What’s he talking about? Today, we take a look and invest right alongside his idea. And it should start to pay off with the arrival of the first swallows of spring in 2010. It’s also timely now — in this weak-kneed economy — because it has traditionally held up well even in when the economy is on the ropes. Even the Great Depression couldn’t put this thing down.

We start with simple truths. The world’s population has more than doubled since 1950 — from about 2.5 billion to 6.7 billion. By 2050, there will be more than 9 billion people on the planet. Almost all of this growth will come from undeveloped markets such as China and India. And they will all be doing one thing, for sure — eating.

Now, hang on. I know that is a banal insight by itself, but this story has layers like a tiramisu. The second layer is the mix of food eaten, which is important. These undeveloped economies are getting richer. Predictably, as people everywhere have done and continue to do when they have a little more money in their pockets, they change their diets. They spend more on food. The average Chinese spends 40 cents of every additional dollar earned on food. In India, it’s about 70 cents of every additional dollar. What do they buy?

Read the rest of the story at PennySleuth.com.

You have ExxonMobil to track Big Oil… Goldman Sachs to track Wall Street… Google to track Internet commerce. More entertaining, though, is following the little bellwethers…

For example, we follow Harris & Harris to check sentiment toward nanotech. We follow St. Joe to check on Florida real estate. And for the water industry, we follow Veolia Environnement.

Veolia is the world’s largest publicly traded operator of clean water projects, sewage systems, and desalinization plants. It’s a French company, but let’s not hold that against it. Veolia is one of the fund industry’s favorite ways to invest in the booming demand for clean water.

Veolia has enjoyed huge growth over the past five years… but shares have fallen by a third in six months. Debt and profit concerns weigh on the company, but most water stocks have similar charts. We’re sure the developing world’s need for clean water will help Veolia resume its uptrend someday. But for now, water is finding its way lower.

Source: The World´s Largest Water Stock Is Falling

But if you can set aside peak oil and the indisputable global food crisis for a moment, I want to talk about another threat facing the global economy. In fact, in my opinion, it’s the #1 threat to the global economy: the scarcity of fresh water.

This precious resource is also running in short supply. There’s no argument that water is much more necessary to life than oil. Without water, we die. Without oil…well, we learn to use bio-fuel… or bicycles.

Forget Peak Oil… What about Peak WATER!

Here in Florida, we’re already rationing our water, like many other areas around the world. Even as our “rainy season” begins, I’m restricted to watering my parched front lawn just two days per week. But that’s a very mild inconvenience compared to what’s going on in other parts of the world – and what’s likely to happen in the very near future here in the United States…

Due to global warming, glaciers in the Himalayas are melting fast. That’s bad news for emerging Asia, because a few hundred square miles off the Himalayas is the source for ALL the major rivers in Asia – home to nearly HALF the world’s population.

In places like Florida, where vast underground aquifers supply ALL our fresh water, rainfall isn’t enough to refill the sub-surface water tables.

It turns out water isn’t a “renewable” resource after all. Or at least Mother Nature is not renewing it fast enough to keep up with soaring demand.

“Demand for water continues to escalate at unsustainable rates” according to a recent Goldman Sachs report. “Globally, water consumption is doubling every 20 years. By 2025, it is estimated that about one third of the global population will not have access to adequate drinking water.”

Aging Infrastructure Leads to Short Supply

Water is running in short supply. It’s a global issue, and it’s approaching crisis dimensions. Consider that…

• Billions of people – don’t have access to reliable fresh water supplies
• The U.S. alone needs up to US$1 trillion in new water pipes and waste treatment plants by 2020.
• Half of the world’s population – will live under conditions of “severe water stress” within the next two decades.
• Water is also a vital industrial resource, used in the production of many other goods. For instance, it takes about 1800 gallons of water to produce a pair of jeans, 400 gallons to produce a cotton shirt, and 150 gallons for the Sunday paper.

The fact is, we’re consuming water faster than we can tap new fresh water resources. This growing crisis in the world’s fresh water supply means major profit opportunities are in store for companies working to find solutions.

Part of the solution involves building out new water infrastructure in developing nations where an estimated US$50 million a day will be invested on water supply projects over the next few decades. Meanwhile, aging water systems in modern countries are leaking like a sieve. They badly need infrastructure updates.

Global Water Crisis Will Trigger a Tidal-Wave of Spending

The World Water Council estimates that developing nations alone will need US$4.5 trillion in water infrastructure investment over the next 25 years alone. And this isn’t just a third-world problem…

In modern industrialized countries, municipal water systems put in place centuries ago are woefully inefficient and falling apart at the seams.

In Europe, most pipe systems date from before World War I and many haven’t been upgraded since then. These leaky pipes lose 40% to 60% of Europe’s drinking water before it can be used.

In U.S. municipal water systems 30% of the pipes are between 40 and 80 years old…another 10% of pipes are over 80 years old. As a result, about six billion gallons of treated water leak from American water systems every day.

