Video transcript below. This is from Max Maher’s channel and I thought it was interesting to dive into what’s going on around the water industry. Let me know your thoughts in the comments.
Are we running out of water and what happens when we do?
Well, this guy was about to find out on the 1st of April 1979. A young man named Andreas was put into custody for being a passenger in a car crash. Not a great situation, but it soon got a whole lot worse because the policeman who locked him in his cell forgot he was there and so did everyone else. They all thought Andreas was already let out but meanwhile, he was trapped in his basement cell with nobody checking in. Nobody could even hear him. Days went by and Andreas began to suffer from extreme thirst, his dry screams left unnoticed. Even his mother who called the police station was totally ignored. Andreas clung to life by drinking what little condensed water he could find on the walls of his cell. This went on for 18 days when an officer finally doing a routine job noticed the ungodly smell emanating from the cell.
Andreas survived and made it into the Guinness Book of World Records – an amazing feat – but for most of us if we can’t find small sources of water like Andreas did we won’t last much longer than three days. If we go without water we suffer from dehydration which causes organ failure and brain shrinkage. It’s widely regarded as one of the most horrific, painful and drawn-out ways to leave this Earth, so when you see headlines like this you know the stakes have never been higher.
But what is going on? Is water actually running out? Are we all going to be licking walls soon? And if it’s running out, what are the rich doing about it? And what can you do about it?
It might not be the most moral but lots can actually be done, but first here’s the situation: 71 per cent of the planet’s surface is water; 97 per cent of this water is salt water which is good for sharks but not much good for anything else; the other three per cent is freshwater of that three per cent only one per cent is liquid fresh water, which you’d think we’d use to drink but we can’t even access most of it because it’s underground. So yeah, I know a lot of numbers all over the place right now but what I’m saying is we live off of less than one per cent of the available water supply and it’s a reality that might mean changes to the way that we live or lead to possible conflict.
But hold on – I hear you saying water is totally renewable though, it does that thing we all learned about in school where it goes to the sea, evaporates, becomes clouds, becomes snow and then enters rivers in the sea again. So what’s the problem? If there’s tons of water around and we only live off a small amount of it, how can we be running out how can this possibly be the future?
Well, sometimes reality is scarier than Fury Road. The world economic Forum has consistently identified a Water Crisis as one of the top Global risks over the last decade and the equation is simple: the supply of water hasn’t changed but demand is going up way up which means in the battle for water there are going to be haves and have-nots, and we’re seeing the beginning.
Cape Town has already put 4 million people on water rations. In other cities including London, people will be forced to tackle this problem unless they change how they use water and by 2040 we may not be able to meet water demands across the world. We’ll simply have too many mouths for the available supply.
Using satellite data NASA has already warned that two-thirds of the 37 major aquifers on Earth are being depleted at an unsustainable rate. Events like these mean it’s no surprise that Goldman Sachs has referred to water as the petroleum of the 21st century. And look at how we behave with petroleum! But before you start skipping showers, individual consumption isn’t even the main issue – just wait till you learn about the crazy water usage for basic things we all take for granted, then we’ll get into what the rich are doing.
The average American uses roughly 80 to 100 gallons per day which is a lot compared to other nations. Wait… Who fills a bathtub and takes a shower every day anyways? Despite the large personal usage, the agriculture industry is by far the biggest water consumer accounting for 70 per cent of the demand. I mean we are talking about irrigating the entire world’s food supply which is no small feat but you won’t believe how water-intensive certain crops and livestock actually are.
Just take a look: one almond = one gallon of water; 100 millilitres of milk = 100 gallons of water; one pound of beef = 1850 gallons of water. And that’s just agriculture. Check this out: one t-shirt = 700 gallons; car tyres = 2,000 gallons; one ton of steel = 34,000 gallons of water. And to top it off a single semiconductor plant uses two to four million gallons of water each day.
Our consumption is unstoppable and going up but before you have a mental breakdown, you haven’t even learned how dry the planet’s getting, you haven’t even learned how the rich are making bank off of this.
But first dryness. Places like the American West are struggling. The United Kingdom – a country known for its unrelenting rain – has seen massive droughts. Italy is suffering the worst drought in 70 years, literally threatening to raise the price of olive oil and risotto which might as well be a death sentence for Italians. France is suffering the worst drought since records began. More than 2.3 billion people around the world are facing water stress and it’s only on track to get worse due to recent events.
