Day Zero Could Mean Troubled Waters Ahead

Day Zero.

It sounds like something from an apocalyptic scenario.

But it is very real.

Day Zero is what the South African city of Cape Town has called the day the city runs out of water.

Cape Town depends on rain for water, but for the last three years, the city has suffered a severe drought.

Only now has it begun to build desalination plants to take water from the ocean, but it is a slow process.

The city has also experienced large immigration growth. It has doubled its population in the last 30 years. Four million people now live in the South African city.

The dams are now at a critical 22.9%, according to the City of Cape Town.

The city is getting closer to running out of water.

To avoid Day Zero the city has encouraged residents to save water. Only 50 litres should be used a day, as those who spend more face heavy fines. Restrictions also apply to bottled water.

Residents have been reducing consumption, and the city hopes that the rainy season — which starts in June — will fill up the dams.

But levels are still critical.

Once the dams reach 13.5% capacity, the city will announce Day Zero. That’s the day the taps will run dry, and residents will have to queue to get their daily 6.6 gallon ration of water.

Cape Town could be the first city to run out of water. Ironic, considering it is surrounded by water.

Looking at our blue planet, you may be thinking there is water everywhere. According to the US Geological Survey, water covers 71% of the Earth’s surface.

Yet water is scarcer than you think.

Check out the following drawing, which shows in 3D the relative amount of Earth’s water in comparison to the Earth:

3D of water on Earth 20-03-2018

Source: US Geological Survey
[Click to enlarge]

The large blue sphere represents all water on, in and above the Earth. In real life it would be about 860 miles in diameter.

Why is it so small? Well, it’s because each sphere represents volume. Compared to the dimension of the Earth, oceans coat the planet with a small layer.

The smaller blue sphere to its right represents all of Earth’s fresh ground water, swamp water, rivers and lakes. Much of this water is underground, unavailable to us.

Do you see the third bubble? The tiny blue dot over Atlanta, above Florida?

That represents the fresh water contained in all lakes and rivers of the planet — what we use every day.

The fact is that 96% of the water on Earth is salt water. That is, it cannot be used for drinking or agriculture without expensive desalination plants. We can only use 4% of the water on the planet.

Out of that 4%, 68.7% is in the icecaps.

Australia is no stranger to water restrictions

In 2000, it suffered a big drought that affected most of southern Australia.

The millennium drought left Melbourne’s water supply almost dry. Since then, Australia has been investing in infrastructure. With recycling and six desalination plants to provide for major cities.

Yep, recycled water. That is, recovering wastewater for drinking.

Would you drink recycled water?

Wait. Don’t answer that.

The fact is that it doesn’t matter, you may not have a choice. 

While Australia has invested in water after the millennium drought, we are still not out of the woods.

Like Cape Town, Australia has also had large population growth.

And, as executive director Adam Lovell from the Water Association of Australia told ABC, most Australians could be drinking recycled water in the next 10 years. Especially if you live away from the coast and desalination plants.

As the ABC article states:

To grasp how real this prospect is, you only need to look at the population forecasts.

In Sydney, when Warragamba dam is full, the city has about four years worth of water supply.

Double the population, as is forecast in 50 years, and that falls to two years worth of water supply — and that is only when it is full, a scenario that might become a lot less frequent with climate change…

In Sydney, most of the 725,000 new dwellings that will need to be built by 2036 to keep pace with population growth will be built in the west, according to the Greater Sydney Commission.

The compass direction changes, but the trend is the same for all coastal capital cities: population growth is moving away from the coast and away from desalination plants.’

Desalination has been somewhat successful, but it is expensive and requires a lot of energy. As an added problem, the process releases chemicals into the drinking water supply.

Recycling is easier and cheaper

Australia already recycles some of its water, as you can see in the chart below.

Australian wastewater recycling 20-03-2018

Source: Australian Water Association
[Click to enlarge]

So you may have to get over your initial reaction to drinking recycled water.

But, in my opinion, Australia won’t be the only country that has to battle with water supply.

As you may already now, the world’s population is growing…at an incredibly fast rate.

It took humanity 1,800 years to reach one billion, but only over 200 years to reach seven billion, which is our population today.

It’s expected that we will reach nine billion by 2038, and the UN projects we will reach 10 billion by 2056.

According to Live Science Magazine, many scientists believe that nine to 10 billion marks maximum capacity…as far as Earth is concerned. Once we reach that, there is no more room.

The fact is agriculture uses about 70% of the world’s fresh water.

Even with improved technology, there is a limit on how much food we can produce and, of course, we have a limited supply of freshwater.

Only that little tiny blue dot floating above Atlanta for all seven billion of us…

It is hard to think that someday we may run out of something that falls freely from the sky — a precious resource that we currently flush down the toilet.

But, there is no substitute for water, and there is no life without water…

Whatever the case, water is our lifeline, and it will become a vital topic for debate in the future.

Kind regards,

Selva Freigedo,
Editor, Markets & Money

Selva Freigedo is an analyst with a background in financial economics. Born and raised in Argentina, she has also lived in Brazil, the US and Spain. She has seen economic troubles firsthand, from economic booms to collapses and the ravaging effects of hyperinflation, high unemployment, deposit freezes and debt default. Selva now writes from her vantage point here in Australia. She is lead Editor at the daily e-letter Markets & Money. And every week, she goes through each report and research note produced by our global network of trusted advisors to find the best investment opportunities for you in Australia and overseas. She packages these opportunities for you in Global Investor.

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