The Business of Water and Droughts

Water is big business? No, it is a huge business. The business of water and droughts is alive and well. Currently, we see pipelines for water being built, retention basins, damns, Desalination Plants and water rights being bought up by billionaires. In my professional life, I was involved with the car washing industry and we always kept up on droughts, water restrictions and water supplies. I can remember not to long ago when California car washes battled consumer backlash to price increases of up to five dollars by Oct. of 2000, due to water. Soon everyone was worried that water rationing might cause another tripling affect if increased water prices occurred.

States such as Texas are having people buy up water rights and talking about a sliding scale of $800 per acre-foot and El Paso at $1400 per acre-foot to deliver the water by pump. In the May 26 of 2001 issue of the Economist there was an article called “Pay up or dry up” talking about the problem in Texas as populations increase, business booms and water drying up. T. Boone Pickens is no dummy either having been caught buying up water rights and agreeing to buy water now at a predetermined price in the future from those water rights owners who do not wish to sell in Western Texas. I see someone else has been studying this supply side situation as well. Imagine cornering the lifeline to all major Western Texas cities; a much similar strategy was applied by US Filter in California. There is big business in life essentials. Without water in the desert you die. So as it becomes scarce, it increases rapidly in value. So with that known we in the car wash business became more efficient. If the water lifeline is cut off and one person controls the water rights, that person will send his advanced purchase prices into outer space in a few years. When these things happen businesses must be prepared to have their marginal costs increase and simultaneously lower them through deployment of water-saving measures.

If you are in the water business or a business which uses water you will need to stay up on droughts, cycles, weather, politics and how these factors effect our civilization’s water supplies.


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