Holding Water

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Living our entire life in need of water, we take for granted that it is basically free and plentiful, so much so that we really don’t give it any thought at all. However, the truth is that only about 2.5% of the world’s water is fresh water and of that, only 25% is readily accessible. Even more startling is that our consumption of fresh water has more than doubled over the past 50 years, and many researchers and scientists fear that we are coming close to a breaking point, a place where chronic water shortages for farmers, businesses and people could be the norm. You need look no further then the recent electrical blackouts in India, which have been attributed to inadequate water flow, and thus the inability for hydro-electric dams to provide power. Closer to home we need only to look at severe draught stricken farms throughout the U.S. and their inability to irrigate crops. The facts underlying water scarcity are quite sobering and from a personal as well as an investment perspective, something you might want to sit up and take notice of. We all learned in school that we live on a watery planet; however with about 97% of that water being salty it certainly doesn’t leave a whole lot of fresh water for our insatiable consumption. Bear in mind that most of the earth’s fresh water is frozen in the form of glaciers, ice and snow, and that underground aquifers hold most of the potable water. Unfortunately the rate of depletion of the these aquifers — which sustain agricultural and corporate users along with providing drinking water for hundreds of millions of people— more than doubled, according to Geophysical Research Letters, from 33 trillion gallons per year to 75 trillion gallons, in just four decades. No one requires an explanation that fresh water is required to sustain life, yet we consume it as though there is a never ending flow. Did you know that the largest users of fresh water in the United States are the agricultural and electrical power industries. Agricultural irrigation and watering used for livestock consumes 41% of all fresh water withdrawals.

According to a report issued by Sandia National Laboratories, the generation of 75% of all U.S. electric power requires 190 billion gallons of water every day, which represents an additional 39% of all U.S. freshwater withdrawals. It’s hard to imagine that we indirectly depend upon as much water turning on our lights and running appliances as we do to take showers and watering lawns. The need for fresh water is no small problem or just limited to a few select locations in the U.S. Throughout the entire country many state, county and local governments, including Delray Beach and Palm Beach County, have conservation regulations in place to help mitigate the ever rising demand. How might you benefit by this knowledge? Holding water may represent an opportunity for your investment portfolio. Anyone who has ever taken an Economics 101 class learned the basics of supply and demand. If we apply that logic to fresh water it is crystal clear that the demand for water utilization is going to continue and that the supply as a natural resource is going to dwindle. What happens when need exceeds supply? Prices increase and they do so all the way down the line. As a result I believe that going forward we will see from an investment perspective a greater emphasis and focus on quality companies that specialize in the Water Sector, whether it’s for purification, desalinization, or infrastructure and shipping. Therefore, you may want to look at whether or not holding water in your portfolio makes sense for you. Focus on the long-term and utilize investment positions that pay you to wait. Drink up! Ed Maass is a Certified Financial Planner, Chartered Financial Consultant, and Chartered Life Underwriter. Located in Downtown Delray Beach you can contact him directly at 561-272- 0663 or by email at Ed@physicianswealthcare.com