I don't offer many diaries here at DK, and this one may pass by unnoticed, and not well written; but I believe this is an important topic that all should consider. I will not be posting any photographs, or videos, realizing this will make the topic less attractive; but again, I hope those who stop by and read will understand at least why I consider this an important issue.
Keep it simple stupid is the method I will attempt at employing here, even if not successful. I live in South Florida. South Florida is an area where water has become a priority while most of the public isn't even aware the very water they need for survival is threatened.
As a region, Florida has many environmental issues. It would be easy for me to shout out the EVERGLADES, so there is my shout, but now follow me below...
Ok, so Florida is the home of the only subtropical wilderness in the entire USA, and most in the country call it the Everglades without realizing that the Everglades is a rather huge ecosystem that encompasses much more territory than the "National Park" some want to "save"; in fact, the territory encompasses most of the State (and the ecosystem relies upon tributaries outside of the state as well!) There ya go, I got the Everglades topic covered, well sort of and not really, but I felt it warranted a mention in this diary.
In keeping it simple stupid, let me just say that like much of the Southeast, Florida itself is emerging from a drought that encompassed many years, only it isn't quite clear if the drought is over. (Here in South Florida we didn't gain a lot of rainfall during the rainy season, and are entering the dry season a little parched.) If you don't live here, what you might have read about over the last few years is fires, water restrictions, Lake Okeechobee and of course, hey, there ya go, saving the Everglades.
If you do live here, what you might not have read about is "holy chit, we are running out of fresh, clean and cheap water! The problems are so huge, I doubt I can remember them all, but for example:
Most of our annual rainfall is dumped out to tide (meaning released into the ocean). Why? Because water managers are (and have been for decades) more concerned about development and flooding than the environment and hey drinking water.
Saltwater intrusion is a huge problem in South Florida. So much water has been withdrawn from the Biscayne Aquifer and Surficial Aquifer (the cheap supply) that the ocean is moving on in to replace what has been withdrawn.
Development has resulted in destruction of millions of acres of wetlands. Those wetlands and even open undeveloped land would normally recharge the aquifer system; but they have been paved over or drained for purposes of preventing flooding and impeding quality of life (huh?).
Pollution is another huge problem, mostly from agricultural production, but from people too...chemicals, runoff, pesticides, herbicides, dumping, landfills, sewage spills; you name it, it has happened.
Of course, Florida is not unique in these sorts of problems, and in terms of water, we get lots of rain (unlike other areas of the country). As an aside, but relevant, something, I have learned over the years is that electricity production, at least in Florida, trumps all other water needs, including what we need to survive, much less the environment. I believe this holds true throughout the country and perhaps the world as well.
So, moving on, and still without any videos or photographs, I have been following the "business" news of late, mostly because of all of those other issues normally discussed here and elsewhere, i.e. foreclosures, markets, the G-20, debts, deficits, bond markets, elections, taxes, and well, just business type stuff.
In that thought, I ran across this article yesterday in the "NY Times" that discussed water issues, bond markets, public utilities, debts, infrastructure, etc...
Water Scarcity a Bond Risk, Study Warns
By FELICITY BARRINGER and DIANA B. HENRIQUES
The municipal bonds that help finance a major portion of the nation’s water supply may be riskier than investors realize because their credit ratings do not adequately reflect the growing risks of water shortages and legal battles over water supplies, according to a new study.
As a result, investors may see their bonds drop in value when these risks become apparent, and water and electric utilities may find it more expensive to raise money to cope with supply problems, the study warned.
Looking at significant water bond issuers across the southern part of the country, the report concluded that Wall Street’s rating agencies had given similar ratings to utilities with secure sources of water and to those whose water sources were dwindling or were threatened by legal battles with neighboring utilities.
Among the seven cities and agencies examined in the report, Los Angeles and Atlanta were identified as the ones whose water systems faced the greatest risk in the years ahead.
You can keep on reading that story here:
http://www.nytimes.com/...
Yesterday, I searched for the "report" mentioned in the article and couldn't find it; but today, voila, here it is:
http://www.ceres.org/...
