It has been used as a weapon, clandestine wars have been fought to control it, humans need it to survive, and its value has never gone down in modern history. And one more thing… the United States and China, the world’s two super powers, are in a race to accumulate as much of it as possible.
I’m referring to water – more specifically, drinking water.
“Right now, 40% of the global population has little to no access to clean water, and that figure is actually expected to jump to 50% by 2025. According to the United Nations Development Program 2007, global consumption of water is doubling every 20 years, more than twice the rate of human population growth.”
In 1995, World Bank Vice President Ismail Serageldin boldly predicted that, “the wars of the next century will be fought over water.”
Geopolitical tension over commodities or resources is what sparks investment super cycles in various sectors (a perfect example is when China briefly stopped exporting rare earths to Japan back in 2011). Understanding the root cause of these tensions will make you a better, more prepared investor.
That said, I want you to ponder just two past instances where water has been the probable instigator behind recent war and conflict.
First, let’s go back to Libya and the war waged against it by NATO in 2011…
Clean Water Investment Project: Eighth Wonder of the World
For decades Muammar Gaddafi used Libya’s oil revenue to fund many infrastructure projects, but 
none were more important than the country’s Great Man-Made River Project(constructed to end Libya’s reliance on foreign aid for fresh water). Remarkably, before this project was even complete, near 70% of Libyans were dependent on it for their fresh water. From the onset, it was a massive success and emboldened the tiny Middle Eastern nation.
*Muammar Gaddafi was killed by NATO supported rebels in October, 2011
The Great Man-Made River Project consisted of man-made rivers supplied by deep underground aquifers accidentally discovered by Libyans in the 50s while drilling for oil. And these weren’t just any aquifers. They were amongst the biggest ever discovered in the world, deemed to be well over 7,000 years old.
In respect to Libya’s historic water project, Global Research reported:
“The ‘rivers’ are a 4000-kilometer network of 4 meters diameter lined concrete pipes, buried below the desert sands to prevent evaporation. There are 1300 wells, 500,000 sections of pipe, 3700 kilometers of haul roads, and 250 million cubic meters of excavation. All material for the project was locally manufactured. Large reservoirs provide storage, and pumping stations control the flow into the cities.”
Gaddafi famously stated that the project would make the desert “as green as the flag of the Libyan Jamahiriya.”
Libyan Great Man-Made River Project dubbed 8th Wonder of the World
The Libyan project was hailed as a modern-day architectural marvel, referred to by many leaders in the Middle East as the ‘Eighth Wonder of the World’, and received the prestigious award from UNESCO for scientific research work on water usage in arid climates. But shortly after the world took notice of Gaddafi’s creation, things turned ugly…
Phase 1 of the project started in 1991, and the third phase was near completion by 2011… the year NATO attacked.
According to Global Research,
“In July 2011, NATO not only bombed the Great Man-Made River water supply pipeline near Brega, but also destroyed the factory that produces the pipes to repair it, claiming in justification that it was used as “a military storage facility” and that “rockets were launched from there”. Six of the facility’s security guards were killed in the NATO attack, and the water supply for the 70% of the population who depend on the piped supply for personal use and for irrigation has been compromised with this damage to Libya’s vital infrastructure.”
Seems like a strange bombing strategy for NATO given that their so-called mission was to free the Libyan people from Gaddafi, doesn’t it?
Clean Water behind NATO attacks
If you recall back in the spring of 2011, it was France’s government who was pleading with NATO allies to join them in attacking Gaddafi forces. Specifically, they were coaxing Britain and the US to get involved. This was out of character for France, a nation that throughout modern history has shied away from conflict.
Anytime the French lead a military strike, it should raise some eyebrows…
Gariaki Chengu reported in 2011 that,
“Today France’s global mega-water companies like Suez, Ondeo and Saur, control more than 45 per cent of the world’s water market and are rushing to privatize water, already a $400 billion global business. For these French companies, Libya will be a bonanza.”
