Water - Green Chip Review

Gas Drilling in Appalachia Produces Harmful Wastewater

Hydraulic fracturing, or "fracking" is a drilling technique that is currently making large quantities of natural gas available underneath Appalachia.

The process consists of millions of gallons of water, sand, and chemicals being blasted into wells to fracture tightly compacted shale and release trapped natural gas.

Though fracking has been around for decades, drilling companies are now using it in conjunction with a horizontal drilling technique.

Fracking a horizontal well costs more and uses more water (up to 5 million gallons per well), but it produces more natural gas from shale than a traditional vertical well.

However, once the rock is fractured, an estimated 15-40% of the water comes back up the well, bringing with it water that is five times saltier than seawater and contaminated with sulfates and chlorides.

Conventional sewage and drinking water treatment plants are not equipped to remove these solids.

Initially, drilling companies brought the wastewater to sewage treatment plants that processed the water and released it into rivers. These rivers are the same ones that water utilities then drew drinking water from.

Environmental regulators say that high levels of salts and other minerals can kill fish and wildlife.

Not to mention what they can do to human health.

In 2008, the Monongahela River in Pennsylvania, a source of drinking water for more than 700,000 people, saw levels of dissolved solids spike above government standards.

The results?

The area's tap water became tinted, smelly, and started to leave a white film on dishes.

One 11-year-old boy, allergic to sulfates, broke out into hives that lasted several weeks until his mother realized the cause of the rash and was forced to switch him to bottled water.

In states like West Virginia and New York, fracking is on hold while companies wait for a new set of state permitting guidelines.

The Marcellus Shale, a rock bed that lies roughly 6,000 feet below Pennsylvania, West Virginia, New York, and Ohio, is believed by geologists to host the most productive natural gas field in the United States, capable of supplying the entire country with energy for up to two decades.

But, until a solution is found to the pollution this process yields, one must wonder... is it worth it?

Veolia Environnement Stock

Publisher's Note: Green Chip's Sam Hopkins is in New Orleans this week, reporting on the city's pressing water and transportation needs, and the company behind its massive infrastructure overhaul...
— Jeff Siegel

—————————————————

More than 200 years after the Louisiana Purchase, the French are about to run New Orleans again.

The fleur de lis still graces everything from garbage cans to football helmets in this tropical American city, and as I've found in the past few days while looking for companies that are making the most of the Big Easy's post-Katrina renaissance, the famed fleur isn't the only nod to the area's erstwhile European rulers. . .

What the coal industry doesn't want you to know can

Make you a lot of money!

Click here for more.

French multinational conglomerate Veolia Environnement (NYSE:VE) is becoming the company that handles New Orleans' most basic water and transportation needs.

Veolia has been a major player in this sea-level city's water distribution infrastructure since the mid-1990s. Veolia Water North America built the largest water treatment plant in the United States here in 1992. Today, the company continues to operate and maintain filtration facilities near the Mississippi River, whose connection to the Gulf of Mexico gave New Orleans its historical strategic importance, as well as its fresh water supply.

Now Veolia, which trades on the Euronext Paris market as VIE, is taking control of the city's famous streetcars and buses from the New Orleans Regional Transit Authority (NORTA). NORTA has failed in its efforts to get public transportation back on track after Hurricane Katrina in 2005 (and Gustav and Ike in 2008), decimated the primary customer base for intra-city mass transit.

Veolia Takes Over Post-Katrina Transit

Consider this: the population of New Orleans is still about 30% lower than it was before Katrina, yet NORTA ridership dropped by 70% over the same period!

That's too low even for sea-level, and NORTA can't get the numbers up. So they're paying Veolia up to $600 million over the next decade to handle everything from payroll and pensions to network operation; security and timetables for the city system and its connections to surrounding parishes, as counties are called in Louisiana.

Perhaps most importantly, Veolia will take over the system's public relations, using lessons from Veolia Transportation's business in 70 countries to recover some of the 70% of customers NORTA lost.

To be fair, it's not all NORTA's fault. As you probably know, Katrina hit the poorest areas of New Orleans the hardest. The reason that many residents of places like the Lower Ninth Ward couldn't evacuate in time to avoid the storm and rising floodwaters is the same reason that NORTA ridership is down a full 40% more than the city's population. Those folks depended on mass transit to traverse the city and to escape it.

And we all remember the sight of entire bus fleets sitting chassis-deep in murky water, as the Superdome filled with panicked New Orleanians. As indelible as those images are to anyone who saw the disaster unfold on TV, the mental and physical scars of Hurricane Katrina are all the more apparent here.

