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China: Case Study for Global Water ETF

by: Carl T. Delfeld August 20, 2008 | about stocks: CGW    
Carl T. Delfeld

Carl T. Delfeld

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As the US and China head to the final few days of the Beijing Olympics in a dead heat for medal superiority, a much more lasting and challenging story is China's lack of water, which threatens its mandarins number one priority - continued strong economic growth.

The water shortage also highlights growing interest in Claymore S&P Global Water ETF (CGW).

Peter Waldman in "China's Big Drain" points out that even in wet years, peasants in the highlands north of the capital are no longer permitted to cultivate rice because growing the staple requires too much water. Instead, the runoff from their lands is captured for the Miyun Reservoir, Beijing’s last repository of unpolluted surface water.

And the Olympics are only adding to China’s water problems. To ensure enough potable water for visitors, Beijing is tapping 80 billion gallons of so-called backup supply from four reservoirs in neighboring Hebei Province. Yet water levels in these reservoirs are already dangerously low. China’s water technocrats are scrambling to build pipelines, canals, and water tunnels farther and farther into rural areas.

The water routed from Hebei to the Olympics site was intended to go to Lake Baiyangdian, an environmental jewel with its own drought problems. To feed the lake, China is pumping 40 billion gallons of water from the Yellow River in Shandong Province, 250 miles away. For every gallon from the Yellow River that arrives at the lake via the 1,400-year-old Grand Canal, nearly four gallons are lost along the way, according to the Dazhong Daily, a state newspaper in China. Among China’s provinces, Hebei ranks near the bottom for available water resources in per capita terms, at just 12% of the national average.

Most disconcertingly, Beijing itself, with a population that has exploded from 2 million in 1948 to 18 million today, is slowly sinking. And America has its own water issues, Trang Ho of IBD reports that 43% of the country is experiencing abnormally dry to exceptional drought conditions, according to the U.S. Drought Monitor.

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This article has 3 comments:

  •  
    Aug 20 05:40 PM
    My take on water and the potential investment...

    20smoney.com/2008/07/0.../
    Reply
  •  
    Aug 20 06:39 PM
    Your analysis to too limited. World wild it is water and oil that are the limiting factors on human kind. In So Cal we are attempting desalination at a cost that is 500% of the current price or water, and about equal to its true marginal costs. The water wars were fought in the old west and they are raging again between the stupid government agencies that allocate water (badly) and the developers who cheat (wildly). Yes, we are in deep problems with water in all respects. Good post, but a little behind the curve.
    Reply
  •  
    Aug 21 08:54 PM
    Very timely and useful article..I have no idea what Whidbooby is rambling about...or what disgusting third rate garbage User number something is pedaling..Please follow up with some additional analysis....
    Reply
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