Date registered: Sep 2004
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RE: Our envirnomnet
There is no more fresh water on Earth today than there was 1 million years ago. Yet today, 6 billion people share it. Since 1950, the world population has doubled, but water use has tripled, notes John Dickerson, an analyst and fund manager based in San Diego. Unlike petroleum, he adds, no technological innovation can ever replace water.
China, which is undergoing a vast rural-to-urban population migration, is emblematic of the places where water has become scarce. It has about as much water as Canada but 100 times more people. Per-capita water reserves are only about one-fourth the global average, according to experts. Of its 669 cities, 440 regularly suffer moderate to critical water shortages.
Although not widely appreciated, water has been recognized by conservative investors as an investment opportunity -- and it has rewarded them. Over the past 10 years, the Media General water utilities index is up 133%, double the return of the Dow Jones Utilities Index. Over the past five years, water utilities are up 32% -- clobbering the flat returns of both the Dow Jones Utilities and the Dow Industrials. One of water's key long-term value drivers as an investment, according to Dickerson: Demand is not affected by inflation, recession, interest rates or changing tastes.
Virtually all of the U.S. water utility stocks are regulated by states and counties, which makes them pretty dull. Governmental entities typically give utilities a monopoly in a geographic region, then set their profit margin a smidge above costs. Just about the only distinguishing factor among them are the growth rates of their regions and their ability to efficiently manage their underground pipe and pumping infrastructure. Among the best are Aqua America (WTR:NYSE - commentary - research) of Philadelphia, Southwest Water (SWWC:Nasdaq - commentary - research) of Los Angeles, California Water Service Group (CWT:NYSE - commentary - research), based in San Jose, Calif.; and American States Water (AWR:NYSE - commentary - research) of San Dimas, Calif.