Over four years after the storm and floods roiled, restaurants place post-Katrina recovery clearances in their front windows as if they were the standard bills of health. I've heard 10-piece bands sing songs about high water and helplessness, and I've seen signs saying, "Katrina broke our city and Capitalism isn't going to fix it."

But Katrina, among other things, demonstrated an epic failure of government at all levels to protect the citizens who bankroll it.

Veolia's job will be to prevent such breakdowns through effective disaster planning and management. If improvement comes through a "capitalist" five-year deal with an option to renew, so be it.

Beyond hurricane preparedness, Veolia is intimately involved in state and city-level efforts to bring federal stimulus money down to the Delta.

New Orleans: "Exhibit A" for Stimulus Funds

In February 2009, Newsweek called New Orleans "Exhibit A" for why a federal stimulus was not only needed to bring the world's richest country out of recession, but also to restore a basic level of service and civil life to one of its most precarious cities.

So far, 16% of Louisiana's federal stimulus money has been allocated to transit and water projects, according to the Louisiana Recovery Authority's website.

Transit and water projects are both right up Veolia's alley.

New Orleans is even seeking to expand Veolia's task by building three new streetcar lines. Estimated at around $150 million, the city wants federal stimulus aid to boost the project. Under the "Exhibit A" banner, New Orleans can legitimately say that by expanding service out to poorer areas, resettlement and reintegration into the local economy will be made possible for thousands of families now scattered all across the country.

Some of the currently un-served areas had older streetcar lines that were torn up, though the wealthier Uptown area kept its St. Charles conduit. So it's not an "If you build it, they will come" scenario, to paraphrase one of my favorite films. Instead, it's more a question of, "If we rebuild it, will they come back?"

People tell me this is the time of year to get work done in the Big Easy because you won't sweat too hard. It's not too muggy, and it's certainly not chilly enough for my temperate-zone bones to raise any objection. Veolia Environnement is bringing its international expertise and the weight of a conglomerate to New Orleans to rebuild old things and build new ones, too.

And as I reported a couple weeks back from California, Veolia is part of an expansive national consensus that infrastructure issues are paramount to economic vitality.

The market is looking wobbly right now, but if you want a piece of what Veolia is doing here and elsewhere, current levels around $32 give you a sound technical support base and an opportunity to start building a position in this water and transportation double-play.

As it happens, the Green Chip team is wrapping up a report on the newest addition to the Green Chip International portfolio. Like Veolia, it's a major force in some of the world's biggest markets for water services. But unlike Veolia, this is a country-specific play on an emerging market that investors are clamoring to get a piece of. This stock is a value investor's dream hidden by hype. You don't want to miss this winner.

Regards,

Sam Hopkins

Editor's Note: My colleague Nick Hodge will soon be attending GreenBeat 2009, the foremost event on the smart grid. Below are some details about the conference.

Call for submissions: Smart Grid innovators wanted! Renovating the power grid requires big ideas from start-ups, major technology companies and manufacturers, and university labs. Innovations will range from technologies that increase the grid's capabilities and efficiency, to new business models taking advantage of these new capabilities. To find out more about GreenBeat's Innovation Competition and to apply, click here.

Deadline to enter the competition is October 30, 2009. VentureBeat will name the top 10 innovations driving the future of the Smart Grid on November 19, 2009, at the GreenBeat 2009 conference. Keynotes include Al Gore and John Doerr.

Save 20% on your regular priced GreenBeat 2009 conference tickets.

California Water Crisis

Editor's Note: Right now, Sam Hopkins is on assignment in San Francisco, where — ironically — the state has had record rainfall. . . and yet water scarcity is actually its most persistent resource problem. Sam wraps up his week of travels to Nevada and California by bringing you on-the-scene coverage of water policy in his new report below... and how it could affect your portfolio. Throughout the fall, Sam will be bringing you plenty more "off-the-Richter" opportunities from his travel and network of global green investors.

Enjoy,
Jeff Siegel

California is about to unleash a deluge of spending — right into your portfolio.

Right now, state lawmakers here are pushing forward with a $9.4 billion bond initiative that will make precious water resources more accessible and secure. . .

At the same time, representatives in Washington are helping turn a trickle of money into torrents going to water stocks and ETFs.

Why is this being done now, and why is there so much money at stake for investors?

One of the Most Profitable Plays of 2010

Congress and the Obama Administration are giddy about giving out green tax credits...

