the issue. It was such a devastating problem. Monks from Tibet may be a great concern, but if a large number of people are sickened or cannot drink water come games time, that could be a more devastating issue in regards to the coming out party that China is trying to throw.
At a larger level, take a look at Turkey, Syria, and Iraq over the Euphrates Rivers. Most of the leadership and the United Nations are referring to the fact that in the 21st century the most dramatic wars are likely to be fought would be over water. You don't have to go very far to talk to people about that. Palestine has to get it from Israel. It's a fascinating element. Your likely to see very serious conflict in the middle east over water rights.
Compounding these factors is the fact that you can't import water. Water is basically one one-thousandths of the value of oil. Arguably, therefore, it is a thousand times more expensive to move per unit of value. So you can't transport it. Competing population will fight for water. It's a zero-sum game. It's my water in a river or your water.
Last but not least, I'll just leave this in your mind. One of the most critical elements that people are starting to understand is that water and energy are linked. The reference is to the water-energy nexus. It takes a tremendous amount of water to create energy and it takes a tremendous amount of energy to create water. So as we see energy fly out of control, water is flying with it and constraining it. If you talk to anyone in the power generation industry they will tell you that they need three things: One is a fuel source, two is a transmission line and three is a water source. Roughly 40% of the water extracted from rivers in the United States goes to cooling power generation. Effectively, you can't put a power generation facility somewhere if you don't have a water supply.
frenchee
16 years ago
Water, The Next Oil
By Thomas Rooney
Good morning! I'm Tom Rooney, and it's a real pleasure to here today. What I'm going to try to do here is help you understand why some people refer to water as the next oil. If you have any inclination to invest in favor of or against water, I think that probably the most important thing you need to understand is WHY it has become such an interesting commodity.
My background is as a civil engineer with a finance degree. I spent five years running one of the few pure-play water investments publicly traded. I was also the CEO of a company by the name of Insituform Technologies, traded on the NASDAQ. I'm a turn around guy, so I came in to turn that company around. I left that company a year ago. Interesting enough, by virtue of running a global company that is investing so heavily in water, I did travel the world meeting with presidents, kings, governors, mayors and bureaucrats on many, many levels on almost every continent.
Since leaving Insituform a year ago, I now actually serve on the board of directors of a Chinese water company based in Beijing with aspirations of going public on the NYSE somewhat near term.
I also sit on the International Center for Democratic Transition. I was asked to do so by individuals in the US State department simply because, as you think about Maslow's hierarchy of needs, food and water would be the first priority for meeting the needs of a population.
When you're thinking of a fledging democracy, for example, you may think about Russia and breadlines. If you think about Russia and why it has backtracked to a great degree in terms of its move towards a pure and better democracy, you would think about breadlines. There is very great concern around the world about fledging democracy and even some stable democracies as it relates to water. So that would tell you a lot, the fact that I sit on the board with some very interesting people from around the world dealing with the linkages between democracy and the stability of democracies and water. And finally I also sit on the board of a charity that is in the business of providing clean water for third world and impoverished countries. All of this gives me a very interesting perspective on water.
Some people refer to water as the next oil. So what I'll talk about is the sky rocketing demand for water, water supplies as they currently exist, failing distribution systems, political concerns surrounding water and other compounding factors. I also will be speaking about this afternoon in two break out sessions on the future of water, where I will speak to some degree about the companies that are in the business and segmentation of water.
So, why has water moved from effectively plentiful and cheap to something that people would compare to oil?
First I'll speak to skyrocketing demands. Most people first and foremost say, "Okay, that has to be because the population is outstripping the water supply." This is a good starting point, and that's very true if you think about places like Nevada, Southern California, even, Florida, Georgia, Texas, and Phoenix Arizona. You see a great number of people crowding into an arid location that really can't sustain it. If you think about the global population expansion, you would think about what the population was one hundred years ago versus today and that the water supply has not changed.
But really the most pronounced drivers are China, India and Eastern Europe. These places have experienced what we have called an economic awakening. We certainly know that. That's why mineral prices and oil prices are up as much as they are. But what happened when you have an economic awakening with population mass in the order of 2.6 billion people is that their buying pattern change. They tend to want to eat richer food, that is to say that they have moved from dried grain to wet grains, like rice and then from rice and chicken and then from chicken to beef. And if you looked at the water consumption per calorie from a dried grain to beef its on the order of a thousand to one.