Ok, so it is 95 pages long, and quite boring, but oh so important. The report was issued because most public water supply requires capital investment, and most capital investment requires bonds, which means investors, and water is a resource that we all need for survival, but wait, there has to be some profit in it before investors will invest, and wait what about all of that debt, and feuds about water. (Am I the only one who read years ago that water will replace oil as the next true cause of world war?)
Some offerings from this investor report:
FOREWORD BY CERES
If we’ve learned anything from the recent credit crisis and resulting economic downturn, it’s to be concerned about hidden risks in assets owned by major investors across our economy.
Growing water scarcity in many regions of the United States is a risk running through municipal bond markets, one that must be addressed if we are to protect the strength of those investments and finance our nation’s vast water and power infrastructure.
Water powers our economy, fueling electricity production, manufacturing, agriculture and myriad other activities on which we depend. Many public water supplies in the West, Southwest, and Southeast are already being constrained by dwindling resources and growing demand that, in turn, are fueling regional water conflicts and tighter regulatory controls.
Public water utilities deliver more than 80 percent of the nation’s water to residential and industrial consumers and issue billions of dollars’ worth of bonds each year to fund infrastructure and ensure continued water delivery. Public electric utilities also depend on ample freshwater to generate hydropower and cool power plant equipment. The municipal
bond market depends on accurate assessments of water availability and quality—now and in the future—to understand these utilities’ ability to pay back the debt on those bonds.
WATER RISK TO PUBLIC UTILITIES
AND THEIR INVESTORS
Water is a linchpin of the U.S. economy, but its availability is being tested like never before. More extreme droughts, surging water demand, pollution, and climate change are growing risks that threaten water supplies in many parts of the United States. In some regions, water scarcity is already crimping economic production and sparking
interstate legal battles. The stresses are especially severe in regions experiencing rapid population and economic growth, including the West, Southwest and Southeast. Among the most immediate threats:
• The City of Atlanta’s water supply could be cut by nearly 40 percent as early as 2012 due to the ruling of a federal judge;
• Lake Mead, the vast reservoir for the Colorado River, is quickly approaching a firstever water shortage declaration that would reduce deliveries to fast-growing Arizona and Nevada;
• Hoover Dam, which provides hydropower to major urban centers in California, Arizona, and Nevada, may stop generating electricity as soon as 2013 if water levels in Lake Mead don’t begin to recover;
• More regular droughts and heat waves are likely to increase the operating costs of power generators in the Southeast, among them the Tennessee Valley Authority, which was forced to slash power generation for two weeks at three of its facilities in Alabama and Tennessee because of heightened water temperatures, costing the utility an estimated $10 million in lost power production.2
This report will demonstrate why investors should treat water availability as a growing concern for both public water and electric power utilities, and how associated risks are not currently reflected in public utility bond ratings. Because these ratings assess utilities’ ability to repay debt, their failure to include growing water risks neglects a key
factor essential to the financial viability of utilities—and to the institutional and retail investors who own their bonds.
Water shortfalls can undermine water and electric power utilities’ short-term liquidity and financial leverage—key elements of credit risk. Yet water risk “stress tests” and other evaluative measures are not currently being used by ratings agencies.
This report demonstrates that in order for utility bond ratings to convey a public utility’s true credit risk, the rating opinion must incorporate the system’s vulnerability to water availability risks. Today’s credit rating agencies fail to incorporate these metrics consistently, leaving investors with insufficient information for managing their potential
exposure in holding such bonds.
The report provides a quantitative framework for evaluating water risks of public utility bonds. Eight investment-grade utility bonds are analyzed in the report, all of them issued by utilities in regions facing water stresses, including California, Texas, Arizona, Alabama,and Georgia.
The report includes specific recommendations for water and electric utilities, underwriters, investors, and rating agencies to better evaluate, quantify, and disclose water risks in utility bonds.
I just wonder if the public is aware of the fact that what we need for survival, what the environment requires for survival, is so dependent on the investment and profit needs of the "market".
From "The Rime of the Ancient Mariner"...:
Water, water, every where,
And all the boards did shrink;
Water, water, every where,
Nor any drop to drink.
The very deep did rot: O Christ!
That ever this should be!
Yea, slimy things did crawl with legs
Upon the slimy sea.
About, about, in reel and rout
The death-fires danced at night;
The water, like a witch's oils,
Burnt green, and blue and white.