Trends and Themes in Water - Ag.

I recently published the first of three themes that should stand the test of time – energy.  Today, I was going to speak about water and agriculture, but I started jumping into the water issue and found too much good information.  So, I will address water only in this blog and agriculture next.  As I mentioned in the previous blog, there are several mega-trends at work currently that will impact the energy, agriculture and healthcare sectors of our economy and those outside the U.S.  One is rapid population growth in the developing countries and population decline in the developed countries.  Another is the transitioning of societies within the developing and developed countries, which impacts how humans live and interact with their economies and ecosystems.

Water

A good place to start to talk about agriculture is to begin with water.  According to World Water Assessment Program, 70% of water is used in agricultural processes (irrigation), 22% is accounted for in industrial processes and domestic use accounts for 8%.  This would compare to 1940, when 84% of water went to agricultural processes, 10% to industrial processes and 6% to domestic uses.  Here is another statistic.  According to the World Bank water recycling makes up 4% of the global supply.  These are unbelievable statistics.

Source: World Water Assessment Program

According to the World Water Council, the average American uses 600 litres per person per day, while the average European uses 350 litres per person per day.  The UN recommended basic minimum is 50 litres per person per day.  The point to make here is that agriculture is the largest consumer of water by far and that with the growing emerging economies, the basic minimum UN usage of 50 litres per person per day will clearly increase at a very rapid rate to feed these growing populations.

We, in the U.S., get our water from several sources: surface, underground and recycled water (not covered here, but will be an increasingly large part of the water picture in the very near future).  According to the USGS, 47% of our water comes from surface water, while 53% of our water comes from underground.  Our surface water sources are: lake water (lakes or reservoirs); river water (where fresh, i.e. not polluted); and cisterns (small percentage and where appropriate).  Our underground water sources are: large well water installations (usually provided by the county where population density is large); and small, single well installations in rural areas for farms or homes.

In a 2005 United State Geological Survey (USGS) study, 67% of the fresh groundwater withdrawals were for irrigation and 18% were for public supply.  More than 25% of total water used in the U.S. in 2005 was withdrawn in California, Texas, Idaho and Florida.  California accounted for 11% of all withdrawals in the U.S. in 2005.  Nearly 75% of the freshwater withdrawn in CA was for irrigation, and 98% of saline water withdrawn was for thermoelectric-power generation.  Below is a map by the USGS showing subsidence of land, which has been attributed to groundwater pumping.  Take a look at the four states mentioned above.  Subsidence occurs in all of them.  Subsidence occurs when withdrawal exceeds recharge.  Therefore, there is a net loss of groundwater and the aquifer begins to compact or subside due to the overburden pressure of sediment layers above the aquifer.

The below chart shows the groundwater level change in Central Valley from 1962 to 2003 and how quickly it has declined without recharge due to the ever increasing water usage in agriculture, required to feed the U.S. and others.  Central Valley is located in California and is the large, long blue blob in the map above.  This type of groundwater depletion is occurring around the U.S., including the Ogallala aquifer in central U.S. (which can be seen above in Nebraska, Kansas, Oklahoma, eastern Colorado, eastern New Mexico and northern Texas) at an alarming rate.

These are discouraging water results.  Fresh water groundwater depletion will become a bigger and bigger problem as time goes on.  We need food for the growing developing countries, so technological, ecological, environmental, and biological discoveries, developments and investments will and have to occur.

The above map is the latest drought monitor map from the U.S. Department of Agriculture.  The states that I have pointed out as major irrigation states are having some sort of drought condition.  Without snowpack or rainfall this year, this map will darken - bad. 

My next blog will be address agriculture and themes that will be investable.  Clearly, water investable ideas are manufacturers of irrigation systems, water utilities, water filtration companies and water treatment companies.