Whether you think it's a great idea... Or a huge waste of tax dollars...

You need to read this report.

Because there's one company that could double - or triple - your money as they receive massive gov't incentives and their sales begin to soar.

It's mainly because there is so much money at stake for the Golden State, and for the United States as a whole.

The World's 8th Largest Economy is Thirsty

Even when stacked up against entire countries, California has the world's eighth largest economy.

The Golden State generates more than 12% of America's GDP, and its agricultural output is twice that of any other state.

All that is worth much more than just the sale price of the produce and dairy products that California's farmers send around the nation — the California Department of Food and Agriculture says the state's $33 billion/year ag industry leads to triple that amount in total economic activity.

That's a multiplier effect Sacramento can't afford to ignore. So Governor Arnold Schwarzenegger has demanded a special session of the state legislature to change a dismal record of dawdling in the capital when it comes to water issues.

The Governator is calling for action on California's "crumbling water system," refusing to mince words about the status quo, since he knows that without water, nothing grows.

"Water is jobs for California, water is food, water is our future, water is our economy," he said in his weekly radio address.

We know that far beyond California, water infrastructure investments are now an essential part of any resource investor's portfolio.

$21 Billion and Counting in Water Upgrades

My colleague Nick Hodge has reiterated the reality and the inevitability of government-led water investment profits for years now. Most recently, Nick combed through pages of data from the federal stimulus package to pull out no less than $11.8 billion in commitments to water infrastructure upgrades across the country.

Include the pending $9.4 billion bond package currently being negotiated in California's State Capitol, and you've got over $21 billion within reach.

That's a big enough number to change the fortunes of dozens of companies, and you can capture bullish market movement easily via water ETFs.

Exchange-traded funds, like the First Trust ISE Water Index (NYSE:FIW), capture the performance of companies that operate from seaside to spigot.

FIW's holdings make money as they upgrade old pipes, filters, and irrigation setups, but they will do best developing brand-new systems to ensure water's flow through America's economic veins.

Of course, water is a worldwide issue. That's why FIW is tapping France's Veolia Environnement (NYSE:VE), whose reach lets you benefit from everything from San Francisco Bay Area projects to Abu Dhabi's $15 billion Masdar green city plan.

Whether you're reading this in the desert, on the coast, or at river's edge, you know how important water is to economic vitality and quality of life.

Why not make some money for yourself as governments spend to keep the H2O flowing clean and clear?

Nick Hodge and I are preparing a special report on what we think will be the most profitable water stock in the world over the next five years. It's based abroad, but it's as easy to invest in as IBM.

As a Green Chip International subscriber, you can get the first crack at this winner in just a few days, and of course you'll have access to a portfolio full of global growth stocks that harness cleantech, renewable fuels, and infrastructure stocks to keep your investment accounts from drying out.

Just click here to check out GCI for yourself, risk-free.

Regards,

Sam Hopkins

Water Infrastructure Stocks

Water could be the key to your retirement.

And I'm not talking about digging your toes into the white sand of some island oasis as the tide comes in. . . though that too could be a possibility.

Instead, I'm talking about leveraging water's looming profit potential for sustained above-average returns.

Of course, investing in water is a theme I've hit on early and often. I've been blowing this bull horn for several years.

North Dakota Oil Boom Has Early Investors Making Fortunes

"The Bakken is clearly the biggest oil play in the U.S. I think we're seeing the investment come back, and 2010 should be a pretty amazing year." -- N.D. Petroleum Council President Ron Ness

Our readers have already cashed in on 9 winning Bakken oil trades... with 7 more winning positions still open.

Best part is, we're just getting started with our profitable N.D. Bakken gems.

And it's time you got in on the easy gains. Simply follow this link.

And while the recession put a wrench in this profit-maker's gears — as it did many others' — recovery efforts have once again made water a highly attractive and liquid market.

Here's what I mean. . .

Using the "Philly Plan" for Profit

I generally talk about water from a macro level, discussing multi-billion markets and the companies operating within them. At times, it may feel like there's no tangible real-world connection.

To bridge that gap, I'd like to take a moment to tell you about a profitable water plan that's taking shape in Philadelphia and will soon be replicated across the country.

The city has announced a 20-year, $1.6 billion plan to transform its wastewater system. And, as with all water projects, that money will be going to parts suppliers and environmental engineering firms — some of which you can invest in.

According to Jon Capacasa, a regional director for the EPA, "This is the most significant use of green infrastructure I've seen in the country, the largest scale I've seen."