The whole situation is no bueno but there is good news because there’s plenty we can do about it. Experts have suggested solutions like better wastewater recycling, improved water pricing and inventing new water conversion technology energies. All ways to make money off of this with a clean conscience, and of course we could use less water personally – but let’s be honest this is a finance channel – who am I to tell you to take shorter showers!
So let’s go back to the point that I mentioned earlier – the rich are making bank from this crisis. Remember The Big Short? in that movie, there’s a guy called Michael Barry who’s played by Batman. He’s a strange character. He plays the drums, listens to metal and is incredibly good at understanding the market. So good in fact he called what was going to happen in the 2008 mortgage crisis. When everyone thought he was crazy he said this whole house of cards was going to come crashing down and it did and he got paid big time. And guess what he’s investing in now? Yeah, water-rich land. This is what he said: “For years I believe that agriculture land, productive agricultural land with water on site, will be very valuable in the future.” It’s no secret that institutional investors and wealthy individuals are becoming increasingly interested in buying farmland. If there’s a crisis, there will always be someone ready to profit from it. Look at Bill Gates he recently made headlines for becoming the largest individual owner of farmland in the United States. He did this after gradually acquiring over a quarter million acres of it. The current trend of farmland consolidation is actually expected to continue because over 40 per cent of farmland in the US is owned by individuals over the age of 65 and not all of them have heirs that want to, or can afford to, keep running a farm. In the coming years, we can expect more and more farms to leave the family name and be added to some corporation’s portfolio. In fact, it’s become a global land rush.
So buying farmland in water-rich areas makes sense but what about buying land in water-stressed areas? Some might call it shady but, of course, it’s happened. People have made a fortune by actually selling the water that they as landowners have the rights to. In 2011, the late oil tycoon T Boone Pickens sold water to the people of West Texas. This happened after a severe drought threatened the water supply of around half a million Texans. The local Water Authority had to turn to T Boone. His MesaVista Ranch sat above the largest aquifer in the U.S and guess what? He had the rights to pump the water and sell it to anyone willing to buy. And sell he did. After tense negotiations with the local government, Pickens sold the water rights for 103 million dollars and he’s not even the only one who’s done this. John Vidovich also struck a 74 million dollar deal to sell water to residential communities as well, and this came up after he bought up thousands of acres for the sole purpose of selling the water he had rights to.
Now look, you’re probably thinking this is great for people with millions to throw around on farmland but what about the rest of us? Well if you want to get in on the farmland hustle there are a few ways you can do it the simplest is just buying a farmland REIT off of any stock brokerage. Farmland REITs are companies that purchase farmland and lease the land to farmers to grow and sell crops, so you get a slice of the farmland pie. Maybe not a Bill Gates-size slice but a slice nevertheless. The two American Farmland REITs are Farmland Partners and Gladstone Land Corp. Do your own research on these to find out if it makes sense for you. None of this is financial advice.
Now if agriculture investing is too indirect a way for you to participate in the possible end of the world and you want that real water-bearing action, you can instead invest in the multi-billion dollar water industry itself. The industry is very broad and there are publicly traded companies that work in everything from treatment technologies to irrigation and infrastructure. Also in my research, I found out there are tons of interesting Innovations in water treatment technology coming down the pipeline – no pun intended, well kind of pun intended – that could actually help combat the global Water Crisis, meaning your money might actually help save the world. Wishful thinking but hey go with me on this one – again it’s a finance channel. One idea is desalination the process of turning salt water into fresh water. Now this has historically been considered unviable because it’s extremely energy-intensive but this is being reconsidered as drought-prone areas with access to seawater are looking for reliable ways to jug up (and jug up is what I call getting more water). Some estimates suggest that the market could double in the next decade so getting in early could be both morally sound and financially wise. A rare combo. Finally as boring as it is the water utility space is expected to see significant growth as it’s becoming increasingly privatized. Now, this is a controversial issue – many people believe water utilities should be exclusively publicly owned and it’s easy to see their side. I mean, what’s next – charging for sleep? Renting oxygen? Who knows? But on the other side, water investments do give you exposure to an industry bound to grow and is in essence protecting yourself a bit. It’s a complicated issue.
What are your thoughts? Should we be able to profit from one of the most essential human needs: water?
