Will India Run Dry?

The thought of waking up in the morning for that first cup of joe, only to realize there's no water to brew it with, is a scary one for me. I've been spoiled with plenty of potable drinking water for my morning caffeine needs. But water scarcity is a daily reality in many parts of the world.

China's water woes, exacerbated by its rapid growth, are well-publicized. In the last decade, there have been years when the mighty Yellow River failed to reach the sea before running dry. Water supplies in densely populated northern China are limited, and industrial and agricultural demand is high. In response, China has taken on the ambitious South-North Water Transfer Project to divert water from the Yangtze River to the Yellow. While the project has faced many delays, Tri-Tech Holding (Nasdaq: TRIT  ) and others expect to see greater sales from the project.

India's water situation
But China isn't the only emerging country with a water scarcity issue. India has its share of water woes, too. However, the scarcity of water in India has less to do with resource scarcity, and much more to do with storage, distribution, water treatment facilities, and the failure of other infrastructure to keep up with growth.

In some cases, the pipes and infrastructure to get water to homes and businesses are in place, but in need of repair, compromising the pressure or water quality. In other cases, settlements have sprung up where infrastructure isn't in place, and water delivery trucks and other ad hoc solutions try to close the gap. Water deliveries and the greater availability of bottled water from PepsiCo (NYSE: PEP  ) and other beverage makers are short-term fixes that help lessen the problem, but they aren't the long-term solutions the country needs.

More storage and pipes
India has historically had plenty of water flowing through its rivers, but parts of the country get most or all of their rain during the monsoon season. According to a report from The World Bank, India gets 50% of its rain for the year in just 15 days. These heavy rains provide the water necessary to support agriculture, while replenishing rivers and groundwater. With so much supply coming in such a short period, the ability to store water is critical, but India's capabilities aren't up to the task. Where some developed nations can store 5,000 cubic meters of water per person, India can currently store only 200.

Using dams to increase the country's water storage would help India keep more of its valuable monsoon rains, and give the country additional hydroelectric power opportunities. However, storage tanks, treatment, and distribution infrastructure are also needed.

Plenty of companies are eager to provide solutions to different parts of the problem. General Electric (NYSE: GE  ) , 3M (NYSE: MMM  ) , and Nalco (NYSE: NLC  ) are already helping to solve supply, filtering, and treatment needs. Local construction firms should also benefit from the build-out, and opportunities should emerge for Infosys (Nasdaq: INFY  ) and Wipro (NYSE: WIT  ) to service and manage utility systems at home, just as they do abroad.

Still, getting this infrastructure in place, and repairing existing systems, requires funding. While India's economy has grown rapidly in the last 20 years, the country has traditionally charged below-average rates for water, and subsidized its agricultural water use to ensure an ample domestic food supply. Arranging the funding and development India needs will require difficult discussions about the true cost of water, and tough decisions that better allocate that cost to all consumers.

Getting the scoop on the ground
The good news is that water from the Himalayas and its monsoon rains provides India with access to enough water to quench its growing thirst. With time, effort, and funding, India's water problems could become a thing of the past, or at least greatly alleviated.

To assess the opportunities in water infrastructure and other industries, our Global Gains research team is traveling to India in early December to meet with company management teams and economic experts, and to get the lay of the land.

If you're interested in getting the details on all the ideas we dig up, simply enter your email in the box below to let us know where to send our free trip dispatches from the field.

Nathan Parmelee does not own shares of any company mentioned. 3M is an Inside Value selection. PepsiCo is an Income Investor recommendation. The Fool has a disclosure policy.

Read/Post Comments (8) | Recommend This Article (21)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 25, 2009, at 11:55 AM, alasker wrote:

    China/ India/ Tibet- most of southeast asia depends on the water that comes off the tibetan plateau.

  • Report this Comment On November 25, 2009, at 4:30 PM, sleepingnuke wrote:

    I've been looking for ways to invest in the water play in India and China. I own CGW, PHO, and PIO already but have no exposure to "Chinda's" water play.

    Water is the most undervalued commodity there is, but the most crucial to life. I live in SoCal and we're in an eight year running drought. A 12 Billion Dollar bond is being voted on to improve our water infastructure and build water reclaim areas to collect snow melt run off. Theres on 35 million people in this state.

    It is going to take hundreds of billions to bring China and India up to par in terms of water resources. I am seriously looking forward to what my favorite fools dig up.

  • Report this Comment On November 25, 2009, at 7:09 PM, topsecret09 wrote:
  • Report this Comment On November 25, 2009, at 7:15 PM, xetn wrote:

    I am living in China and the biggest problem with the water is pollution. Up until recently, the Chinese have not tried to keep supplies clean but used (and still do) rivers as dumping sites. This includes the South China Sea which has been used as a septic.

    The water that comes out of the tap is filled with dirt and I boil and filter it before drinking or cooking.

    As for ag use, they are indeed having a problem and the concern is for a world-wide shortage of rice. That is not to say that the government has not taken steps to solve these problems.

  • Report this Comment On November 25, 2009, at 8:15 PM, Radiance08 wrote:

    Water is always an issue and critical.

    Who would have predicted we're all running around with "bottles of water".

    Just go to the Bahamas and they all collect water on their roofs to be stored, filtered and used at private homes.

  • Report this Comment On November 25, 2009, at 8:38 PM, nogrthinker wrote:

    So, what's the model? Are we looking at a stable population in India and China? Or is the population in those countries going to double in the next 50 years? How about the World.

    What's our future? Everyone living in high-rises with "vertical Growth Mediums" (Valcent) taking up all the open space in between to gather sunlight? Might as well live on the moon?

  • Report this Comment On November 26, 2009, at 1:48 AM, Karshish wrote:

    The source of much of the feed water for both India's and China's rivers is glaciers in the Himalayas. By melting the glaciers in the Himalayas, global warming will severely diminish the flows in the rivers in the Indus Basin and the Ganga-Brahmaputra Basin. This will affect the water supply to about 4 billion people.

  • Report this Comment On November 26, 2009, at 12:08 PM, devoish wrote:


    My understanding is that glaciers store water that falls during wet seasons and slowly distributes that water during dry seasons. The loss of glaciers due to global warming will result in more severe seasonal flooding followed by seasonal drought.

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