Patrick Starr, senior VP of the Pennsylvania Environmental Council believes "It's the most significant investment in transforming the city that we'll see in our lifetimes."

This type of plan can be transformational for your portfolio, as well.

In a nutshell, the plan involves:

creating rain gardens
building green roofs
installing porous pavement
laying new pipes and
expanding treatment facilities

Finding out how that $1.6 billion will be divided and spent — and to whom it will be paid — is the key to using this project for personal profit. And the long-term nature of the project means sustainable profits for years.

What's more, Philadelphia is the first city to propose such a bold measure. But as other cities — both large and small — follow their lead. . . the total spent on water projects will only surge. And so will related investor profits.

Potential Profits Become Pocketed Profits

The window on this opportunity isn't closed by any stretch of the imagination. . . but there is now a firm screen in place.

That's because investors are quickly becoming aware of the lucrative profits the water industry has to offer. Some water infrastructure stocks have surged nearly 80% since March.

This is mostly due to the American Recovery and Reinvestment Act, otherwise known as The Stimulus. The act allocated more than $11 billion to be spent on water projects.

All you need to do is take a position early, before this quietly creeping megatrend reaches ubiquity.

And it's happening quickly.

Some $4 billion ($11 billion set aside) has already been allocated for water-related improvements across the country — $93.7 million has already been awarded to Pennsylvania, and each state will get its share.

And it's pushing water stocks ever-higher.

One of the best ways to get in and stay in is through a water ETF, which I've said numerous times. But you won't blame me after you see how they're performing:

They may be up ~40% over the past six months, but they will undoubtedly head higher as more stimulus dollars are approved and more projects —like the one in Philly— take shape.

And they will.

Washington D.C. is pursuing a $2.2 billion plan to build giant sewer overflow tunnels. Surely you've seen related spending in your area.

Call it like you see it,

Nick

P.S. I've been using this megatrend to pick off winner after winner for my readers. In fact, they've been averaging 32% per month for the past year on my recommended winners. And they've done it simply by following my guidance exclusively on cleantech and water stocks. Click here to see how they've done it. . . and what their next trade will be.

Global Water Problems

In old-time Athens, hundreds of miles of sewer pipes were made out of clay.

The pipes were only intended to carry raw sewage into nearby creeks. Most were never watertight, even when first installed.

But I'm not talking about Athens, Greece. . . I'm talking about Athens, Alabama. And those pipes — some put in place as early as 1909 — are still in use.

In some places the clay pipes are totally collapsed, heavily taxing treatment plants as millions of gallons of groundwater infiltrate the system. . . and unknown amounts of raw sewage escape.

City Water Manager John Stockton said the system is in danger of "catastrophic failure" within the next five years.

And this isn't just an Athens, Alabama, problem. Water systems all across the country are facing a similar plight.

The billions of dollars spent to fix these aging systems have the potential to make alert investors handsome returns.

As part of the stimulus, $40 million has been awarded to Alabama for sewer installation or repair. Athens is getting $6.8 million of it.

That's $40 million worth of pipe and labor in a single state — all ending up on some lucky companies' balance sheets.

But infrastructure is only one prong of a growing water problem-profit dichotomy.

Rumor Spreadin' 'Round, in that Texas Town

Apparently 'bout the threat of losin' water.

In drought-stricken Texas, over 230 public water systems are under "mandatory water restrictions," including those in major cities like Houston, Dallas, San Antonio, and Austin.

The Gains We Underestimated

When a tiny mining exploration company took control of a $273 billion resource in Greenland this past January, we knew there would be a commotion.

What we didn't dare dream was that our readers would net triple-digit gains almost over night. But they did.

Learn more here.

One local water company's website reads in big bold red letters: "If we follow these strict guidelines, we may have drinking water." This is Texas — not a developing nation — worrying about whether or not its citizens will have potable water.

In fact, according to one local paper, plainclothes police officers are "patrolling streets, looking for people illegally watering their lawns and gardens." And "residents are encouraged to stealthily rat out water scofflaws on a 24-hour hot line."

I guess so. Over 75 Texas counties are in extreme or exceptional drought — the two worst categories on the Dept. of Agriculture's monitoring list. The drought, which began in 2007, has been worsened by 36 days of 100 degree or hotter weather so far this year.

Streams that feed Lake Travis and Lake Buchanan — the sources of water for 1 million Austin residents — have "all but dried up," according to the Lower Colorado River Authority. Lake Travis, down 54%, is now more empty than it is full. And only one of the lake's 12 boat ramps still reaches the water.