So if I consumed dried grain in my local area I wouldn't have much of an impact on water, but if I'm wealthy enough to desire beef for my consumption, my water impact, my water footprint as an individual can go up to as much as 1000 to 1. When you then start to think about places like Beijing and China, which used to be bicycle cities that are now automobiles cities, and you think about the electrical consumption, you see a tremendous consumption pattern or footprint for water for each individual that goes way up.
What we have seen is water consumption per capita is skyrocketing...and there's a long way to go for developing countries. The US, for example, uses 158 gallons per person per day. Most developing countries use only around 13. So what we have is a massive population that is suddenly becoming dramatic users of water in unprecedented days. By the way, if I take a look at the united states, us water demand has moved per person 6 folds in the last 50 years. So our population grows, our water consumption moves up even more steeply.
So where does the water come from? Well, water supplies are limited. Now I say that, and we've all seen the picture of the earth vastly covered by water. The problem is that 97.5% of the volume of the water on the earth is salt water, not consumable for human beings. Then when we look at that other 2.5% we see where the fresh water is. Interestingly enough, almost 80% of it is frozen in the polar ice caps and in glaciers. But polar ice caps and glacier, generally speaking, are not where the population is. So, its in the wrong place and its frozen. I guess the good news is that the glaciers do melt and create rivers such as the Ganges and the Colorado and others and ultimately do supply human beings. But you can't actually tap a glacier very easily and I'm not sure if you would want to from the standpoint that it takes millennia to create glaciers.
What's left then? Most people when they think about fresh water and access to fresh water think about water from the Ganges River, from the Mississippi River and from Lake Michigan and places like that. The fact of the matter is that only about 1% of all fresh water in the world is on the surface. Twenty percent is underground. So our focal point has been off as to terms of where to access the water.
This is critically important as we think about the future of water and investing in water. Water supplies are diminishing rapidly. In China you see the Yangtze and Yellow River are down dramatically and effectively don't run continuously year round any more. In the US the Rio Grand doesn't make it to the end. The Colorado is being fought over and the Chattanooga that supplies Georgia and Florida is at a point of serious legal contention between the states of Florida, Mississippi and Georgia. The situation is so dire that the governor of Georgia, quite literally, holds prayer sessions praying simply for rain. I think when you see a major political person literally praying for rain, well, that would suggest to you that we have gotten to a certain dire situation. I guess next up would be water dances and everything else.
The fact of the matter is, that's only 1% of the rivers and lakes. The other 20% [see chart] would be aquifers and the water tables. So how do they look? In parts of Tuscan and Phoenix the water tables down as much as 500 feet. Houston is down 400 feet. There are areas in the Chicago land area that are down as much as 900 feet. The Ogallala aquifer, one of the largest aquifers in the world, which basically runs from Nebraska down to Texas, is dropping at 2 feet per year. Thirty percent of the agriculture in the US is dependent of the Ogallala aquifer. I'll talk about that later because T. Boone Pickens and others are actually gearing up to sell water out of the Ogallala by transporting it over long distances. By the way, an aquifer typically takes as much as about 1000 years to recharge. So .1% of an aquifer will typically recharge in a year, so if you deplete the Ogallala as an example, you would have to go through exuberant means to try to mechanically recharge it.
To be continued...
frenchee
17 years ago
Big boys like this ETF...
Claymore S&P Global Water Index ETF PRINT HELP
Institutions
The 10 largest institutional investors Share Holdings Change in Share Holdings* Date Reported
Welch Capital Partners, L.L.C. 265,200 197,000 9/30/07
North American Management Corp. 158,176 100,199 9/30/07
Reinhart Partners, Inc. 84,475 84,475 12/31/07
Bahl & Gaynor, Inc. 74,010 -6,400 9/30/07
Davidson & Garrard, Inc. 57,845 10,000 9/30/07
Goldman, Sachs & Co. Bank 42,216 24,236 9/30/07
John G. Ullman & Associates, Inc. 40,100 700 12/31/07
U.S. Trust, Bank of America Private Wealth Managem 27,496 27,496 9/30/07
Jane Street Capital, L.L.C. 23,331 23,331 9/30/07
Bel Air Investment Advisors, LLC 9,644 9,644 9/30/07
Mutual Funds
The 2 mutual Funds with the largest holdings Share Holdings Change in Share Holdings* Date Reported
C.I. Global Opportunities Fund 6,400 6,400 12/31/07
Fondo De Capital Arka S.A. de C.V. 113 113 12/31/07
*Reflects the change in shares since the prior quarter's disclosure of holdings.
Shares are not adjusted for stock splits.
Source: First Call/Thomson Financial
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