Bringing Water to LA Becoming More Expensive

Roman Aqueduct

Among America's great engineering triumphs is the transportation of water to Los Angeles. To accomplish the task of bringing fresh H2O to arid LA, an assemblage of aqueducts, power plants, and reservoirs was created, much of it a century old today. The collection goes about its business every day, providing blue gold to the millions who call Los Angeles home. One difference between Westerners and East Coasters is that the West respects water, while Northeast Corridor residents take water for granted. Another distinction is that bringing water to LA is an expensive proposition. It's going to become increasingly costly in the coming years, partly thanks to California's new cap-and-trade regulations, and LA's loss of certain electric resources.

I've had an interest in aqueducts ever since I lived in Rome. One aqueduct was especially memorable. It was an arched structure that stretched across the flat Roman plain for miles. It was as if someone drew a straight line from Point A and Point B and had it carry water. The aqueduct was easily seen from the train that went between the Eternal City and Naples. Its simple, pleasing design looked best at sundown, when its terra cotta-colored stone gracefully partnered with the setting sun.

Baths of Caracalla

The ancient Romans did not take water for granted. They became skilled at finding it, transporting it, and leveraging all its qualities. Roman baths were a step forward for health care. Their ardor for bathing led them to build the Baths of Caracalla, so that the body and soul could be refreshed. They had the right idea, and would have scoffed at the idea of a gym.

In a way, Los Angeles has continued the Roman skill. The LA Times recently ran a thoughtfully story on water and LA's future. It provided a thin overview of the issues involving water, and some directions for going forward. Some details, especially about the pipeline that crosses the desert, make for intriguing reading.

Water Insecurity

The BBC reported a story originally appearing in the publication Nature regarding the world's water supply. The gist of the article is that global fresh water supplies are dwindling at a troubling rate. The researchers wisely split their analysis into two gross categories: "natural" and "managed" water supplies. The latter refers to reservoirs and other human interventions to maintain sufficient potable water. The former considers streams and other conduits that have flowed unimpeded for centuries.

Interestingly, the developed nations in the Northern Hemisphere have stressed their aqueous natural resources. Their supportive infrastructure manages to supply enough water for their demanding industries and growing populations. Developing nations more or less face challenging conditions in which the deterioration of their water supply will only accelerate.

In recent years, some writers and financial analysts have characterized water as "blue gold." I entirely share that perspective. There is a finite -- and declining -- supply of fresh, potable water in the world. Global population is expanding. Demands on available water supplies will most likely increase to a grim extent. China, for example, is staring at some bleak social and economic consequences, thanks to its relentless degradation of its water resources.

One problem with taking water issues is that the northeastern United States, where many of the nation's leading thinkers and financiers are located, doesn't have an obvious water supply issue. This region has managed to dodge the nastier outcomes of drought -- so far. It has also done next to nothing to preserve arguably its most valuable commodity.

Curiously, the nation that best understands water management is France. There are a number of French firms specializing in this area. One can invest in some of them, either via ADRs or, if your portfolio structure and prosperity permit, purchase them directly from the Paris Bourse. You'll have to do your own homework on this topic. When you do, drink plenty of water -- while you still can.

The photograph shows Minnesota's Lake Itasca, the source of the Mississippi River.