In San Antonio, the two-year dry period is the worst since records started being kept in 1885.

As bad as it sounds, the problem-profit equation still holds true. Section 16.060 of the Texas Water Code directs the Texas Water Development board "to take all necessary actions to further the development of cost-effective water supplies from seawater desalination in the state."

The state has already contributed hundreds of millions of dollars to build desalinations plants. And more is on the way from the stimulus.

And it's not just desalination.

Conservation and effective infrastructure management will also help ease Texas's water woes. The stimulus has already provided nearly $200 million to that end.

Again, all that money will be paid to companies that execute the projects. Smart investors are finding the public ones and making early bets.

And I'm certainly not mistaken.

Developing World Even Worse, Still Profitable

Of course, if the U.S. is experiencing such drastic water issues, you can imagine what's happening elsewhere.

In India, booming population and agriculture have led to dramatic drops in groundwater levels. And it's only getting worse.

A recent satellite study by the Goddard Space Center found that groundwater "dropped at a rate of 1.6 inches (4 centimeters) per year between August 2002 and October 2008."

The study concluded that "severe groundwater depletion is occurring as a result of human consumption."

India's population has tripled since 1950 to over 1.15 billion people. By 2030, India will surpass China's population with 1.53 billion people.

All of them will need water, not only to drink, but to grow food and produce other necessary goods.

The government and international organizations are already fervently trying to secure adequate supply.

The Asian Development Bank announced last month they'll help improve water management in the area through grants. A recent government announcement said $129 million will be spent on "drinking water supply in at least 24 towns." It seems like new treatment plants are commissioned monthly.

And earlier this summer, India awarded contracts for its first Ultra Mega Power Project, capable of desalinating over 25,000 cubic meters per day. The contract was awarded to Aquatech, a global leader in water purification technology.

As more measures are taken, more investment opportunities will abound.

Taking the Macro View

These aren't three isolated events. . . they're microcosms of water problems now more common than not — from Podunk to the Big Apple, from Timbuktu to Thailand.

If they haven't affected you yet, they will.

Water main replacements, new water treatment plants, warnings of shortages; these are the local symptoms of a global disease, and the constant reminders of an obvious investment angle.

And in the unlikely event those physical reminders aren't available, check your quarterly water bill. The growing cost of freshwater was evidenced for me this month by a $0.06 rise in my still-too-cheap water rate — from $1.26 per cubic foot to $1.32 per cubic foot.

Stick with Green Chip as our family of publications profits from this macro trend for years to come.

Call it like you see it,

Nick

P.S. I examined avenues for water profit last week in our companion publication, Energy & Capital. For further reading on the topic, be sure to check out that article on top water ETFs and stocks.

The Future of Hydropower

Innovation and competition go hand-in-hand in clean energy, and the field of potential winners in next-generation hydropower production is growing thinner by the day.

Run-of-river (mini) hydropower is ahead in the race. You've already read in GCR about how publicly-traded companies like Plutonic Power have established essential ties to utilities, while they continue to study the potential generating capacity and environmental effects of their small-scale hydropower technology.

Now, we're happy to present a full report that gives you more than 5 stock plays on run-of-river hydropower's push to prominence.

You'll also find details on a market we haven't discussed yet—India—where a booming population and energy deficits are paired with a mini hydropower developer's dream resource... A landscape full of rivers, large and small.

The rainy season is coming soon, and after this company's projects start churning out electricity to thousands of homes, it will be flooded with profits and new projects.

Be sure to check out the new free report.

Regards,

Sam Hopkins

Green Chip International

Run of River Hydropower Stocks

Today let's look at why one small Canadian power company enjoyed a 63% stock surge in the past month...

The play revolves around hydropower.

While hydroelectric power remains the world's largest utility-scale renewable energy, there's now a better, more efficient way to generate electricity from rushing rivers.

It's called run-of-river hydropower, and it's quickly becoming the new mainstream for consumers and investors alike.

That's partially because large-scale hydropower gets little love from environmentalists who say dams do too much damage to alluvial areas.

The reservoir-dam model also takes a hit as old, Depression-era engineering in this age of smart grids. No one wants to pitch a plan most Americans associate with Herbert Hoover!

Anyway, the best spots for dams have already been picked out and transformed by decades of surveying and construction. Developing countries may have room to build like beavers, but there are other obstacles to face.

