Global Water Index: Investments for Privatized Water

economy, international, investments, water privitization, water trade

You may have heard the phrase S&P 500 floating around, background noise as you listen to the news. But if you are a person with even an inkling of interest in the stock market, you will know the S&P 500 is an index exhibiting stocks of the top 500 publicly owned companies primarily from the US.

The S&P 500 shows the market value of the 500 companies in the index and is a good indicator of how the stock market is doing as a whole. The index will rise if the market value of a company goes up (with an increase in individuals interested in purchasing shares), and the index will decrease if the market value of a company goes down.

Well, what does this have to do with water, you ask.

The S&P 500 actually has little to do with water itself, but Standard and Poor’s (the company that created the S&P 500) recently released an index of the top 50 companies in the global water sector called the S&P Global Water Index. The Global Water Index is similar to the S&P 500 except investors use it to track viability of investments in the international water sector. The Global Water Index is comprised of 25 companies in water utilities or infrastructure and 25 companies in water equipment or materials.


Photo courtesy Pixieslayer on flickr.

Events such as the subprime mortgage crisis in the US and rising oil prices have really challenged the future of investments. Water, necessary to life and in demand everywhere on the planet, is thought the next big thing among some economists.

“One man’s challenge is another man’s opportunity. With water shortages an enormous challenge in both the developed and developing world, companies that transmit, purify, or supply equipment should benefit.”

– Forbes, ‘Ways to Play Water

Should individuals with money benefit on global shortages of drinkable water?

Individuals are already investing in the global water sector, and this will influence sustainable and available water supplies into the future. Such investments could drive-up the cost of implementing water infrastructure or treatment facilities for developing countries with dwindling budgets. In addition, among the ten most profitable companies in the Global Water Index are SUEZ Inc. and Veolia Environnement SA. These privatized water suppliers, as well as others in the index, have poor records of providing affordable and dependable water supplies.

For more information on water privatization, see this post on Waterblogged.info or listen to this CBC radio series (a little past due but still great), Water for Profit.

Will water supply concerns overshadow the 2008 Summer Olympics in Beijing?

agriculture, asia, dam, drinking water, drought, economy, industrial, international, sustainability

Over two million people are expected to visit Beijing this year for the Summer Olympic Games. In August, the population of the metropolis will crest 19 million souls.

The arrival of so many visitors to China’s capital will result in exaggerated water use of 2.75 million cubic meters (2,229 acre-feet) a day or, in layman’s terms, enough water to fill 2000 Olympic size swimming pools each day.

Chinese officials may soon begin to worry as North China is currently enduring a severe drought including Hebei (which surrounds Beijing) and other provinces in the north.

The Chinese Ministry of Water Resources indicates the drought has caused 50,000 wells to go dry, with over 170,000 additional wells short of water. Over 3.4 million hectares of crops have been compromised, and 250,000 people are now short of drinking water in the Shandong, Heilongjiang and Hebei provinces.

China’s answer to this Catch-22 is to pipe water to Beijing via extensive water supply canals, often at the expense of local citizens, businesses, or agricultural practices. China hurries to finish 309 km (192 miles) of canals to draw water from behind several dams in the province of Hebei to serve water to Beijing for the Olympics, as stated on Reuters. These canals are actually part of a larger project China is undertaking to pipe massive amounts of water from the Yangzte River in the south to arid regions in the north, widely known as the South-to-North Water Transfer Project (previously reviewed on WaterWired).

                                                                                                    Central route of the South-to-North Water Transfer Project, courtesy of The New York Times.

Concerns about the colossal diversion project by residents of the area are many. During an interview with the Environmental News Network, one farmer said:

“For the country, it’s a good thing. It will bring water to Beijing so everything runs smoothly,” said Shi Yinzhu, herding sheep near the 100-metre wide canal in Tang county. “But for us here, they had to pump away underground water to dig the canal and we’ve lost a lot of land too … Sometimes you wonder if they need all the water more than us here.”

The world’s attention will soon be on Beijing, China for the Summer Olympic Games.

Will the world’s attention also be on the many people currently affected by drought conditions and difficult times in North China?

