Investing in Water Rights

Last week we were on the high seas, this week we’re sticking with the water theme. We’ll be exploring water rights.

Let’s dive in!* 👇

*This phrase is overused, but it makes sense here, so I’ll let it slide.


The planet’s freshwater is declining

When we talk about precious commodities, most people think of stuff like gold, cotton, soybeans, and crude oil. But the most precious commodity of all is the one we all take for granted.

The reason is that people falsely believe there is more water available than there actually is. Yes, the Earth is 71% water, but only 3% of it is drinkable. And the majority of that is located within glaciers or in deep underground caverns.

Yes, our planet is mostly water. But saltwater and freshwater are two very different things!

Much of this underground water is at risk. According to a NASA study, many freshwater sources are being used up faster than they’re being replenished. 21 out of the world’s 37 largest aquifers are officially receding.

Freshwater has become increasingly hard to get. Even once you do get it, distribution is a whole story. It’s unevenly distributed, so rainfall in a wet region does nothing to help a dry region across the globe. How poor is this distribution? Of that meager 1% of the world’s freshwater which is readily available, only 10% of that is used!

And water is very heavy and expensive to transport.

The water is here, but it’s not evenly distributed.

That inequality extends to sanitation. According to UNICEF, 1 in 3 humans can’t get sanitary drinking water on a consistent basis. 297,000 children still die each year due to drinking contaminated water.

And then there’s climate change. Warmer temperatures mean less snow, which means less snowmelt. Climate change’s effect on lakes and rivers has been so obvious that you don’t even need words — the pictures really do speak for themselves.

Nevada’s Lake Mead has shrunk over the past 20 years. It’s now down to 27% of capacity, and could become a dead pool.

The Glen Canyon Dam on beautiful Lake Powell, AZ. There’s actually a 1 in 3 chance this thing won’t be able to generate power next summer.

Where our water goes

It’s easy to look at pictures/stats like these and think, “boy, we’ve got to do a better job conserving water!”

Yes, conservation is a good thing, and we should all conserve. But let’s be clear: most of our water goes to agriculture. Agriculture accounts for 42% of freshwater usage in the US, and 70% globally.

But don’t blame the farmers, they’re just meeting demand. And some foods require far more water than you’d think. It takes 680 gallons of water to produce a single pound of pecans, and a hamburger takes 630 gallons.

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Stefan von Imhof

Stefan von Imhof

As the CEO of Alts, Stefan lives and breathes alternative asset analysis and valuations. His alternative investing newsletter has grown into — the world's largest alt investing community, with over 200,000 investors. His favorite alternative investments are holiday rentals, cash-flowing websites, and especially his collection of 300 vinyl records. Originally from Boston and Santa Barbara, CA, he now lives with his wife in Australia.

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