Although more than 70 percent of the Earth is covered by water, only about 2.5 percent is freshwater. Because freshwater is used for crop irrigation and consumption, it remains one of the most sought-after resources on the planet. In fact, due to the demand for water and the decrease in supply, the global water industry is growing, and new ways to extract, transport and treat water are rapidly being developed, in turn making water a valuable resource for investment.
As with several other natural resources, freshwater reserves are over utilized. This is largely due to several factors such as industrialized agriculture, a growing population in areas naturally subject to limited precipitation, and climate change. Freshwater can be found in rivers, lakes, ponds, and glaciers in addition to groundwater reservoirs. Groundwater is usually found in aquifers, and can be extracted using deep water wells.
Freshwater resources are so important that it has been the heart of several disputes in the United States. Take for example the western part of the United States, which, apart from having dry and arid land, has been afflicted by droughts in the past years. Those communities have battled various entities, or each other, for the rights to pump underground water and divert rivers. But the water problem is spreading throughout the United States, and the U.S. Environmental Protection Agency expects at least 36 states to suffer water shortages in 2013.
Old Water Wells, New Battles
Several years ago a Nevada state agency granted the Las Vegas Southern Nevada Water Authority permission to pump water from the eastern part of the state, which borders Utah, through a 200-mile pipeline. Hundreds of concerned citizens, environmental groups, and Utah government officials asked Nevada courts to restrain the Southern Nevada Water Authority from doing this, as there are concerns of groundwater depletion and the creation of fugitive dust. Presently, appeals against the state agency’s approval of the water transfer are pending with the Nevada Supreme Court.
Most recently, the small communities of West Wendover and Pilot Valley in Nevada have been embroiled in a battle for underground water rights. In 2012, West Wendover applied with the state of Nevada for a permit to create a 20-mile pipeline to Pilot Valley in order to appropriate underground water. In response to this, many of Pilot Valley’s 300 residents have opposed this move by filing protests with the state. Pilot Valley residents fear that the project will cause their wells to dry up, as droughts have decreased the underground water supply. In this area, droughts only compound existing issues with growing populations in naturally dry, desert climates. Presently, the Nevada State Engineer has not decided whether to grant West Wendover the permit. Nevertheless, Pilot Valley residents are likely to appeal any decision favoring West Wendover. Clearly, irrigating the west is incredibly important to both economic growth and human welfare. However, water battles are spreading all over the world.
New Wells, Future Battles?
Within the past year, both Mexico and Namibia have discovered water aquifers in their territories. Both aquifers come as a great relief to those countries, as they both suffer from a lack of precipitation. Therefore, such water sources can potentially have a major impact in the continuing development of both countries. However, due to its importance, both countries are considering different ways to pump the water in a sustainable way. If the supply is managed and distributed proportionally, the aquifers will provide residents with clean water and water wars such as those observed in the United States may be avoided.
A Growing Industry
Although the shortage of water supplies can create problems among competing parties, water is clearly a valuable resource for investment. In fact, due to the growing demand for water and the decrease in supply, the global water industry is growing, and new ways to extract, transport and treat water are rapidly being developed. The international attorneys of Diaz Reus recognize investment opportunities in the global water industry. With offices in the United States, Latin America, China and the Middle East, Diaz Reus’ attorneys and counselors offer important guidance to local and multinational entities operating in these regions.