Blaine Townsend btownsend@trilliuminvest.com

Natural resources fuel the world’s economies and as a result much of the world’s war, strife, and politics. But the world ain’t seen nothing yet. The capital markets are now vying to control the planet’s most precious resource: water. How the issue of water is resolved will test whether capitalism is a mirror of democratic ideals or just a tool of greed and power.Today, less than one percent of the world’s water is potable. The rest is either in the ocean, frozen or toxic. By 2025, fifty percent of this small supply will be used for commercial purposes (agri-business and manufacturing). This will leave 3.6 billion people without enough water for basic health and hygiene. The environmental, social and public health implications of this scenario are frightening. As is the potential to exploit this scarcity by market forces. We’ve seen this happen already. In 1998, for example, Bechtel Group Inc.’s control of a water system in Bolivia led to widespread rioting by a population too poor to pay Bechtel’s prices. Not surprisingly, when Enron entered the water business that same year, it actually stated it was doing so to “exploit the worldwide move to privatize water.”But the privatization of water systems is not the most onerous issue relating to water use. Rather, it is the simple yet awesome question of whether water is a basic human right or an economic commodity like timber or oil. Since everything dies without water, and the capital market system is designed to deplete natural resources as quickly as possible, it seems obvious that leaving water to the vagaries of the markets is a very bad idea.Unfortunately, it is a bad idea that has already been put into to practice. Trade agreements like the North American Free Trade Agreement (NAFTA) and quasi-governmental trade bodies like the World Trade Organization (WTO) are based on the notion that water is a commodity — and not a basic right. This means, for example, that if the citizens of California tried to ban the bulk export of desperately needed local water, their attempts to do so could be challenged by water exporters in the dubious courts of the WTO or NAFTA. It also means that a farmer’s well might go dry because a foreign company drained an underground water system two states away and shipped the water to customers in the Middle East or China. The growth of the global economy will be tied to water. Investment bank dollars that long funded oil pipelines and oil-filled tankers will soon flow to similar projects for water. Companies that previously drilled for oil will begin to drill for water. Companies that traded energy will begin to trade water. What should be obvious in this transformation is that people with money will pay more and more for this water, and anyone poor or anything that swims, flies, gallops or grows will get less and less.Water is not a commodity. It is a basic human right. Any notion that suggests otherwise needs to be rejected. This is not a right the President should be allowed to trade away under “Fast Track” authority. An individual’s right to clean water should be protected with the same zeal as the American Civil Liberties Union protects the right of free speech or the National Rifle Association protects the right to bear arms. Only then will water’s use in the capital markets be restrained. After all, who needs free speech if your mouth is too dry to talk? And who needs a gun if the deer have already died?

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