November 17, 2016    5 minute read

Why Water Is Becoming A “Hot” Commodity

Depleting Resources    November 17, 2016    5 minute read

Why Water Is Becoming A “Hot” Commodity

 

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Trying to choose between a cup of coffee or a glass of water? Well, you do not have to as a cup of coffee includes 140 litres of water already. Coffee is not the only culprit. For example, a kilogramme of beef requires a mega 16,000 litres of water to produce, which involves water to grow the grain feed, water for the cattle to drink and water to process the meat. Water consumption in the 21st century is hitting new heights and leaving one question behind: is it possible the world could start to run out of fresh water supplies?

Growing Demand For The Commodity

It is a scary question to ask and a more daunting one to answer, but there is a modest amount of evidence to show that the world’s supply of fresh water is rapidly decreasing. After successfully foreseeing the 2007 financial crisis, renowned investor Dr Michael Burry has turned his attention towards commodities, specifically water. In a December 2015 interview with New York Magazine, Burry discussed his reasons for allocating a substantial part of his portfolio to water, but his response was somewhat vague, and he stated that water will always be in demand considering its growing industrial use.

This is true, of course, but for the investment to pay off, the price of water needs to increase, and for that to happen either the demand needs to increase, or the available supply must drop. So does Burry know something the world does not? If one looks at the evidence over the past two decades, there is a strong indication that he could be secretly predicting a more shocking calamity than the 2007/2008 financial crisis.

A June 2015 publication released by researchers from the University of California analysed data from NASA’s Grace Satellite mission and found that 21 out of 37 of the world’s largest aquifers have been in decline since 2003 and, also, 13 have been depleted to the point that local water availability is threatened.

These water aquifers, which hold some of the largest reserves around the world, are found underground in layers of water-bearing permeable rock but are being pumped to the surface a lot quicker than they are naturally able to replenish. So why is this happening? Or why is the world not doing anything about it?.

The Effect Of The Avocado

Avocados are not solely depleting the world’s fresh water supply but, like coffee, they are a perfect example to illustrate the current situation. Demand for avocados has increased by a whopping 123% in the last five years, so suppliers have looked for new ways to grow avocado trees outside of their natural habitat. The tree itself needs 5-20 gallons of water several times a week to survive, which comes out of aquifers at an untenable rate to keep them alive and fresh.

These aquifers are the victim of food like avocados becoming more accessible as super suppliers become aggressive in their approach to supply a growing demand for more diverse choices. This is a problem because 70% of the world’s water resources are used for food production. The rate at which the population is increasing is correlated very sharply to spikes in water depletion and, with the world’s population expected to pass 11 billion by the turn of the century, one can expect to see extremely low levels in the aquifers.

How Much Water Does The Earth Actually Have?

Although there are major concerns regarding the possible levels of aquifers, little is known about them still. This could be a possible reason for underground water being used inefficiently as it is easier to misuse something when the physical consequences are not immediately visible.

So if this is the case, surely one needs to understand them better as groundwater aquifers receive insufficient management compared to more visible supplies in reservoirs and rivers. However, aquifers are hard to study and, according to studies, a large number of wells, equal to the oil industry, would be needed to study them, which is not realistic due as there is not enough profit in water commence.

Solutions

Controlling waste management more effectively and the numbers in the food and beverage industry could have a profound impact on underground water future depletion rates. Also, a simpler way of dealing with the issue is to bring in regulation directed towards extracting water from underground sources and banning drilling on unsustainable plots.

However, in 1904 the Texas Supreme Court ruled that groundwater was too “secret, occult and concealed” to regulate and in practice food manufacturers and drilling companies hold a substantial amount of power which makes it difficult to limit their activities. Many experts in the politics of water have also been asking the question: who owns the rights to water?’

It is a difficult question to answer and a braver one to ask but important to understand otherwise one could see a political war entrenched with countries changing their borders dramatically to protect their underground resources.

There are many questions, and few answers that prevail around the topic but surely the utmost importance is for it to earn more attention amongst lawmakers, lobbyists and regulators so the world can plan for a future with water and not without.

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