The New York Times today has another twist to the the looming water crisis -- "Water Scarcity: A Bond Risk, Study Warns." Highlights of the article:
- Municipal bonds backed by water revenue may be riskier than investors realize because of potential water shortages and legal battles over water resources.
- Bond valuations and the ability to raise money could be impacted as water becomes the new oil.
- Rating agencies don't reflect the potential vulnerability associated with increased water competition, climate change, and dwindling supplies.
- Utilities may not be positioned to effectively manage these types of risks.
- The report was sponsored by a coalition of water investors, environmentalist and public interest groups and prepared by PricewaterhouseCoopers.
- Energy and water transmission makes water and oil linkage extremely critical in the context of an era where both resources come under supply constraints with increasing demand.
- Water intensive industries, such as electric utilities (also facing cost pressures from carbon control considerations), are also at risk in the water as the new oil era.
- A weak economy and poor growth, combined with aging infrastructure adds additional pressure with respect to capital investment needed to meet supply requirements.
- Municipal bonds are not required to disclose risks associated with climate change vulnerability.