On the way to becoming the world's largest water-driven power station, China's Three Gorges Dam project displaced over 1.2 million people and outraged everyone from ornithologists to archaeologists. Three Gorges Dam itself is over 6 times as long as the Hoover Dam and almost 50% larger than the Grand Coulee Dam — America's biggest.

It's too bad China didn't look upstream instead of down when officials decided to dam the Yangtze.

If Beijing's top brass had it to do over now, they'd see that run-of-river hydroelectricity is already changing the way the world gets power from water.

Take Canada, for example. . .

Run-of-River Scores a Win in Canada

In the province of British Columbia, run-of-river power has been run through the political mill lately.

The New Democratic Party stumped for a 6-month moratorium on private power projects that encompassed several clean energy technologies. Hydro was included on the forced dormancy list, so were wind and biomass (the local solar resource is negligible).

But the Liberal Party won, and Canadian clean energy investors didn't just breathe a sigh of relief — they also propelled shares of companies like Plutonic Power (TSX:PCC) into double-digit gains.

A Global Energy Monopoly

Thanks to the unprecedented discovery of a new metal oxide... one company is about to create a global energy monopoly.

Their nuclear fuel additive alleviates safety concerns, reduces radioactive half-life, and saves billions in operating costs.

But, more importantly, it could triple shareholder value in the next 6 months...

All the details are available in this new nuclear energy report.

Vancouver-based Plutonic Power's stock jumped by more than 20% on the heels of the May 12 vote.

Over the past month, PCC shot up over 63%!

That one company has at least 17 small-scale hydroelectricity generation sites planned for the hilly headwaters of Bute Inlet, a fjord just north of Vancouver and Vancouver Island.

Below, you see the layout of how run-of-river generation works in Plutonic Power's proposals:

This run-of-river design diverts some water into a pipe called a penstock, which channels the river water into turbines for generation. Then, the water goes back into the stream with little or no net effect on downstream water levels.

That's perhaps the most salient difference between dams and ROR projects in terms of environmental impact and the regulatory hoops specialty firms have to jump through.

Hoover Dam, that national landmark and symbol of how long hydro has given power to the American Southwest, has a generating capacity of just over 2000 MW.

If approved, Plutonic's modular Bute Inlet array will be optimized to generate more than 1000 MW!

That's enough to power 300,000 homes. But of course, it's only a small piece of the puzzle to get British Columbia's energy mix more accessible, localized, and efficient.

Moving Beyond British Columbia

"It's not a given that our business plan advances," Plutonic CEO Donald McInness told the Vancouver Sun_, "but without the Liberals winning, we certainly weren't going to advance at all."

That Liberal win keeps alive a process initiated by provincial utility British Columbia Hydro and Power that puts new, renewable generation sources up against each other.

BC Hydro projects consumer electricity demand growth of up to 35% before 2030.

Competition is good — we're not looking for sweetheart stock plays here. We want winners.

In addition to Plutonic, top bidders in BC are likely to include Finavera, Innergex, Naikun, and Swift Power Corp.

But it does look like Plutonic's run-of-river technology is headed for the medal stand when it comes to expansion of electricity resources and access around the world.

The company also has the backing of General Electric (NYSE:GE). Together, they're lauching joint bids and developing synergies that could take successful application in British Columbia to GE's worldwide operations.

As small sites begin delivering power to large grid networks, we'll pay close attention to run-of-river hydropower's progress.

Regards,

Sam Hopkins

PS. Look for a full report on this topic in the next few weeks. You'll be able to find it in the FREE report section, along with other great supplemental Green Chip Review material.

Desalination Investments

Last week, I got a stark reminder of the connection between energy and water.

After days of rain here on the East Coast, I awoke last Wednesday to a few inches of water in my basement. The switch in my sump pump went bad, so when water pushed the float up and it should've kicked on. . . it didn't.

The pump wasn't getting the energy it needed to move the water. This is the embodiment of the energy-water nexus, a topic I've covered here, but which you'll soon be hearing much more about.

The Energy-Water Nexus

What happened in my basement is a microcosm of the larger relationship between water and energy.

In the U.S., 4% of all electricity used is to transport and treat water. In California, where dense population and scant water resources prevail, that number jumps to 19%, with 31% of the state's natural gas use also going to the ongoing supply of freshwater.

And the nexus works conversely.

It can take up to 168 gallons of water to get one barrel of oil from oil sands. And 800 gallons are required to generate one megawatt-hour of electricity from traditional resources.

