Saturday, August 9, 2008

A Tall, Cool Drink of... Sewage?

Tomorrow's NY Times Magazine has a general interest article by Elizabeth Royte on the processing of sewage into drinking water, "A Tall, Cool Drink of... Sewage?". The article notes that the reprocessed water is purer (as measured by "T.D.S.", "total dissolved solids") than reservoir water (or even bottled spring water), and yet then Orange County, California treatment plant she profiles pumps the treated water into a reservoir where it filters through sand and gravel for a few months before being pumped into taps by utilities:

In other words, nature messes up the expensively reclaimed water. So why stick it back into the ground? “We do it for psychological reasons,” says Adam Hutchinson, director of recharge operations for the water district. “In the future, people will laugh at us for putting it back in, instead of just drinking it.”

Some have said that the scarcity of potable water in many parts of the world represents a macro trend from which investors can profit, perhaps by investing in the companies that build wastewater treatment plants, or some of the equipment those plants use. I haven't done much homework in this, but I plan to look into it at some point.

Update: Today's NY Times Business Section includes a related article, The Feed: "Can Israel Find the Water it Needs?". The article mentions an Israeli multinational, Netafim, that's active in drip irrigation as well as wastewater treatment and other water resources areas, but it isn't publicly traded.

Also, reader SL directed my attention to this article in the current Barron's, about American Water Works (NYSE: AWK), "The Spigot Reopens at American Water Works".


Anonymous said...

The water macro trend has been talked about for a long time. I think there's an etf, PHO, to play it.

I have some mixed feelings/worries

(1) water isn't like energy, telephone or any other utility... it will always be more heavily regulated (same with the profits).

(2) As you pointed out, water markets are a zillion independant markets, not a big macro market like oil, gas, etc. Every part of the world will likely have unique water solutions.

(3) I just got a bill from my water provider (santa monica). Water prices will be going up 10% per year for the next 4 years. It's already higher than my electric bill.

(4) Greywater systems are really interesting. They're illegal in some states and very hard to get permits for, in general. They could knock out a big % of water expense (for lawn, garden, ag).

Not sure if it's any good but Cadiz was a S. Cal water investment that I looked at along time ago (There is a writeup on vic).

Great blog.

DaveinHackensack said...

Thanks a lot. Good points. I'll take a look at the Cadiz write-up on the VIC.