The global water crisis may soon end up grabbing the headlines away from soaring food prices and sky-rocketing energy costs. This will result in an unprecedented spending boom of more than US$5 trillion over the next 20 years, according to estimates.

That’s about US$250 billion in water-related spending every year – a very big opportunity to profit if you know where to invest…

I’ll be watching this trend very closely over the next few months. Please stay tuned for updates.

MIKE BURNICK, Senior Editor & Global Markets Analyst

P.S. In my research, I’ve discovered one fund that invests in 50 different water treatment and infrastructure companies. In my opinion, it’s the absolute best way to profit from what’s quickly becoming a global issue. Look for full details on this dynamite play coming in the July issue of The Sovereign Individual. Don’t receive our members-only newsletter? Click here to sign up for the next 12 issues – for pennies a day.

Source: Why This Scarce Resource is Also the #1 Investment Opportunity of the 21st Century

EU foreign police chief Javier Solana and European commissioner for external relations Benita Ferrero-Waldner have apparently penned a report that may be of some use..!

The report says that “significant potential conflicts” are likely in years to come because of “intensified competition over access to, and control over, energy resources,” according to The Guardian.

It predicts that global warming will precipitate security issues for Europe, ranging from energy wars to mass migration, failed states and political radicalisation.

The report also stresses the volatility of the regions that hold large mineral deposits and predicts greater destabilisation in central Asia and the Middle East as a result of global warming.

Amongst other things, the report discussed tensions between Norway and Russia regarding fishing rights around the Spitsbergen archipelago… and the large deposits of gas and oil underneath its frozen wastes.

“If global warming were to allow this to become a viable source of energy, a serious conflict could emerge between Russia and Norway.”

A resource war has already begun…

In July last year, Russia announced it was sending a miniature submarine, equipped with a team of explorers, to claim a chunk of the Arctic Ocean the size of Western Europe.

Russian scientists claim an underwater ridge near the North Pole is really part of Russia’s continental shelf… However, the ridge stretches all the way to Canada, so she could use the same argument. What the Russians were doing is posturing… and testing the water for the future. Resource wars really are coming – and the Artic will be one of the hotspots.

Resource depletion and global warming will have a significant effect on a country’s carrying capacity.

Carrying capacity refers to the number of individuals who can be supported in a given area within natural resource limits, and without degrading the natural social, cultural and economic environment for present and future generations. So, when the carrying capacity of a land mass falls due to, say, excessive water depletion, for example, rising populations can spell disaster… this is the situation we find ourselves in.

Of course, an area’s carrying capacity can be improved by, say technology, but it is mostly changed for the worse by pressures that come with a population increase. As the environment is degraded, carrying capacity shrinks. This leaves the environment no longer able to support even the number of people who could formerly have lived in the area on a sustainable basis.

This scenario will create a sense of desperation, which is likely to lead to offensive aggression against countries with a greater wealth of resources such as minerals, water or oil. The future could be very bleak indeed…

Regards,

Garry White

PS: should you know anyone else that you believe will find my musing of interest please forward this link so that they can sign up for the service.

PPS: I also write a newsletter each month called Smart Commodities UK which expands on the views expressed in Garry Writes and makes specific recommendations in the resource, infrastructure and biotech sectors. To discover more click here.

Before the war, water pipes were usually over-engineered. That is, they were cast-iron pipes, built to last forever. The average useful life of water pipe from the 1920s is over 100 years. After the war, people had to be stingier in the construction of these pipes. We’re feeling the effects of this today.

More than 56% of all water breaks today occur in pipes built in the 20 years immediately after World War II. Many of those pipes are reaching the end of their useful lives.

I caught up with Thomas Rooney after the holidays. He is the former CEO of Insituform Technologies, a water pipe replacement company. He told me the story above about the World War II metal shortage, which I found fascinating. Rooney’s a good guy with a lot of insight into the water and infrastructure sector. He shared some of those insights in our recent talk.

He noted that just because pipes need replacements doesn’t mean it will happen. In fact, as Rooney explained, there is a subtle link between infrastructure spending and new housing construction. This link suggests that spending on water infrastructure will decelerate, just when obsolescence demands that spending should accelerate.

One of the bubbles that burst over the last eight-nine months, Rooney told me, is the idea that water infrastructure spending is “recession proof.” A water utility is recession proof, Rooney offered. “It’s just like how you’ve got to buy power.” But water infrastructure spending is not.

Consider the mechanism for how water infrastructure funding works. Much of it comes from “tap fees.” When a developer builds a new development, he pays tap fees to the local utility. These tap fees are supposed to cover the cost of connecting that house to the public water system. But in reality, the developer puts in everything. It costs the local utility close to zero to accept these tap fees. Usually, its cost is simply to get an inspector out at the site to approve the work.

Well, this amount of money turns out to be huge. The average tap fee in the U.S. is $1,500-2,000 per home. Consider that we were building two million homes per year. That’s $4 billion in free cash flow for the utilities.

