How a Penny Stock Could Solve the Water Crisis

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Apr 16th, 2009 | By | Category: Featured, Investing Strategies

The scarcest resource on the planet is something you use every single day. I’m writing, of course, about water.

Fresh water is a valuable asset. How valuable? Well, no one’s really sure. That’s because experts don’t know how much of the fresh water supply humans can use before they begin to throw a wrench in the environment’s gears…

How many rivers can we run dry? How many wells can we drill before we destroy entire ecosystems? These questions will need to be answered in order to fully understand the scope of the global water crisis.

Despite these unanswered questions, one fact is certain: If we continue to deplete freshwater supplies, other resources will suffer as well. Of course, as the global population continues its ascent, the situation becomes more dire…

“Freshwater fish populations are in precipitous decline. According to the World Wide Fund for Nature, fish stocks in lakes and rivers have fallen roughly 30% since 1970. This is a bigger population fall than that suffered by animals in jungles, temperate forests, savannahs and any other large ecosystem,” The Economist notes.

Water makes up over 70% of the Earth’s surface…but less than 0.014% of this water is accessible drinking water. And this water supply is not growing. In fact, with the past 100 years of global population growth, we’re depleting this limited reserve at a record pace.

Stateside, residents and experts in Las Vegas and Southern California are starting to worry about their respective drinking water situations. A recent Bloomberg article points out that Vegas’ water source, Lake Mead, is approaching dangerously low levels, which could suddenly turn off at least 40% of the city’s water.

However, the water situation in Vegas pales in comparison with the Middle East. With oil prices on the rise over the past few years, countries like the United Arab Emirates saw population explosions. In these desert nations, water shortages routinely make headlines.

Instead of planning for future shortages, the majority of the world turned a blind eye. Now we face a near-catastrophic situation. But not all hope is lost…

In recent years, we’ve heard plenty about water conservation and advanced water-filtration technologies.

But no topic has been as prevalent as desalination…

Desalination is the process of removing salt from salt water. And it’s the single best way to ensure a positive outcome when it comes to the global water crisis.

Historically, the main problem with desalination efforts has been energy costs. We already have the technology to turn salt water into drinkable water. But we haven’t been able to accomplish the feat cost-effectively…

There are a few different ways to remove salt from ocean water, but the most prevalent is thermal desalination, or multistage flash distillation. The way these systems work is through rapidly exposing salt water to high temperatures, which causes a portion of this water to “flash” steam, which is captured as salt-free water.

Unfortunately, it’s expensive to provide the energy needed to run this type of process. Currently, it’s the most widely used form of desalination. Around 85% of all desalinized water comes from these types of plants.

But another technique is rapidly gaining attention. It’s called reverse osmosis — a desalination process in which salt water is pumped through a membrane, or filter. Until recent technological breakthroughs, the membranes and pumps were both too expensive to operate economically.

Jim Nelson

April 16, 2009

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Jim Nelson

Jim Nelson began his investing career during the tech boom at age 14 – with purchases of Starbucks and AOL. Early inspiration came from an old Tweedy Brown whitepaper: “What Works in the Market.” He graduated with a degree in Political Science from Pittsburgh University, Nelson focuses on income investing, including dividends, covered calls, and fixed-income. Additionally, he covers MLPs, ADRs, utilities, consumer staples and tobacco. Nelson is the managing editor of Lifetime Income Report.

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