Consider this excerpt from Global Research:
“The United Nations Environment Program 2007 describes a so-called “water for profit scheme”, which actively promotes the privatization and monopolization for the world’s water supplies by multinational corporations. Meanwhile the World Bank recently adopted a policy of water privatization and full-cost water pricing…”
Israel Draws Border to tap natural resources: water
The second instance of possible controversial water control in the Middle East I want to cherry pick has to do with Israel, a country recognized as the world leader in water sustainability technologies.
As you probably know, Israel has been building a wall (security fence) around its border. The construction has been extremely controversial because the Israelis are running it well into designated Palestinian territory.
By going into Palestinian territory, Israel garners critical “natural resources like water” according to Global Policy Forum (GPF). GPF continued, “The International Court of Justice has ruled that Israel’s West Bank barrier violates international law…”
Conflict and war over water stretches across the globe, and dates back thousands of years to Mesopotamia. And in light of the current shortage of fresh water, the battle for potable H2O is only going to intensify.
Many countries, including the US and China, feel as though they are in a race against time to secure sources of fresh water, and the technologies needed to produce drinkable water. As such, we are on the verge of an incredible investing era… a once in a lifetime opportunity.
Technology meets lack of natural drinking water demand
It is important to understand that the world is more than capable of producing enough drinking water for hundreds of years. The problem is, most countries haven’t invested enough into the technologies to do so.
Although natural sources of drinking water are relatively scarce, this is an issue stemming from a lack of investment and planning. As you will soon read, proactive countries such as Israel have the technology to literally refine sea water into potable water.
Government motives in the world of water control
The powers that be are desperately trying to change the way you and I think about water. They want us to believe that it is an extremely scarce resource so that we’ll be more than willing to pay a boatload in tax increases for usage and infrastructure build-ups. These tax increases will help them correct for past government mistakes, fund new projects, and, in some countries, keep cronyism with water conglomerates on track.
Water shortages give the government more power than ever. Water is life. So when the government controls water allocation, they control dependency for our most basic need.
In late-2012 the Daily Mail reported, “An Oregon man has been jailed for 30 days for collecting rainwater and snow runoff in three reservoirs that he had built on his own property.”
The article continued, “When it comes to the point where a rural landowner can’t catch rainwater that falls on his land to protect his property, it’s gone too far,’ he told the Associated Press following his conviction.”
California’s Clean Water Conundrum
This most recent drought in California was self-inflicted. By that I mean the state could have prevented it from happening had they been proactive with water tech investment, similar to Israel. However, by not preventing it from happening, the government has garnered more control over the economy than ever before.
California’s drought has made the Governor of the state a very, very powerful man. Richard Mckenzie of the Wall Street Journal reported,
“As it is, Gov. Jerry Brown has become the state’s water czar, with considerable power to allocate water to communities and industries. He has thus activated politically savvy interest groups-such as the farming, landscaping, ski, cemetery, construction and tourist industries-all pleading for special allocation concessions…”
It’s important to consider that California has dealt with droughts several times in the past. This isn’t anything new. But despite that, “California hasn’t built a state-funded dam or reservoir in more than 30 years…”
source: http://www.mercurynews.com/california/ci_26689220/water-bond-revives-int…
During that same 30 years, California’s population has roughly doubled.
Bear in mind, California has committed to build a high speed rail system estimated to cost about $68 billion; yet for some reason they haven’t invested in even one new reservoir…
How does that make any sense?
Meanwhile, Israel has gone from a drought stricken nation as recently as 2008, to one that now has an abundance of drinkable water. So much in fact, that it sells its excess fresh water to its neighbors.
Controversial border designations aside, Israel has achieved this remarkable feat despite roughly 60% of the country being a desert. Together with the private sector, the government invested in desalination plants (at a cost of about $400 million per) to solve a threat to their sovereignty and survival. Taking salt water from the Mediterranean, the Israelis have made it drinkable with these desalination plants – now responsible for producing roughly 80% of the nation’s drinking water.
Israel-headquartered IDE Technologies’ innovations are largely responsible for the country’s water breakthrough. This tech company has taken the cost of desalinating ocean water “from about $1 per cubic meter to about 40 cents in just a few years” according to Todd Fichette of the Farm Press Blog.
Israel invested billions in water recycling facilities, pipeline infrastructure and other critical pieces of their water infrastructure to ensure the country’s sovereignty and long-term economic sustainability.
