Before we get started I just wanted to send a shout out to my in-laws, on the occasion of their wedding anniversary. Don’t say we never get you anything!

Israel is second to none when it comes to innovative technology for the water industry. From drip irrigation, to the water quality testing solution that was used in Beijing to keep the water events safe, Israel has been at the forefront of developing these technologies. It makes it all that more frustrating and shocking that domestically, Israel has been fast approaching a water crisis. With the country’s main water source at dangerously low levels and few calls for water conservation, a crisis seemed to be on the horizon.

Well finally a solution maybe brewing. Bids have been made to build and operate Israel’s 4th desalination plant. Funny that the country that developed the technology, has for the most part exported it to other countries to solve their water problems, but has been slow on the uptake to tackle the domestic issue. (But there is no use crying over spilled milk) According to Globes: “…that at least four or five consortia will likely submit bids today in the presorting tender to build and operate Israel’s fourth desalination facility at Soreq. The 100-million cubic meter a year plant will cost NIS 1.5-2 billion($500 million). The facility is due to come on line in 2012.”

Let’s just assume that it won’t be completed on time, and that it will come on line in 2013-2014. Still, it will go a long way in solving the domestic Israeli water crisis. Israel faces many challenges to its’ water supply from neighbors. Jordan, Syria and Lebanon, all have the ability to tinker ( to put it mildly) with the Jewish state’s water supply. Another water desalination plant will help Israel become more ‘water independent’ and self sufficient, which will also be crucial in limiting geopolitical risk.

It also wouldn’t hurt if some prayers would be directed to above to provide the country with some much needed rain.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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You turn on the faucet, and-voila-you have a drink of water! Those of us who come from western nations tend to take water for granted. However, after a few years in Israel, we appreciate the fact that whatever water we receive is a gift. The media is filled with reports about how the world is running low on crude oil, but not too much attention is paid to the growing water crisis.
Water as an Investment
As abundant as it appears to be, only about 20% of the global population has access to running water.  Additionally, only one-third of the world’s population has access to clean water. In fact, many estimate that in 40 years, more than four billion people, half the world’s population, will be living in areas that are chronically short of water. Moreover, economic development has placed greater pressure than ever on the supply of fresh water. In 1900, the global annual water use per capita was 350 cubic meters. In 2000, that number had grown to 642 cubic meters. In the United States alone, the demand for water has tripled in the past 30 years, while the population has grown by just 50%.
China, Africa and the United States
The need to increase access to clean water around the world has led some to call water the “oil” of this century. As the world becomes more and more developed, wealthy countries will not only be able to afford, but will also have a moral obligation to provide this basic necessity to their citizens. China and India, which are experiencing economic booms right now, are therefore investing hundreds of billions of dollars in improvements to their water infrastructure, while many sub-Saharan African countries that are beginning to show signs of economic growth will soon need to begin to provide basic resources to their population. In all three of these examples, these are huge populations that are in their infancy when it comes to the basic needs of their citizens. They have been steeped in poverty for decades, and they are emerging only now. As such, they need to start from scratch, which means access to water and building roads.
In terms of the United States, the Environmental Protection Agency estimates that up to $1 trillion will have to be spent on upgrading U.S. water infrastructure over the next few years. The country’s aging infrastructure, much of which is more than 100 years old and has long exceeded its useful life, is in a state of utter disrepair. In the United States alone, the network of drinking water pipes extends more than 700,000 miles - more than four times the length of the National Highway System. This all adds up to the need for new reservoirs, better water canals and more efficient irrigation systems. Israel happens to be a global leader in the innovative technology needed for making such repairs.
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While many experts believe that there will never be substitutes for water, I tend to take a much more optimistic view of things. All kinds of technologies are being created to tackle the issue before it turns into a crisis. If we were to fast-forward 50 years, I am sure that we would be shocked at the technological advances made. Investors should speak with their financial advisers to see what options are available to invest in the water industry.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
www.IsraelNewsletter.com

In today’s issue of the Israeli financial paper Globes, Merav Ankori, has an interesting article on how the US Army is looking to invest in Israeli water technology. Apparently the US Army invests sizable amounts of money in private equity, and one of the funds, Onpoint Technologies, is managed by Arsenal Venture Partners.  Christopher Fountas, Arsenal managing partner and Onpoint director, is in Israel looking for local water technology companies.

In an interview with Globes, Fountas said, “We manage investments in technologies for the US Army to meet needs that arise in wartime, such as during operations in Iraq, and for the government and industrial markets. We’ve come to Israel with the understanding that it’s a global leader in water technologies.”

While it’s true that Israel is a global leader in exporting all kinds of water technologies to the world, it’s ironic that Israel is facing a water shortage. With below average rain over the last few winters, the country’s main water sources are at dangerously low levels. For Israelis the summer is sure to bring calls for water conservation. Why? Because of bureaucracy. Israel has done next to nothing to shore up its’ own water supply. With all the technological advances including desalination and drip irrigation, Israeli bureaucrats and legislators, as usual, were asleep at the wheel. While Israeli companies were out making millions of dollars selling their technology abroad, a crisis developed locally.

At least US soldiers will be drinking clean water. L’chaim!

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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