What's something that most people take for granted that it will always be there but which is actually finite and running out? If you answered oil, you'd be right; however, if you answered water, you'd also be right. Yes, that's right – welcome to the world of peak water. Here's what you need to know and how to profit from it:
What is Peak Water?
The odds are good that you've heard the term peak oil before. That's the point at which demand for oil will begin to permanently outstrip the demand for the stuff. It is expected that we'll hit peak oil in the next few years. In fact, some people actually believe we're already there and that we just don't realize it yet. Peak water is much the same thing – the point at which demand for water permanently outstrips supply.
But We Live On a Wet Planet!
I happen to be a science fiction buff and a common theme with many alien invasion stories is that the aliens show up hoping to drain the earth of water, which we happen to have plenty of. In fact, 2/3 of our planet is covered in water, so how could we possibly be on the verge of peak water? It doesn't make sense, right?
It's Fresh Water, Not Salt Water
The thing is, that 2/3 of our planet which is covered in water is almost all salt water, in the form of large oceans. In fact, according to most scientists, 99% of our planet's water is undrinkable. If you've ever seen one of those movies where the guy is at sea and dying of thirst in spite of being surrounded by water, it's because the ocean's water isn't drinkable without being treated. Get more than a few gulps of the stuff and it could destroy your internal organs and rot your brain – literally.
Global Weirding Is Making It Worse
A few weeks ago, I wrote about the phenomenon of global weirding (more commonly known as global warming, though that term is really a misnomer), whereby weather was getting really strange all over the planet. One of the affects of global weirding is that parts of the world, especially areas which were already arid, such as most of the Middle East as well as parts of the southern United States are rapidly reaching peak water.
How This Works
In essence, as populations increase, we're seeing an increase in the demand for fresh water for drinking and other purposes (flushing the toilet, doing the laundry, growing crops, etc.). Combine this with the fact that certain parts of the world are experiencing increasing droughts thanks to global weirding and you have the makings of a disaster.
In fact, some people believe that the next big war in the Middle East won't be fought so much over land as over water resources, which have in large part have already hit peak water in that part of the world.
How to Profit
So let's get to the bottom line here – how do we make money from peak water? Well, it's really simple – you invest in the solutions. This means a number of types of investments are going to do really well.
Desalination plants and desalination technology companies (the rather expensive process of removing salt from sea water to make it drinkable) should see increasing demand for their services, thus pushing up their stock prices.
Conservation companies, especially those that manufacturer things like flushless toilets and technology for recycling sewage water should also see their fortunes improve as peak water takes effect in more and more places across the globe.
In the Forex Market
Finally, in the forex market, expect peak water to affect the currencies of countries which are inland and arid. These countries will have a tough time with desalination and will thus be forced to make purchases of expensive imported water and or improved conservation products to contend with peak water. This should make their currencies weaker, thus making them good medium term investments for the next few years as shorts. Certain African and Middle Eastern countries in particular should be good investments in the face of peak water for example.