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Could you be Making Money off the Drought in the US?

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Could you be Making Money off the Drought in the US?

Could you be Making Money off the Drought in the US?

Aug 18 2015, 11.41am GMT


Droughts mean water shortages, particularly in areas such as California where there is a limited supply of natural fresh water. This is occurring mainly in the area north of the city of Sacramento, while most of the demand for the life giving liquid, about 80%, is in the southern two thirds of the state.

The water situation has, to a large degree, been remedied by the construction of one of the most complex and sophisticated water storage and transport systems globally. The system however needs rain to supply the water and the present drought in the state, which has lasted for at least two years, is currently its driest period since 1850.

“This could possibly be the driest water year in 500 years,” said B. Lynn Ingram, a professor of earth, planetary science and geography.

Interestingly, the weather conditions have not resulted in any emphasis on water related technology from Silicon Valley. Technology focused entrepreneurs and developers continue with their search for new wonder apps and similar types of quick money making developments.

Israel, which is the global leader in water technology, has attracted very little foreign investment in that sector, and yet this technology has made the water parched country self-sufficient in water supplies while Israel also offers its technology around the world.

An example is the $1 billion ocean water desalination plant Israel’s IDE Technologies is building to provide 50 million gallons of water daily in the San Diego area starting in November.

The data on investment in water technology companies by venture capital investors shows that that there is some progress taking place. CleanTech Group data shows that a total of $1.4 billion globally was invested in water technology startups in the period 2010 to 2014 in 405 companies. Last year however, $281 million was invested in 66 water technology startups, an increase of 19% on 2013.

These figures compare very unfavorably with the total of $20 billion that was invested in 1,812 software companies in the U.S. alone, according to the PWC MoneyTree Survey. 

The majority of startups however seem to be focusing on smaller water saving projects such as smart meters which warn consumers when they are using excessive amounts of water, while another company has developed a water saving shower head which results in a 70% reduction in the amount of water used per shower. These are small savers while technology for real big projects for water recycling and purification are what are needed.

WaterSmart CEO Robin Gilthorpe commented that water is, “the most pressing problem of the next century.” He added, “Because we have been spoiled by abundant access to water, people underestimate how huge the segment is. We could use more investment.”

The concept of water as a cheap commodity has to change according to Peter Williams, eminent engineer and chief technology officer of Big Green Innovations, an in house think tank focused on carbon, water and other environmental issues at IBM Corp.

Water scarcity is not just a current California crisis, but as the Israeli mega approach to the problem indicates, water is an international crisis in waiting that requires new investment and innovative approaches.

As the last words from Gilthorpe of WaterSmart explain, “We are all praying for rain, but fundamentally this is not a drought problem, it is a growth problem.”

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