The United States, much like China, has done relatively little to ensure a long term potable water supply.“In 2013, the American Society of Civil Engineers gave the country’s dams, drinking water systems, and wastewater plants a D grade, a ranking earned because of inadequate investment.”
source: http://www.circleofblue.org/waternews/2014/world/u-s-water-systems-deter…
“The average age of a water main in Baltimore, for instance, is 75 years, according to the city’s public works department.”
source: http://www.circleofblue.org/waternews/2014/world/u-s-water-systems-deter…
Brett Walton reported that, “… Johnson Foundation asserts that U.S. cities and their residents could face water cuts and unreliable service if utilities do not modernize and reinvest.”
Global Investments in Water Projects
The lack of investment in America’s water infrastructure since the World War II era is about to reverse course… dramatically. And, as an investor, you need to get ahead of this trend.
According to the U.S. Environmental Protection Agency, utilities need to spend $US 633 billion over the next two decades to supply water and to treat sewage. In collaboration with the private sector, the US government wants to tackle this daunting challenge.
Last year, “A water resources bill signed by the president in May includes a pilot program to use federal money to spur private investment in water projects.”
source: http://www.circleofblue.org/waternews/2014/world/u-s-water-systems-deter…
Heather Clancy of Forbes wrote in 2014 that, “A wave of startup companies is rising up to address the growing need for wastewater treatment and monitoring solutions, part of a $600 billion industry that has traditionally been dominated by legacy companies such as GE, Veolia, Siemens and Suez.”
* Israel-based IDE Technologies, mentioned above, was recently granted the contract to build the largest desalination plant in the Western hemisphere in San Diego.
China’s Water Emergency
Remember what China’s demand did to the price of copper, oil and iron ore from 2009-2012? That was child’s play compared to what it will do to future demand for potable water.
According to the National Bank, China had 50,000 rivers just 20 years ago, but more than 28,000 of them have disappeared due to climate change, extraction, and industrialization. More than half of the country’s 21,000-plus chemical plants are located along the Yangtze and Yellow Rivers.
The Yellow River is so polluted that the Chinese government estimates around two-thirds of if it is too polluted to drink.
“China has a fifth of the world’s population but just 7 percent of its water resources.”
According to Jiao Yong, Vice Minister of Water Resources, China has more than 400 cities short of water, some 110 of which are facing serious scarcity. About 300 million people in China drink contaminated water every day. One can imagine how much stress this adds to the country’s health care system.
To fight this problem, in Q1 of 2014 it was reported by Reuters that “China plans to spend 2 trillion yuan, or $330 billion, on an action plan to tackle pollution of its scarce water resources…”
Reuters continued
“It will aim to improve the quality of China’s water by 30 to 50 percent, the paper said, through investments in technologies such as waste water treatment, recycling and membrane technology.”
So cumulatively, the US and China, at minimum, need to spend nearly $1 trillion on water infrastructure over the next two decades… and that doesn’t include what they may spend outside of their own country.
It’s no wonder Israel-headquartered IDE Technologies, a global leader in water sustainability technologies, has been heavily courted by both the US and China. The Israeli firm now has offices in China, Chile, India, the United States, Australia and Canada.
Global Water Investment Opportunity
In an effort to save their nation from future crises, the US and Chinese governments are about to throw hundreds of billions at water projects in order to de-risk and entice private innovation. We saw the same strategy deployed by the super powers in 2009-2014 to help alternative energy technologies develop.
Here are some technologies within the industry that companies, both private and public, are working on:
- Desalination processors
- Membrane filters
- Equipment to remove pollutants such as nitrogen found in many global fresh water sources
- Recycled water processing facilities (example: California’s sewage water recycling plant)
- Smart meters
- Irrigation sensors
Water sustainability is an issue of national security for every nation on earth. Ripe with opportunity in both the commercialization and startup stages, this is a sector you want to do your homework on. The United Nations University Institute for Water, Environmental and Health estimated that it will take an annual investment of $840 billion to address waste water, pollution and management problems. That’s a staggering sum.
All the best with your investments,
Aaron
PINNACLEDIGEST.COM
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