The fact that we can't make or destroy energy or water makes this a zero-sum game. There's a finite amount of each, and demand for water only rises. If Las Vegas increases its withdrawals from the Colorado River, less water is available to be drawn for Las Angeles.

And if you want to get it from somewhere else? Be prepared to work out the exorbitant costs of moving water long distances.

What the coal industry doesn't want you to know can

Make you a lot of money!

Click here for more.

Adding to the Zero-Sum

Conservation adds nothing to a zero-sum game. It only means using less so someone else can use more. And while it's a great idea worthy of pursuit by everyone, it's not very profitable.

This is the very core of the problem. . . and the reason billions have already been made by trying to change the energy and water equations.

Burning coal, oil, and natural gas today means less coal, oil, and natural gas for tomorrow. That's why there's been a massive (and profitable) push toward renewables. . . they change the energy equation by harvesting resources that replenish themselves rather than harvesting resources that don't.

And it's why renewable energy has been and will continue to be lucrative. It's the solution to the energy part of the nexus.

As a member of Green Chip, you don't need to be reminded about the disruptive effect this is having on the energy market...

But what about water? Where's the game-changer there?

Like solar and wind, the answer to the water problem is extracting it from the most abundant resource there is: our vast oceans.

The only problem? Between 50% and 80% of the costs for desalination are for energy to pressurize or heat water. That means the use of desalination only exacerbates the problem of the energy-water nexus.

Until now.

Recent developments are driving down the energy costs of desalination. As these costs continue to fall — and the costs of traditional energy and water continue to ascend — desalination will emerge as a game changer.

It will allow the extraction of water from the most abundant resource there is.

And the early profits will be similar to the solar and wind gains of the past few years. . . when companies like Vestas (VWS.CO) and First Solar (NASDAQ: FSLR) were gaining hundreds, even thousands of percentage points.

I'll be covering this topic in depth as it continues to evolve. For now, I've posted a new piece in the 'Reports' section about water desalination investments.

It's a great tool to learn more about the potential of desalination, both for clean water supply and as an investment catalyst. Use it as a backdrop to get a leg up on this emerging industry, and keep an eye out for related articles going forward.

Call it like you see it,

Nick

Water Investments

With Earth Day this week, the green drive is a bit more pressing than usual.

Major networks are hosting green-themed weeks, celebrities are out in force, and seemingly hundreds of dot-orgs are blasting the airwaves promoting their campaigns.

And while we'll hear the annual calls for cleaner air and planting more trees, a new theme is gaining prominence this year.

Yes, it seems water is everywhere except where we need it to be, these days. It's generating headlines, causing conflicts, and making savvy investors hefty returns along the way.

But don't take my word for it. Check out the performance of several water ETFs over the last three months.

Granted, this group has been roughed up by the recession like most others. But economic easing and renewed interest in the topic has led to a 33% run in the last few weeks.

I thought we'd take today to digest some recent water news and look at a few possible investment angles.

Water News I Already Told You

Recent water news is often old stories happening in new places or with new twists. I've been telling you for some time that serious water problems were looming, so evidence of major shortages now should be no surprise — where they happen and how to profit might be.

Consider my words back in August 2007:

We are at the crux of disaster — a crisis so big that it already affects well over one billion people and will soon affect everyone on earth.

The calamity we face is a serious lack of fresh water.

In that article, subtitled "A Steady Stream of Water Profits," I used then-recent water headlines to illustrate my point:

Las Vegas Growth Depends on Dwindling Water Supply
Seawater Could Help Solve Florida Water Woes
Iraq Calls for Water Treaty to Avert Crisis
El Paso's 15-year Wait for Desalination Plant Is Over

It's been a full 18 months since then. . .

Las Vegas is still dependent on water for growth.

Florida (and a large part of the Southeast) is still facing drought conditions.

There are abundant water problems in the Middle East.

And desalination is increasingly being looked to as a major solution.

Now, take a look at water headlines from the past few weeks:

California's drought raises rural-urban tensions over water
Florida Drought Watch: Water levels dropping
Palestinians face dire water shortage: World Bank
A Rising Tide for New Desalinated Water Technologies

You should see a striking resemblance in the contents of the news, even though much time has passed.

And that's my point: coverage of the water issue is cyclical, but the problem is constant. . .

So are the profits you can make.

Win Big When the Next Domino Tumbles

First there was housing... then the banks. And after that it was the automakers that came crashing down. Next up is a Commercial Real Estate Crash.

