Water, Water, Everywhere?

Are we running out of water?

It’s a funny question to ask just after a storm. Here in the Northeast we’re struggling with what to do with all the frozen water crystals. Right now there’s significant snow-cover over two-thirds of the country. Some areas have well over a foot of snow on the ground, with more expected in the Northwest in the next few days.

But weather isn’t climate, and some parts of the country haven’t had much snow or rain the past few years. California is especially struggling. It’s impossible to fly into the state without noting the dry rings around all the reservoirs as you come in, that show how their water levels are below normal. Mountain snowpack is about 12% of average for this time of year. Governor Jerry Brown is proposing that the State build two $15 billion 30-mile water tunnels under the river deltas east of San Francisco.

But water shortages come from both supply and demand issues. We can’t control how much falls from the sky, but we can change the way we use it. California’s agriculture industry—the nation’s largest, though still only 2% of its economy—uses 80% of the State’s water. Some almond growers still flood their orchards in 100-degree heat, rather than using more efficient drip irrigation. And much of California restricts the use of genetically modified crops that use less water.

When there’s scarcity, often there’s inefficient pricing. Water is essential for all life, but it’s a politically hot commodity, with prices set by committee. The recent snowfall in New England may be a hassle to deal with, but it’s nice to have the extra wet stuff around. Maybe we can figure a way to export it!

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2014-02-06T10:53:10+00:00 February 6th, 2014|Global Market Update|0 Comments

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