|
|
| |
| GLOBAL HYDROCOMMERCE |
| |
Water is the most essential life-sustaining substance on earth and the most critical industrial input to the world’s economy. Demand for clean water has expanded unrelentingly as populations soar and societies modernize, and we now face crisis-level shortages for this most basic and necessary resource.
Yet, paradoxically, water remains absurdly undervalued. In many regions, utility prices come nowhere near the life-cycle costs of actually providing water, and are even less reflective of its true economic and social worth. But public outrage predictably results when local water rates are raised by even a few percentage points. This, despite the fact that most people happily buy bottled water (at a cost hundreds of times higher than tap water) and routinely pay much larger monthly bills for non-essentials such as cable television and cell phones. This fundamental disconnect, between water prices and the true cost and value of water, will gradually correct itself as supply constraints become more acute and the associated problems can no longer be avoided. The proverbial pump is therefore well-primed for a long-term appreciation in value.
But exactly how valuable is water? A truer accounting would reflect several underlying realities. First, water has no economic substitute, at any price – the only substance or commodity in the world of which this is true. Second, we can neither create nor destroy water, so there is essentially a fixed supply of water on the planet. Third, while we obviously use more water as the world population grows, we also use more water on a per capita basis as industrialization, urbanization, and standards of living advance. So demand increases exponentially rather than at a smooth, linear pace.
These undeniable fundamentals of supply and demand will only intensify over time, bringing the potentially devastating effects of the world water crisis into sharp relief. While the challenges certainly will be immense, equally as great are the long-term prospects for the industry that will meet our growing needs – as well as the opportunities for investors with the foresight and patience to position themselves ahead of the trend. |
|
