EDITOR: | January 25th, 2016

H2O Innovation Fighting the Water War

| January 25, 2016 | No Comments
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Water-WarsYou took it for granted today. You used it, saw it in a bottle at the grocery store, turned it on, turned it off, washed with it, flushed it. It’s almost impossible not to have dealt with this today. But did you think about what you were doing? And if you did think about it, would you have cared?

“Human life, as with all animal and plant life on the planet, is dependent upon water. Not only do we need water to grow our food, generate our power and run our industries, but we need it as a basic part of our daily lives – our bodies need to ingest water every day to continue functioning. Communities and individuals can exist without many things if they have to – they can be deprived of comfort, of shelter, even of food for a period, but they cannot be deprived of water and survive for more than a few days.”

That’s from The Water Page, an independent initiative dedicated to the promotion of sustainable water resources management and use, and it’s inarguable that life on this planet needs water to survive.

Earth’s water is located in aquifers, the oceans, rivers, glaciers, permafrost, the atmosphere, the soil, lakes and inside biological entities like us. It seems like an unlimited resource. Seas are vast, and humans have explored less than 5% of the oceans.

But not all water is the same, it isn’t everywhere, with the same accessibility to all. A scarce resource historically has resulted in conflicts involving use and access. To avoid these conflicts we need to find ways to make sure every person has daily access to the water needed.

The Pacific Institute in the late 1980s created an index to track and categorize events related to water and conflict, to understand the connections between water resources, water systems, and international conflict. There is a table and a timeline, each of which can be filtered by region, conflict type, and date range. There is also an interactive map showing the geographic locations of each historic water conflict, telling engrossing stories of conflicts large and small.

I didn’t know that in 1748, a ferry house on Brooklyn shore of East River was burnt down, likely as revenge by Brooklynites for perceived unfairness in the East River water rights. History repeated itself 250 years later in 2007, when a 36-year-old Australian killed a man during a fight over water restrictions in Sydney. A number of incidents were reported following ten years of drought and water restrictions, leading authors to suggest a “link between persistent urban water restrictions and civil unrest.”

One of these authors, Wendy Barnaby, argued in 2009 that while water wars were a “myth”, she acknowledged that water rights and usage were frequently one of the major factors leading up to the conflict, although never the main driver of a war.

She and the Pacific Institute might be right. In fiction, Chinatown, the 1974 multiple-award winning movie starring Jack Nicholson and Faye Dunaway, dramatized the California Water Wars pitting farmers and ranchers first against the Paiute, and then against the water needs of the growing city of Los Angeles. This real-life conflict began in the mid-1800’s. It has seen embezzlement, a bank collapse, dynamite, armed assaults, desertification in the Owens Valley, destruction of various ecosystems and decades of litigation. These battles continue today with California’s drought conditions affecting the price of food being shipped across North America.

More recently, the 2008 James Bond movie with Daniel Craig, Quantum of Solace, based its plot on an intended coup d’etat to seize control of Bolivia’s water supply. “Greene isn’t after the oil. He wants the water.”

That brings us to the real-life environmental disaster in Flint, Michigan, where in 2014 city planners mismanaged the water supply by disconnecting from Detroit’s water line to save money and began drawing water from the Flint River. The problem was, improperly treated water from that river allowed lead to leach from the pipes, bringing the lead directly into people’s homes and diets. The residents cooked with it, showered in it, drank it, fed their children with it.

Lead toxicity affects every organ. The short and long term implications for Flint’s residents, for the legal system, for the entire health care system, are open-ended.

Companies that can provide a clean reliable water source will reduce the number and severity of conflicts. The locals win twice: once by not suffering through the stress of a conflict, and second by having ready access to reliable potable water. The company wins not only by executing on its plan but by being able to say it made a difference.

H2O Innovation Inc. (TSXV:HEO | OTCQX:HEOFF) falls into this category. It has been winning contracts across North America for potable water treatment systems, and in so doing, has been easing tensions in areas with high conflict potential. Others have conducted a more in-depth analysis of the company’s business model and financial results – I’m more interested in the social side of the product.

In California, the company has been addressing the drought conditions by treating waste water and indirectly making it potable, and by building new desalination plants. Treated water was available on-site using the company’s equipment within four months after H2O Innovation received a purchase order from Cambria District in California. With this new UF-RO water treatment system in place, Cambria was quickly able to face the challenges brought by the drought affecting central coastal California. The potential for civil unrest fell and fresh water flowed. People’s standards of living increased.

Clean potable water adds to civil stability, reducing the opportunity for conflict among consumers competing for an otherwise scarce resource. Companies like H2O that can execute on a business plan, that pay taxes locally and corporately, that create hundreds of jobs, all the while enhancing the greater good, should be applauded. It’s a victory every time a new entry does not go into the Pacific Institute’s index.


Peter Clausi

Editor:

Mr. Clausi is an experienced investment banker, executive and director. A graduate of Osgoode Hall Law School called to Ontario's bar in 1990, Mr. Clausi ... <Read more about Peter Clausi>


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