When I was a student at Duke more than 30 years ago, basketball games were much rowdier than they are now, largely because we had lost a lot for a pretty long time (Coach K arrived in 1980 and changed that, obviously). The crowd — not yet known as “Cameron Crazies” — was loud, aggressive, funny and often “over the line.” At one home game against North Carolina State (before my time), a male student came out to sing the national anthem dressed in drag to mock State coach Norm Sloan’s wife, who often sang the anthem before State home games. As you might expect, Norm didn’t take kindly to the display and famously alleged that Duke students spent the days before basketball games doing nothing but tanking up. Thereafter, Duke students (I will neither confirm nor deny any personal involvement) greeted his every appearance at Cameron Indoor Stadium with the chant, “Have a drink, Norm Sloan, have a drink!”
That’s a fun story for me to recall and it has at least tangential relevance to my subject today. Our ability to have a drink in the future — of water rather than alcohol — is a serious concern on account of population growth, development, a lack of infrastructure and climate change (Jeremy Grantham deals with the problem in connection with the related food crisis here).
The world’s population is growing, and developing areas are demanding more clean water. The investment world has noticed and, although it’s in its infancy as a market sector, the water sector is a hot topic. Moreover, since 2001, the sector (depending upon how it’s defined) has beaten the S&P 500 by more than 10 percent annually.
Unlike many issues relating to commodities, it is a major American problem too. The Upper Colorado River Basin (Colorado River water is used by about 40 million people in the states of Arizona, California, Colorado, New Mexico, Nevada, Utah, and Wyoming and supplies water to my home area in southern California) could see deficits in its compact obligation to deliver water downstream as often as once every five years by 2040, according to a massive new Bureau of Reclamation study released this week. The study includes a 50-year Colorado River water supply and demand outlook and that outlook isn’t great. By that model, the river could be short by at least 3.2 million acre feet by 2060, and perhaps by as much as 8 million acre feet, according to the Colorado River Water Users Association.
Water — it’s a sector to pay attention to for 2013 and beyond. We’d all like to be able to have a drink now and then.