A couple of weeks ago I was in a hotel room in Vancouver. Having woken up jetlagged and thirsty I wanted to have a drink, but the bottles of water in the room were C$7 a piece; that’s an astonishing £3.30 in real money. Needless to say, I headed straight for the tap…
As well as being a patently outrageous price for half a litre of water, there was something else that was even crazier about the situation; the fact that the water was actually a bottle of Evian. It was French water, direct from an Alpine spring.
Just think of all that energy that it took to get the water out of the ground… to make the plastic bottle… to drive it to the airport… then fly it half way around the world. It’s astonishing. No wonder it cost 7 bucks.
Indeed, throughout history man has gone to enormous lengths to transport vital goods around the world silk from the east; spices from Zanzibar; coffee from Brazil.
However, there has been one factor involved in this that has made the goods precious; their scarcity in the land of the purchaser.
Water is ubiquitous. It is found, more or less, anywhere and there is plenty of it in Canada. Indeed, I could see lots and lots of it lying as snow on the Rocky Mountains as I flew into its airport. Why on earth do they need French water? It just doesn’t make sense.
If you “google” the words “bottled water Vancouver” then you get a whole list of distributors of water whose sources is in Canada.There is a fine choice; and I’m sure it does the rehydrating job just as well as a bottle of Evian could.
Indeed, all I had to do to get some cheap non-French water was to walk to the 7-11 around the corner and buy a bottle of Whistler Water for around a dollar. Whistler Water is made by melting snow from the mountains around the ski resort and shipping it the 75 miles down the road. It tasted just as good as the Evian stuff and it did not have to fly over an ocean of water to get there.
Saving energy is firmly on the agenda at the moment and we are constantly being told facts and statistics such as “CO2 emissions from electrical equipment being left on standby are equivalent to 1.4 million long-haul flights a year.” Fair enough, ban standby buttons – they are unnecessary anyway. The only people who will miss them are a couple of fat people in Hull – and it will be good to force them to get moving.
But what about the bottled water business. Huge multinational companies currently make billions of dollars on water they simply extract from the ground, slap a label on and sell at competitive prices. Remember the Dasani debacle where Coca-Cola was trying to pass off tap water from Sidcup as something special and unique?
In ten year’s time I do not expect the bottled water industry will exist in the same form. As energy prices soar, the cost of taking a bottle of Evian from France to Vancouver will price it out of the market.
Water is going to be a major issue over the course of this century – or the lack of it. Canada, South Africa and Europe have made headway into ensuring they have an integrated water network – but the US (surprise, surprise) has a fragmented regulatory approach and antiquated water infrastructure. It has real trouble ahead.
Water shortages: crisis equals opportunity
There will be a lot of money to be made as the US sorts its water infrastructure out, but before it does that, it will have to sort out its regulatory system. Manufacturers of pipes, plants and other water infrastructure sectors are sure to do well. I also believe that nuclear desalination will become widespread, especially in the Middle East. After all, you can’t drink oil, can you?
However, the problem will be worse outside Europe and North America, with our relatively wet climates. Developing countries are facing a real crisis – and a lack of water not oil could lead to their destruction.
Remember Fatehpur Sikri, part of Uttar Pradesh in India? It was the political capital of India’s Mughal Empire until 1585, when it was abandoned due to lack of water. Babylon and Persepolis also crumbled in part due to the lack of local potable water. We could see this sort of thing happening again – and it will represent just as much as a cultural shift in the areas that it happens as it did in Fatehpur Sikri.
I like to invest in things that are scarce – it is usually a good route to profits. Water is going to become scarcer and scarcer as the population of the world increases – and you should keep your eyes on opportunities in the sector. Water is a valuable commodity – and it’s going to get more and more valuable over the next 20 years.
By Garry White for his ‘Garry Writes’ newsletter. To find out more about his monthly newsletter, Outstanding Investments, which expands on his views and makes specific recommendations in the resource, infrastructure and biotech sectors, click here: Outstanding Investments
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