Article Series
The Arctic Cold War Looming
The Uranium Merger Mania Pending
The Paradigm Behind Global Trade Protectionism
The Stealth Rally in Mining Mergers
Special Memorial Day Weekend Report
Special Report
The Paradigm Shift of Sky-High Oil
The Looming Commodity Crisis No One Talks About
By George Bell
In headlines over the past week, mainstream media has been highlighting the issue of rising commodity prices, something to be expected, given the price of wheat alone is up 170% year over year.
However, there's a commodity out there that poses an even larger potential threat in terms of growing demand outstripping supply - yet it remains largely devoid of media attention.
Water is, by most accounts, off the radar of the world's woes, mostly because it is not easily tradable, as Wall Street would prefer.
Consider this, though: Without water, one cannot grow crops or raise livestock, produce commodities, or live. Water is the most precious resource on earth, and the looming global shortage of this resource is quietly threatening virtually every industry.
In March, Brad Knickerbocker of the CSM penned, "Lester Brown, head of the Earth Policy Institute think tank in Washington, is concerned that declining water supplies combined with the push for water-intensive biofuels could be a threat to global food security."
Reuters reported, "The thing to keep in mind is that it takes 1,000 tons of water to produce one ton of grain ... Seventy percent of all the water we use in the world – that we pump from underground or divert from rivers – is used in irrigation. Not everyone has connected the dots to see that a future of water shortages will be a future of food shortages."
Even more worrisome, the "food riots" of late could be nothing compared to the "water riots" that ensue in the years to come. Case in point, in a global water study, Arizona State University cited the World Bank when claiming, "80 countries now have water shortages that threaten health and economies, while 40 percent of the world — more than 2 billion people — have no access to clean water or sanitation. In this context, we cannot expect water conflicts to always be amenably resolved." The authors go on to state, "In the Middle East, a region marked by hostility between nations, obtaining adequate water supplies is a high political priority. For example, water has been a contentious issue in recent negotiations between Israel and Syria. In recent years, Iraq, Syria and Turkey have exchanged verbal threats over their use of shared rivers."
The global water shortage isn't new either, though for some reason, it seems to be "hushed" from headlines. In 2005, MSN Money's Jon Markman wrote of China: "It has about as much water as Canada but 100 times more people. Per-capita water reserves are only about a fourth the global average, according to experts. Of its 669 cities, 440 regularly suffer moderate to critical water shortages."
What we must understand is the world cannot make more fresh water, aside from desalination and other expensive technological solutions. As the world population continues to grow, while global warming evaporates rivers and aquifers run dry, access to water could become the single greatest threat to geopolitical stability ever seen. The U.S. Census Bureau predicts that by 2050, there will be 9 billion people walking the planet, roughly a 40% increase over present levels.
But there's another facet to consider: Did you know that it takes anywhere from 40 to 130 gallons of water to make one gallon of ethanol?
Fuel and energy are massive consumers of water, and increased demand for water for those sectors could become the major catalyst spurring even more worry in an already aggravated situation. In short, the world needs to examine water consumption in fuel and energy production, if we are to stave off "water wars" in the coming years.
With all of the aforementioned in mind, in part II of this article, we will examine the amounts of water used in various forms of fuel and energy production, while also comparing water-related costs.
There are solutions to heading off what could be the largest crisis the world has ever seen, but we need to start working on them now.
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