There was a rather curious article in the Financial Times on Wednesday February 27th. 2008. The headline was " Water fears lead Saudis to end grain output." The gist of the story is that due to concerns about the desert Kingdom's scarce water resources they intend to halt wheat production by 2016 and import the 3.4 million tons they presently require. Aside from the implications for wheat prices (which are already at new highs) what does this say about the water resources for the entire region. The byline was Andrew England in Cairo and Javier Blas in London.
This is the link to the story but you will have to log in to see it. http://www.ft.com/cms/s/0/029b7dfe-e4d7-11dc-a495-0000779fd2ac.html
Should investors be concerned about this?
Are there enough water resources available to sustain the dramatic growth of consumption that is and will be taking place in Dubai for example?
Do any investors or potential investors in this area have access to data that that would reassure other potential investors?
Is this one of those things that could destroy value in the medium term!
My idea would be to use some of that water.
Getting the fish out should not be too difficult, and to remove the salt perhaps, given time, I could come up with some sort of process.
I think I would call it Un-salt-igration, or something like that. They didn't happen to give a contact address for the guy in charge of water in Dubai, did they?
I think I ought to let him know.
I think the more likely situation is not that the Saudi's are frightened of the water running out but that they have decided that by 2016 it will be cheaper to import wheat than grow it themselves by the time you factor in the cost of producing the de-salinated water for irrigating the home grown crop and that as wheat prices fall they will gradually move over to importing more and more of it, thereby saving themselves money on water production.
SM
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