How To Cash Checks From America’s Water Needs

Right now millions of Americans want to send you a check. And it’s not because they’re feeling overly flush with cash. Nor are they feeling highly generous.

Nope — it’s because their very lives — and those of their families — vitally depend on sending you a check starting now and continuing for the rest of your life and the lives of your heirs.

This isn’t a gimmick.

There really are over 120 million folks in 73,400 communities across America that are absolutely committed to cutting you checks that are critical to their lives.

I know many of these folks personally. In fact, I’m one of them. So I know that this is legit.

What on earth am I writing about?

Clean water. Everyone needs it… and you’re going to help us get it — making yourself some nice cash along the way.

Why Water?

Water is one of the most vital natural resources.

The Earth has about 330 million cubic miles of it. But of that expansive amount, only about 2.6% isn’t salt water. That tiny percent of fresh water is what we rely on for agriculture, industry and human consumption.

Only about 26% of that fresh water is renewed by rainfall. The rest of that small portion of the globe’s fresh water is finite, either just below the surface or much deeper underground from aquifers that are being drained around the globe.

Consider the High Plains Aquifer in the United States. It’s in danger of being depleted — forcing localities around the Midwest to plan for rationing, especially for agricultural use.

Each year the United States and the rest of the globe consume around 2,400 cubic miles, or about a third of all renewable water. And that amount is growing by some 152 billion cubic miles each year.

That means it will only be another 11 years or so before we’re all consuming double the current amount of water.

It’s a situation that hasn’t been lost on the media or the financial gurus — the former predicting imminent doom and the latter promising tremendous profits.

But for more practical-minded investors like you and me, looking for nice, big gains in the water market has been a very tough proposition.

Water Doesn’t Work

I’ve followed and picked through lots of companies that are in the water business. And despite the compelling story of supply and demand, much of it just doesn’t work. Even the stuff you’d think would be no-brainers.

For instance, you’d think it would be easy to just go after water utilities or companies that own promising water reserves. Wrong. We’re not talking about oil here. You can’t price it based on market conditions. Locals would riot — not to mention the businesses that depend on cheap water. Agricultural and industrial interests have powerful lobbyists.

In short, no politico will dare allow true market pricing for water service.

So investors expecting water utilities — by and large — to rake in huge profits and to see soaring share prices have been disappointed. Don’t get me wrong… occasionally, a water company will trade at a premium because of the whole water story. But in the end, they’re just utilities and perform like them. Local regulators that set rates and fees can push the voting public only so far on pricing out water.

And then there’s the other side of the balance sheet. While water companies’ revenues are limited by politics, more and more of them are facing ever-increasing costs.

Remember, it’s not enough to deliver water from here to there — that water needs to be drinkable.

But for 120 million Americans, it’s not!

Fines Could Soon Be Flying

In the most recent study and analysis by the U.S. Environmental Protection Agency (EPA), 73,400 water systems are at risk of putting contaminated water into homes, businesses and agricultural operations across the nation. Those systems service 120 million customers… including me!

Obviously, this cannot stand. In fact, it’s illegal! The Safe Drinking Water Act of 1974 and its many amendments say we have a legal right to clean water. So if the companies involved don’t want to see feds knocking on their doors with fines and summonses, they’ll need to act.

Fixing the problems is expected to cost at least $384 billion — but we won’t really know until we actually dig into the water systems… many of which were built a century or more ago.

Then there’s the matter of aging piping. Water mains are in terrible condition around the United States. Every day, on average, there are 850 water main breaks. Since 2000, the number of failed water pipes is some 4.2 million.

Fixing all the known pipe problems would cost another $549 billion.

And again, this isn’t “Oh, it would be nice to fix these things.” These are fixes required by the EPA under the Safe Drinking Water Act.

Where will cash-strapped water companies get the money?

That question has led several companies that are dependent on clean water, including Coca-Cola, to aggressively lobby federal, state and local governments to ramp up a plan to help utilities fund needed fixes. And they’re getting some traction.

They’re also being helped by EPA regulators and various think tank and industry groups that are putting the hard sell on getting the money from fees, bond issues and various new spending initiatives to make the fixes happen.

But all of this is going to take some time, and perhaps we will get the will of the 120 million opening their checkbooks. However, in the meantime — there is another way for us to make money on this situation now.

Oil & Water Do Mix

The idea takes shape when you realize the similarities between water and the petrol business.

Moving and processing both require pipes, valves and processing equipment. So not surprisingly, some companies specialize in both water and petrol.

Now, with petrol companies spending big to ramp up their systems around the United States, they are enjoying booming profits. But the urgent need for water spending has the potential to boost their bottom lines even more.

By buying into these companies, we enjoy the certainty that comes from their petrol businesses while setting ourselves up for gains as their water businesses grow.

All my best,

Neil George
Original article posted on Daily Resource Hunter

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Neil George

Neil George is the editor of Lifetime Income Report and Income on Demand — investment advisories dedicated to finding Wall Street’s best yields.

Before joining Agora Financial, Neil was the editor of Personal Finance and oversaw investment journals in the United States, Germany and other countries. He’s been featured in the Wall...

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