The threat of "peak water" should be considered as big a threat – and opportunity – as the threat of peak oil.
But investors who want to capitalize on the coming water crisis will have to contend with the unique economics of the world's most fundamental resource, according to Peter Gleick, noted water expert and president of the Oakland, Calif.-based Pacific Institute.
It's not that the world is running out of water per se, Gleick told an audience Wednesday at the Cleantech Investor Summit in Palm Springs. Rather, "We may run out of the ecological value that water provides," he said, by depleting ancient underground aquifers, overdrawing the world's major rivers and contaminating the limited fresh water available in certain parts of the world.
That's not just a problem for the more than one billion people worldwide that lack access to safe drinking water, or the two-fifths of the world that lacks access to adequate sanitation services, he said.
It's also a threat to businesses that rely on clean and abundant water – and every business, from agriculture to semiconductor manufacturing, needs water, he said. Beijing, China recently banned new water-intensive industries from the city because of a severe water shortage, he said.
"What companies once thought of as a minor cost may no longer be a minor cost," he said.
But what he called a coming water crisis also represents an opportunity for the $400 billion to $500 billion water industry, he said (see A Guide to the Water World).
But there's a fundamental problem for venture capitalists wanting to invest in water, he added – and that's the price of water.
"People don't pay for water, or they don't pay enough for water, and that makes it hard to invest and get returns," Gleick said in an interview before his speech. At the same time, "It's very difficult to raise the price of water politically" in areas where people live on less than $1 a day.
Meaning: "What you don't want is a smart, high-tech system that's incredibly effective, but breaks down or can't be managed in a village in Africa," he said. "People in the clean tech world should spend more time thinking about cheap, simple ways of doing the things they do."
Some of his suggestions?
"There are enormous opportunities for end-use [conservation] devices, from water use in homes to drip irrigation in fields," he said. Small-scale water treatment systems for small communities could also be useful, he said (see WaterHealth Lands $10M for UV Water Purification).
"There are also opportunities in real-time water testing and monitoring," he said. "There are new contaminants we have to worry about and low-level contaminants that we've never previously detected," such as traces of pharmaceuticals that are now showing up in drinking water supplies.
In his speech, Gleick also suggested a different approach to thinking about water infrastructure, which has traditionally been a matter of huge dams, reclamation projects and centralized water treatment systems.
"Infrastructure in the United States might also mean, 30 million front-loading washing machines that save water and energy, and do a better job of washing your clothes," he said.
Gleick was on Wired magazine's "15 people the next president should listen to" list, so it's possible his ideas will get some traction as the federal government considers how to stimulate the economy by investing in the country's infrastructure.