Water: Invisible Crisis

Earlier this week the Americas Society/Council of the Americas (AS-COA) based in New York City hosted a panel discussing Latin America’s Mounting Water Crisis.  Panelists included representatives from The Nature Conservancy and Columbia University’s Water Center as well as a senior officer from The Coca Cola Group (KO:  NYSE).  The focus was of course  on Mexico, Central America and South America, but the panel could be talking about Africa or India as well.  The problem is not one so much of inadequate water supplies as it is about contamination of water supplies and inadequate infrastructure to get water to the right places.

During the discussion the panelists revealed an interesting comparison between Nicaragua and Canada.  Canada’s Montreal receives about 1,000 millimeters of rainfall each year while Managua in Nicaragua receives over 2,900 millimeters per year.  Canada for the most part has adequate water supplies, while as many as 1.0 million of Nicaragua’s 6.2 million citizens do not have enough water for basic needs.  One of the problems is the dilapidated condition of Nicaragua’s water infrastructure, which is estimated to lose as much as 55% of potable water supplies through leaks.

While the panel did make note of a lack of resolve on the part of government officials in dealing with water issues, the discussion surprisingly veered off to another causal factor  -  inadequate watershed.  For those who need a primer on watersheds, it is an area of land that collects rainfall and snowmelt into streams and rivers.  The fresh water is sent through nature’s filter of creek bed rocks and sand into large lakes and underground aquifers where it can be tapped by the humans and animals who need water to survive.  There are at least eight major watersheds in South America, the largest of which is anchored by the Amazon River and its tributaries. 

Apparently, Latin American rivers are among the most polluted in the world.  In 2014, the World Bank reported that over 70% of water used in Latin America returns to rivers with no treatment.  The natural filtering system of the watershed cannot keep up with foul industrial and residential wastes that get into water in urban centers.  Exacerbating the problem is that as much as 80% of the population in Latin America lives in urban areas near rivers.  Water systems are tapping polluted waters and delivering it straight back to residents and businesses.

Is the situation an opportunity for innovators and entrepreneurs? This post begins a series on the investment opportunities in water and water treatment.  There will also be a look at companies with a vested interest in keep water clean.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.