Water – The next Big Business Idea

Category: Agro Commodities Trading | Inflation | Water July 24, 2012 | 1 Comment » Share
WATER

WATER - The next Big Business Idea

Water related Industries will rule the next 20 years, as did Technology & Software for the previous 20 years until now. 

As Given in Forecast 2012 – The Technology boom seen in the past 15 years will see the pace slowing down. Technology, banking, realty, metals, electronics & FMCG sectors expected to decline & will sharply slowdown. The new sectors which will emerge as winners for the next 15 years will be from the Water related Industries, Pharmacy, Health – care, Power, Education, Entertainment (Films, Music & Arts included), Telecom, Agriculture & Alternate Fuel Industry.

The new Microsoft or the new Bill Gates will now emerge from the Water Industry.

As posted on Jan 18 – 2012: In response to shortages, harvesting the sea will also be undertaken on a vast scale in this period, and with mass production of factory fish, a much greater awareness of the ecological downsides of the process will dawn, leading to more humane standards for fish. Extraction of oil from the ocean will play an even greater role, and as a shortage of oil begins to threaten the smooth functioning of industry, vast undersea reserves will be exploited in previously pristine environments around Greenland and in the Arctic. Read more

In 2010 global water generated over a half trillion dollars of revenue. Global world population will explode from 7 billion today to 10 billion by 2050, predicts the United Nations. And over one billion “lack access to clean drinking water.”

Climate and weather patterns are changing natural water patterns. And industrial pollution is making water a scarce commodity. So the good news is that huge “opportunities exist for businesses that can figure out how to keep the pipes flowing.”

Yes, it’s a hot market. So, expand your vision for a minute. How many bottles of water do you drink a week? How much did you use for a shower? When you flushed a toilet? Wash your car? Cooking? Lattes? And my guess is your city water bill’s gone up in recent years.

So ask yourself: What happens in the next 40 years when another three billion people come into the world? Imagine adding 75 million people every year, six million a month, 200,000 every day, all demanding more and more water to drink, to shower, to cook, to everything. All guzzling down the New Gold that’s getting ever scarcer.

Population, the explosive driver in the demand for ever-scarcer water

Now here’s the real scary stuff, the investor’s basic multiplier. In the 12 short years leading up to 2011 the world added a billion people. China’s population is now 1.3 billion. Plus they’ll add another 100 million in the next generation, while India adds 600 million according to United Nations experts.

China’s already planning as many as 500 new cities to house all their new folks. Imagine, 500 new cities each housing 100,000 or more people, and that’s just for half of China’s projected growth to 2050, all demanding more water. The numbers are overwhelming.

Today Americans use 150 gallons a day, compared with 23 gallons in China. But they’re catching up, just check out any panoramic travel photos of China’s beautiful megacities, Shanghai, Beiiing, Guangzhou. And read about skyrocketing sales of Ferraris, Cartier watches, Gucci handbags and luxury goods in China. China has its own version of the American Dream!

Seriously, just a few decades ago China was an emerging country, a bit backward, not a global economic threat. But change is happening at light speed. Soon their GDP will overtake ours.

India expects their water demand to double in one decade while Fortune says “expanding populations will also swell demand for agricultural water some 42% by 2030,” in two decades.

China’s mining “new Gold,”  - Water for agriculture, industry, economic leadership

You probably “think individuals consume the most water,” says Fortune. Not so. Agriculture accounts for 71%, and industry another 16% for a total 86% of all water use in the world. It even takes 71 gallons to produce a single cup of coffee, forcing Starbucks to “cut its in-store water usage by 25% by 2015 with, for example, espresso machines that dispense less water.”

Here’s Fortune’s summary of the global market for all water users: Total worldwide revenues of $508 billion in 2010 … the bottled water market generated $58 billion of that total and growing fast … industry needs $28 billion for water equipment and services to all kinds of businesses … another $10 billion covers agricultural irrigation … another $15 billion in retail products like filters and various heating and cooling systems … $170 billion is used for waste water, sewage systems, waste-water treatment and water recycling systems … and $226 billion for water utilities, treatment plants and distribution systems.

New Gold hidden in steaks, auto tires, chickens, designer jeans

So humans consuming lots of bottled water are not the world’s biggest guzzlers. It’s our lifestyle and consumer habits that accelerate the impact of population growth. Everything we eat, wear and use has a big water-use price tag, says Fortune:

“Consider the impact on the water supply when more people in developing nations begin living Western lifestyles. In India alone, water usage is expected to rise by nearly 100% over the next 20 years. Expanding populations will also swell demand for agricultural water some 42% by 2030.”

What we must do is grow more crops “with less water by applying genetically modified seeds, drip irrigation, and other technologies.”

In short, New Gold is costly to purify and the cost will keep going up. So the price of the New Gold will appreciate in the future for investors betting on this key commodity.

Consider this data: It takes 70 gallons of water to produce 50 cents worth of milk, says Danielle Commisso in Carnegie Mellon Today. In Fortune we learn those designer jeans your daughter just bought require 2,906 gallons of water, mostly from growing cotton … a pound of that juicy prime steak you had for dinner required 1,857 gallons … while a pound of that finger-licking-good chicken for lunch used 467 gallons … a pound of rice pilaf is a little less at 407 gallons … how about that bowl of shredded wheat you had for breakfast? A pound needed 160 gallons … and a pound of steel needs a mere 31 gallons … so why does a car requires 104,000 gallons you ask? Most of it from the rubber.

Add it all up and you got mega-opportunities the next generation, in a world adding a staggering 200,000 people each and ever day.

Long-range solutions do exist for coming global water shortages

“The good news is that long-term solutions” do exist for today’s global water problems: “20% of Singapore’s drinking water comes from processed sewage” thanks to innovative superfine filters. China’s constructing a 1,816-mile “aqueduct to move water from rivers in the south to the parched northeast.” And global water companies like Veolia and Suez, in France, and ITT are “partnering with municipalities to manage water.”

“Beating the Coming Water Shortage” was the challenge headlining Fortune’s feature. To get the message across it also highlighted several examples where government and industry are cooperating to “beat the water shortage” problem:

In America a desalination project is underway, at a cost of $700 million, to supply 8% of San Diego County’s drinking water by 2014, a county growing at a rate of almost 17% a decade. The Tampa Bay Water Utility is spending $210 million for Veolia to build a treatment plant to provide 120 million gallons a day for 2.4 million people who had been using well water.

So yes, water is the 21st century’s New Gold. And, yes, growing shortages guarantee price appreciation for this ever-scarcer commodity. But still, something doesn’t feel right. Yes, Fortune presents a solid, upbeat picture. But in the end something was missing. Because this does not reveal a serious long-term strategy.

The fact is, no nation on Earth has a long-term plan to reverse the real problem, that’s not the “coming water shortage.” The real problem is our suicidal growth rate adding water users on a planet that’s incapable of feeding 10 billion.

Source : Paul B. Farrell,  MarketWatch


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