Peak Water

peak waterThere is a concept in the Oil and economics called ‘Peak Oil’. It is the point at which the maximum rate of petroleum extraction is reached after which the rate of production goes into terminal decline. Oil is a finite resource so if there are not alternatives found before the world runs out (and I don’t believe we are actually going to run out any time soon) there could be a worldwide energy crisis. Enough about ‘peak oil’ though, because today we will talk about ‘Peak Water’.

The world has always had food shortages, at almost any given time some part of the world is going hungry or they have enough instability that food supplies don’t reach their intended targets and many people starve. Starvation is a massive issue and one that is vital to fight, rapid population growth is probably as big a threat but one that is not as simple to solve. However, these issues pale in comparison to the issue of water.

If the world water supply is 100% then only a mere 3% of it is fresh water, the kind you and me require to survive on. A shortage of water causes drought, desertification, and in many cases a change in water can cause mass extinction, the Sahara desert was once a lush land full of vegetation. Without oil we have an energy crisis, without water we don’t exist.

Glaciers are important stores of fresh water, and they are melting faster than ever, if they melt out fully then thousands of rivers which provide the lifeline of water will be cut off, the Himalayas provide freshwater to almost all of Asia, and Asia has half of the entire worlds population. Water is not ‘renewable’, and with the world population rising fast, particularly in areas like Asia we are likely to see water shortages within the next decade and that will cause untold strife. That is before we consider the topsoil that over run rivers will drag out to sea with it, drought combined with barren land would be a deadly combination.

drought peak waterGoldman Sachs believe water consumption is doubling every 20 years and that by 2025 one third of the world will not have adequate access to drinking water. Scary to even consider, which is probably why many large companies such as GE are investing heavily in desalination technology, which will turn saltwater into freshwater. The UN says that by 2050 that figure will be half of the world.

Will that solve the problem though? Bear this in mind, it takes 500 litres of water to make a Sunday newspaper and about 1500 to make a pair of jeans, before you ask ‘no… there is no magic animal in the jeans factory that needs lots of water’ instead you must take into account all of the water used in getting cotton to grow, get harvested, transported, treated, stitched, brought to market etc. It all adds up fast. Then of course you can look at beef which takes an amazing 9,250 litres! Thirsty indeed them cows are…

desalinationIt’s not good news, what is good news though for those of you who are guiltless capitalists is the opportunity to make money on the back of water shortages. The areas of growth will be in ‘water funds‘ which invest in a basket of water related equities, desalination companies and bonds that back desalination projects, water treatment firms, and of course the companies that make the water treatment machinery, if oil was ‘black gold’ then perhaps we’ll start to see water as ‘blue gold‘. There will be knock-on effects in other areas of the economy, water engineers can expect to be very highly paid in ten years time – if you are reading this and considering college then this might be something to bear in mind!

We might live to see ‘Peak Water‘ where the supply of water is totally outstripped by demand and if we do then it will be a very unfortunate event, I have faith that people can find solutions to water shortages and any other issue the world faces, however, it will require intelligent and decisive decisions by world governments and organisations, and in them I have little or no faith at all.

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