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The Water Crisis Disconnect

Investors Cannot Ignore This Anymore

Written by Keith Kohl
Posted May 24, 2016

It's surprising how people can distance themselves so completely from a countrywide crisis.

Actually, it's a global crisis, and it's getting worse every day. But I'm more baffled by people's ignorance of the issue right here at home.

People are having trouble getting a resource that is essential to human life: water.

Don't let the sporadic headlines fool you; it's not just a few states having this issue.

California's drought — which is quickly becoming the new norm for the state — and Flint, Michigan's lead poisoning are just the latest examples of our country's massive water problem.

What causes this widespread disconnect?

People forget exactly how much we need water...

You're Gonna Miss It When It's Gone

You get up in the morning. Shower. Brush your teeth.

Head to the kitchen and get the coffee — or tea, whatever floats your boat — brewing. Get a bowl out of the dishwasher for your cereal.

Maybe you turn the sprinkler on your lawn or run the hose to rinse the layers of pollen off your car.

These are just the things we use water for directly, the things you see and touch every day.

But consider the parts you don't see...

The food you eat was grown on a mass scale through agriculture, which uses quite a bit of water for irrigation. And don't forget the water resources needed for livestock.

The energy in your home may in fact have been produced with water, either in hydroelectric dams or thermoelectric power plants.

Water also has industrial uses in the cooling, cleaning, and operations of large-scale machinery.

The U.S. Geological Survey breaks it down into similar categories:

chart1524eac

And this only really takes into account what the U.S. withdraws from various fresh and saltwater resources.

It doesn't account for what gets lost on the way.

Of course, this doesn't even mention the unseen issues that occur daily — leaky pipes that can lose as much as 7 billion gallons of water per day. For the record, that's nearly 17% of the water allocated to public supply, a massive amount withdrawn from depleting aquifers for direct human use, that is lost forever.

Not to mention that those pipes are also leeching lead into people's homes.

Still feel like we should ignore the crisis at hand?

Well, as a country, we really can't afford to anymore...

Save Me Some Water

People across California, Michigan, New Jersey, Maryland, and more have been struggling with the country's aging water infrastructures for decades.

They can't disconnect from the issue anymore.

It's time for some upgrades.

California, in a move that's at once optimistic and realistic, instituted a few rules that are more permanent and meant to save water even if the ongoing drought lets up.

The new regulations allow individual districts to determine their own water conservation goals based on water supply and demand estimates, which assume precipitation will stay low, just to be safe.

Those districts will also now have to report water use on a monthly basis.

And for individual Californians, some of the current restrictions are staying in place: no watering the lawn within 48 hours of rain, no washing the car without a shut-off nozzle on the hose, and no washing off sidewalks or driveways with water at all.

All in all, that doesn't sound so bad compared to the places still forced to drink unhealthy levels of lead every day.

But the solution to that problem won't be solved with a new hose nozzle.

Rather, it will require billions of dollars in infrastructure upgrades.

Which will leave many areas without access to water while those upgrades are being installed.

California's water conservation efforts may become the norm across the country.

How long will your green lawn last then?

Water's Rising

Make no mistake, dear reader; this crisis does have a solution.

Unfortunately, that solution will come at an incredible cost.

You and I, however, can't disconnect from this any longer. And you certainly don't need me to tell you that the most profitable place to be is ahead of the investment herd... the hoards of people still pretending nothing is wrong.

A few weeks ago, I showed you one of my favorite water stocks for any portfolio.

Truth is, the global water crisis brewing right now is opening windows of opportunity that will soon be closed to individual investors that are late to the party.

This crisis won't go away overnight, and it will be a valuable resource for those who are paying attention.

Until next time,

Keith Kohl Signature

Keith Kohl

follow basic@KeithKohl1 on Twitter

A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.

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