NEWS UPDATE 

In China, the State Flood and Drought Relief Headquarters has just updated statistics showing currently 5.9 million people face drinking water shortages, more than double that figure of 2.43 million published on Feb. 24, throughout the entire country.

and

China Diverting Major River to “Water” Beijing Olympics – National Geographic

Singapore’s International Water Week 2008

asia, economy, international, research, technology, water privitization, water trade

Singapore is hosting International Water Week from June 23rd to June 27th of 2008. This first-annual event is to be held as a forum for “government officials, industry leaders and water specialists” to discuss policy, business, and water technology. Festivities of the week encompass a Water Trade Show, a Water Summit, and presentation of the Lee Kuan Yew Water Prize to an innovator in the field of water technology.

In 2006, Singapore began wide-spread governmental investments in water technologies to accelerate economic growth in the water sector. No doubt hosting two-hundred exhibitors of water technologies will be great way for the country to stay abreast of additional investment opportunities.

However, several main sponsors of International Water Week include multinational corporations with questionable environmental and water management track records including:

Enterprising steps in the field of water technology are fundamental to ensure available water supplies now and into the future.

Does sponsorship of International Water Week by the above organizations make this event any less important? Not necessarily, but maybe it does mean that we should pay closer attention to these companies and their water management standards.

World Economic Forum 2008 Wraps Up with Water

agriculture, asia, climate change, drinking water, economy, industrial, international, technology, united nations, water trade

Water was a major topic of conversation at the World Economic Forum 2008 (WEF) now coming to a close in Davos, Switzerland.

At the forum, according to the Environmental News Service, Bill Gates announced a grant of $306 million dollars for development projects to help boost yields of crops for farmers in developing countries. It is unclear whether a portion of this money will be devoted to water conservation practices in conjunction with agriculture. Also discussed was implementation of a cap and trade system for water supplies and the importance of market forces in water allocation.

Leaders at the forum pledged renewed support for the UN’s Millennium Development Goals, of which one goal is to increase access to safe drinking water.

Created as a venue for dialogue, research, and networking among economic and political leaders, the WEF is often criticized for more talk rather than action, a membership majority of industrialized countries (primarily USA, Europe, and Asia), and limited media access to specified plenary sessions.

While members of the WEF did review the importance of water in the coming age, no definitive plan was drafted to move our global society in that direction. However, maybe discussions during the event will leave lasting impressions on these economic leaders. And gradually, they will come to the realization that water is more than a commodity, but a necessity of life.

Be sure to check out other blog posts on this issue… our friends at WaterWired give additional perspective on how water was incorporated into the WEF agenda.

Webcasts from this forum are available on the Podcasts, Video, and Web-Mediapage on this blog, as well as on the WEF website.

For an insiders look at the WEF 2008, check out this NPR story: The Wacky World Economic Forum.

Coca-Cola Encouraged to Close Plant in India

agriculture, drought, economy, groundwater, india, industrial, international

Research has just been released that suggests Coca-Cola (Coke) should close a bottling plant in water scarce Rajasthan, India. The Energy and Resources Institute of New Delhi issued the report on January 14, 2008. This report was completed in response to research last year showing high pesticide levels in Coca-cola drinks in India.

The assessment looked at 6 of the company’s 49 bottling plants in India, but highlighted conditions at the Kaladera plant in Rajasthan. The plant’s presence in this area would “continue to be one of the contributors to a worsening water situation and a source of stress to the communities around,” it said. The company should find alternative water supplies, relocate or shut down the plant, the report concluded.

The New York Times

Atul Singh, director of Coke’s India division, avows Coke will not be shutting down the plant anytime in the near future. Instead Coke declares they will review water conservation measures to be employed. Truth or good PR? I am more inclined to believe the latter given the history of this corporation in the international sector. Coke has a track record of egregious human rights and environmental violations in many countries.

The organization KillerCoke (known as such because of numerous assassinations of unionized employees in Columbia) hosts a campaign to encourage Coke to clean-up its act. The group proposes actions as simple as sending a letter to The Coca-Cola Company requesting an end to human rights and environmental abuses to cutting business contracts with the company. Several universities have already drafted resolutions calling for an end to Coke’s poor practices abroad including Rutgers School of Law, the University of Illinois, Hofstra University, and York University to name a few.

