05/03/2012 08:54 am ET | Updated Jul 03, 2012

Water, Water Everywhere

"Water, water everywhere, nor any drop to drink," lamented Coleridge's ancient mariner. Investors looking for long-term growth prospects might want to consider the pending water crisis, and promising developments in conservation and desalination technology.

Worldwide water use is growing twice as fast as population. An estimated one billion people today lack access to safe water and by 2025 up to half of the world's people will be vulnerable to water shortages.

The world has an abundance of water, but 96.5 percent of it is ocean water which contains too much salt for human consumption or agricultural use. We face a worldwide water shortage and there are two potential solutions -- more effective water conservation and more cost effective desalination of ocean water.

There are a variety of techniques for consumers to reduce water consumption, such as more efficient taps, shower heads and toilets. A growing number of municipalities are committing to water conservation programs. Companies with breakthrough water saving technologies have unlimited potential.

Agriculture consumes 70 percent of the world's water. Many irrigated farms are making great progress by controlling irrigation more carefully, reducing loss of irrigation water to evaporation and capturing tail-water runoff for reuse. Here, too, is great potential for investors with innovative technologies for conserving agricultural water use.

Meanwhile, the race is on to find cost effective means of desalination. The two primary means of removing salt from seawater today are flash distillation and reverse osmosis, straining seawater through membranes, both of which are costly. Flash distillation costs about $4 per 1000 gallons, and reverse osmosis somewhat less. It doesn't sound like a lot, but it is much more than we normally pay obtaining water from traditional sources. Today, there are about 5000 desalination plants around the world producing 10-13 billion gallons of fresh water daily, or about 0.2 percent of world consumption. But that proportion is expected to grow rapidly in the years ahead. There is a flash distillation plant in Saudi Arabia producing 250 million gallons of fresh water a day. It is energy intensive, but then Saudi Arabia has a lot of energy to use.

Australia is another dry country in dire need of more fresh water. Roughly the size of the lower 48 states, total freshwater runoff in Australia is less than that from the St. Lawrence River. Recent droughts have exacerbated that nation's water woes. Australia has major desalination facilities operating near Sydney and Perth, and its major research agency has joined with nine major universities in pursuit of more cost effective desalination.

In our country, General Electric is out front in pursuit of more cost effective desalination techniques. Other companies and agencies are becoming involved in this quest as water shortages become more common. Within a few years, the quest for fresh water may supplant global anxiety about energy supplies. Prudent investors should be on the lookout for breakthrough technologies in water conservation and desalination.

Jerry Jasinowski, an economist and author, serve d as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements.