Hedge Fund Has Water Rights for Three Glaciers

A Canadian hedge is hoping to make good returns off of water rights it bought for three glaciers in Northern Europe. Seems like these rights also last 95 years, so I'm curious what kind of price was paid. The hedge fund plans to fill tankers with water and to eventually sell to those in need. They are making a bet that we'll see an expansion of market-based pricing systems whereby demand for private owned (and market-priced) water grows.

Otto Spork has hired three glaciers. He is siphoning off the melting glacier water, and plans to put it in tankers and ship it to thirsty companies and countries across the globe.

Water is the new oil, says Mr Spork, chief executive of Canadian hedge fund Sextant Capital Management: "Two years ago we were looking for the next big commodity and settled on water. It was under appreciated, mispriced, and growing scarce." ...

Sextant bought 95-year water rights to three glaciers in northern Europe, all close to ports. One glacier will be used to create bottled water; the other two will provide bulk water transported to customers in 24,000 litre containers or supertankers. Mr Spork plans to float his glacier-owning companies in the next six months

Oh wait. So perhaps he's actually looking to make money off of the water fund concept, rather than the actual water assets. Maybe he's going for a quick flip. We should be at least somewhat skeptical at first blush. Nevertheless assuming he's genuine, water shortages are a pretty interesting long term trend and there's probably good money somewhere along the line.

Merrill Lynch estimates that by 2025 two-thirds of the world's population could be living in conditions of "water stress", which would have a big impact on farming (which uses 70 per cent of the world's fresh water), industry (22 per cent) and day-to-day living (8 per cent.)

Statistics like that have persuaded the "commodities king" Jim Rogers, who has a track record for timely and lucrative investments, of Mr Spork's point of view. ...

Legendary oil investor T.Boone Pickens agrees, and has spent $100m buying up water rights in Texas and building a 250-mile pipeline to the city of Dallas, where he hopes to sell it.

But water is not yet traded as a global commodity. It is owned, by and large, by governments, not by private companies. It is heavily subsidised in many countries, particularly for farmers, exacerbating waste and inefficiency. Prices vary hugely across the globe, and often the poorest people without access to municipal water pay huge premiums.

Water needs to become more expensive, says Mr Rogers, and the free market is the best tool for the job.

An interesting article worth a full read. Personally, I have thought that things like water purification and desalination technology would be the most interesting angle, avoiding the political complications of trying to hike the prices of privately owned water. If anyone knows a legitimate water technology pure play, feel free to tell us about it in the comments.

Comments

[mrsquare]

Not sure if it qualifies as a pure play, but my broker pointed me to some midsized, publicly traded water engineering firms recently. It looked like current work was primarily fixing & upgrading infrastructure for local water systems, but I have to imagine that any sort of water "market" will have to involve plenty of engineering for collection & distribution, like Mr Pickens' 250-mile pipeline.

I won't name company names but they'd be easy enough to find for anyone interested.

[Hardhead]

Thanks - I stole your article and posted it on my blog - but the credits are there. Good post.

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[Forex View Blog]

Now, aren't Hedge fund suppose to do market speculation? They should be called Water Funds...not hedge fund :)

Anyway, from what I know, this type of lending, over a very long period is pretty cheap in Europe

[zeropointzero]

if it comes to that and you own the water rights, you'd be lucky if they hang you.

[Akin Ahsekun]

Water is a pure play I couldn't agrree with you more, I am looking for funding for a bottled water company at present please feel free to contact me. It is amazing that only very few people are paying attention to the most vital source of life Our health depends mostly on the water we drink and it is getting poiluted by the day, It would take new technology to get the toxins outof the water that end up in our body. We have the answer

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I know that water could be the new oil but could happen in 10 or 15 years??? so I'm not agree with this situation, I think that people should care more about this and leave glaciers as they are now. If they want water for many things, they should think in other way.

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