Drought Continues in Kashmir

agriculture, asia, drought, economy

The Kashmir region (India, China, and Pakistan) is hoping for additional precipitation in form of snow.  The region, while traditionally arid, has received little snow or rain over the past several months to replenish waterways. December 22nd commenced an annual season of 40-days known as “Chillai Kalan”, characterized with heavy snowfall and blustery temperatures. However, as of yet, this “Chillai Kalan” has not brought the significant snowfall for which citizens have been hoping. A shortage of rain threatens many farmers in the region, including those who cultivate the famed Kashir Saffron spice (exported on the global market).

Nearly five hundred springs have dried up, and the level in the river Jhelum has fallen to a dangerously low degree. The river through the middle of the city has shrunk so low that at several places children can bee seen playing cricket on the river bed.

Kashmir Observer

River Jhelum near Srinagar, during a time with ample flow.

Singapore: Water Technology Clearinghouse

asia, economy, technology

Previously, on this water web-log, we have heard of Israel’s attempts to become the next “Silicon Valley” of water technology. Right on schedule, other investment minded countries are jumping on-board.

Singapore has stepped-up with hopes of being a major water-technology provider for Asian countries, as reviewed on Earthtimes. The island of Singapore, south of Malaysia, began serious investment inquiries of the water industry in 2006, with major political funding aimed at such measures. And, a track-record of being able to provide sustainable supplies of water to citizens in a water scarce country, certainly helps to poise the country to step into such a role with ease. China is already beginning to take much interest in this small city-state’s ability to utilize water technology.

Downtown Singapore sky-line (at the entrance of the Strait of Malacca), photo courtesy National Geographic.

New Water Financier Scopes Markets in Gulf, India, and China

economy, water privitization

A large Saudi Company, among others, is staking it’s claim in the burgeoning enterprise of water investments. According to Arabian Business On-line, the joint venture is formed of two companies from Bahrain and Saudi Arabia. Starting with a minimal sum of $50 million dollars, the company has plans to finance water projects in arid areas such as the Gulf region, India, and China. The choice of these areas, where water is in great demand, could provide a surplus of business ventures for the new company, Moya. Nahed Taher, CEO of Moya, states:

“The demand for water in emerging markets is growing rapidly and the Gulf, India, and China are among the major markets that I want to be in,” said Taher.

“The demand elasticity for water is minimal hence no matter what the cost of water becomes, the demand level is always stable which makes water projects good ones to finance,” added Taher.

As parasitic as the above-quote does sound, capitalising on water has become commonplace, and, seemingly, is proving to make for a profitable endeavor.

It is not clear whether Moya intends on privatizing operating entities for water purveyors (British Model) or financing construction of such facilities (French Model).

However, privatization as a model for managing water supplies has been consistently problematic in the past. Examples of such problems include degraded water quality, unstable supply systems, excessive prices for water, and extensive public debt.

In summary, it is difficult to understand the commercialism of basic needs, and why a public resource such as water is not a guaranteed basic human right.

Water Commodity and Global Market Trading

economy, water trade

Global market trades of water supplies seem a relative certainty as human populations grow, agricultural practices increase, and precipitation and snow-melt become more unpredictable. Investors are lining up to stake their claims. A recent article on the Times Online UK edition explains the likely scenario in an article entitled: Water whets the appetite of commodity traders with an eye to the next fortune.

The exact way water would fit into global market is still a bit ambiguous. It could be comparable to current markets in Australia or even micro-markets in the US where water rights are sold and/or traded simultaneously. A parallel is even drawn to current Carbon Markets – Emissions Trading. One thing is for sure, there are many individuals that would like to make a profit on the liquid of life – water.

Short Film on Water Privitization

drinking water, economy, groundwater, water availability, water privitization, water trade, water treatment

This film, produced by the World Development Movement (WDM), gives a brief overview of the water privatization throughout the world. It is called “Dirty Aid – Dirty Water” because as entities like the World Bank and the International Monetary Fund provided loans to developing countries, often times they did so with the stipulation that the country receiving the funding must agree to participate in a water-privatization program. Privatization of water supplies in these countries has seen many ill effects including significant increases in water prices making water less available those in need.