Housing starts, as we know, have collapsed. Take a look at this chart from the U.S. Census Bureau:

Rooney was one of the first people to point out this connection between infrastructure spending and new housing construction. As Rooney says, infrastructure spending is discretionary.

There is good news, though. As we watch U.S. spending contract, it’s a different story in other parts of the world. In Canada, where the commodities boom helps line government coffers, infrastructure spending is rising in double digits. “Where there is loose change,” Rooney says, “you see discretionary spending go nuts.”

Even then, Canada could spend more. Ontario wastes $1 billion every year in water. But the government says it would cost $11 billion to fix. Thinking like bureaucrats, Ontario officials believe they are making a good decision in “saving” $11 billion every year. But in the private market, you could easily finance $11 billion in return for a promised $1 billion annual return. That’s a 9% cash return.

The ultimate bubble, Rooney says, is the idea that even current spending is recession proof. It isn’t. As Rooney says at Insituform, he saw spending not only slow, but actually contract. So we are in the ironic situation of having worsening infrastructure problems, but a declining level of spending to fix them.

There is still a huge opportunity remaining in the water sector. It starts with a little saying: “It takes a lot of water to make oil, and it takes a lot of oil to make water.” It’s called the energy-water balance, or the energy-water nexus. “People are going to make tremendous amounts of money by focusing on the confluence of water and energy,” Rooney says.

For example, how to extract oil by using less water — that’s a big issue. Also, refining oil requires a lot of water, as does processing and transporting various sources of energy. Utilities use water for cooling and emissions scrubbing. Hydroelectric power, of course, uses water directly. In fact, hydropower accounts for about 40% of all freshwater usage in the U.S. That’s a massive amount of water, behind only irrigated agriculture.

I’ll be sure to continue my research on this subject, no matter where it takes me. I’ll be sure to let you know, whenever I find out more…

Sincerely,
Chris Mayer

P.S.: If you haven’t already, I urge you to check out my special report on this very subject. I found the five best companies that will take advantage of this unfortunate water situation. I put them together in a special report aptly named “Blue Gold.” Get your copy here.

Editor’s Note: You are probably aware that Chris just released his book, Invest Like a Dealmaker. Already, it is a bestseller for business on Barnes & Nobles and Amazon. To get your copy, check it out here.

1996 Yorkshire Water was in a crisis… in March.

For any of you who have not spent a winter or spring in the delightful countryside of this fine county, the thought of a lack of water for whippet bathing is astonishing. After all, it is just over the hills from my home City Manchester, on which it is always, always raining…

Anyway, Mark Thomas delivered a truck of water to the company as “a gift of the Ethiopian people.”

He also wrote a song to accompany the gift called “Don’t They Know It’s Bath-Time In Rotherham”… which was a parody of the Band Aid single Do They Know It’s Christmas.

Taking his queue from events in Yorkshire more than a decade ago, the Chattanooga Mayor turned up in a truck at Georgia’s state capitol building in Atlanta last week. He said it was “Give our Georgia Friends a Drink Day.”

Just like Mark Thomas, the move underscored a serious message in a relatively light-hearted way. This is the proclamation issued by Mayor Littlefield:

• WHEREAS, it has come to pass that the heavens are shut up and a drought of Biblical proportions has been visited upon the Southern United States, and

• WHEREAS, the parched and dry conditions have weighed heavily upon the State of Georgia and sorely afflicted those who inhabit the Great City of Atlanta, and

• WHEREAS, the leaders of Georgia have assembled like the Children of Israel in the desert, grumbled among themselves and have begun to cast longing eyes toward the north, coveting their neighbor’s assets, and

• WHEREAS, the lack of water has led some misguided souls to seek more potent refreshment or for other reasons has resulted in irrational and outrageous actions seeking to move a long established and peaceful boundary, and

• WHEREAS, it is deemed better to light a candle than curse the darkness, and better to offer a cool, wet kiss of friendship rather than face a hot and angry legislator gone mad from thirst, and

• Whereas, it is feared that if today they come for our river, tomorrow they might come for our Jack Daniels or George Dickel,

• NOW THEREFORE, In the interest of brotherly love, peace, friendship, mutual prosperity, citywide self promotion, political grandstanding and all that I Ron Littlefield, Mayor of the City of Chattanooga, Tennessee, do hereby Proclaim that Wednesday, February 27, 2008 shall be known as “Give Our Georgia Friends a Drink Day.”

Both of Georgia’s Legislative chambers have passed a resolution claiming that an 1818 survey wrongfully placed Georgia’s northern border short of the 35th parallel, and more importantly short of the Tennessee River.

The flow of the Tennessee River is approximately 15 times greater than the Chattahoochee River, which currently serves as metro Atlanta’s main source of moving water. Atlanta is a hot place… without water it will die.

So, although I can see the comic value of Mayor Littlewood’s proclamation, I also see portents of doom. This issue that is funny today will not be very funny tomorrow. The future of Atlanta could be in the balance… and it won’t be international terrorism, communism or crime that brings the growth of Atlanta to an end. It will be something as simple as H2O.