And unfortunately - just like the rest of them - the government's last-ditch efforts to prop up this domino are all doomed to fail.

But a 372-year-old investing technique is the answer to it all. And it might not only save your portfolio during this $1 trillion crisis... but also make you a fortune!

To learn more about this moneymaking opportunity click here.

How to Profit from Water

Like energy, water is becoming more valuable because of scarcity. Also like energy, hundreds of billions are being spent to combat looming supply shortfalls.

And that's what is driving investor profits.

Investing in water is even being looked to as a tool to combat recession. The recently passed stimulus had a $6 billion water portion.

It's only a drop in the bucket, but much larger international commitments will undoubtedly follow.

That's the beautiful thing about investing in water — the market has completely different fundamentals than other industries because demand constantly rises while supply remains relatively constant.

Improving the management of existing resources is one way to tackle the problem and turn a profit at the same time. This falls mainly in the category of investing in water infrastructure.

Knowing the ins and outs of the industry has already netted readers of the Alternative Energy Speculator four double-digit winners in the sector.

And an entire section of our portfolio is dedicated only to water stocks. As of this morning, four of the six stocks in that section were up, two of them in double digits.

Is it any surprise? Unlike with oil, demand for water does not decline during a recession.

So, despite credit tightening elsewhere, Reuters recently reported that "operating budgets for municipal utilities, which make up 85 percent of the water utility market, have remained intact. That means water treatment companies such as Nalco Holding Co and filtration companies like Calgon Carbon Corp should have a steady stream of orders for chemicals and components needed to keep water clean and plants functioning."

Reuters was a bit late on the Calgon (NYSE: CCC) coverage. Alternative Energy Speculator readers closed that stock for a 16% gain over a week ago.

Of course, we've played several other water infrastructure companies for profit. . . and we'll continue to.

But as water shortages become particularly acute — and they will — the big money is going to made in companies that can alter the supply picture, rather than merely manage it.

What I'm talking about is actually being able to increase freshwater supply. And the only way to do that is through desalination, what Reuters called "the Holy Grail in the quest to replace dwindling freshwater drinking supplies."

This is where the most lucrative water profits will be made.

In fact, I told new readers of Alternative Energy Speculator about my favorite desalination play just the other day. Look how it's performed since then:

Those that followed my water investment advice have gone on a 25% two-day adventure. But this stock's run is just getting started. I think it could easily triple as water issues start coming to a head.

And there is still plenty of time to get in. Here's the same report that new Speculator members used to profit.

Give it a read. It has all the details you need to get in early on the one stock poised to dominate the future desalination industry.

Call it like you see it,

Nick

P.S. You can now follow me on Twitter at http://twitter.com/nickchodge, where I'll be providing real-time market updates and my thoughts on the ever-changing landscape of alternative energy markets.

Water and Energy Investments

Should utilities be required to use the best available technology in order to minimize harm to the nation's waterways?

Most people with half a brain would answer that question affirmatively. But apparently the upper reaches of our judicial system don't fall into that category.

So today the U.S. Supreme Court will hear a case that a five-year-old could decide in seconds.

It centers around the impact utilities have on waterways near power plants that use billions of gallons of water each and every day—all of it sucked up from our rivers and lakes.

You see, power plants—coal-fired, natural gas, and nuclear—all use incredible amounts of water for cooling. The total comes to more than 214 BILLION gallons of water each day, or tens of trillions of gallons every year.

And here's what makes the correct decision here patently obvious: the cooling process kills every living organism in the water—fish, larvae, eggs, microorganisms—all of it.

Now, this court case isn't going to have any financial implications for us as investors; I'll get to some water-related investment ideas in a few moments.

First, let me just outline the facts of this case so we can all have a good chuckle, and reminisce about the Bush decision of yore, which will shortly be no more.

Facts of the case, as derived from an NPR story this morning:

The utilities say installing the best technology is too expensive
The Bush administration adopted a rule that would allow utilities to get a variance from the Environmental Protection Agency if they can show that the cost of complying is greater than the environmental benefits.
Environmentalists contend that Congress specifically rejected the cost-benefit approach because Congress itself concluded the costs were worth the benefits to the environment.
Opponents also say a case-by-case cost-benefit analysis would be too prone to manipulation.

So to summarize, very briefly, Congress enacted the Clean Water Act to protect, well, water. The utilities say it's too expensive to protect the water, so they shouldn't have to do it.

Brilliant. Get the Supreme Court on the line. The utilities aren't happy about something. Please note: the utilities lost in the lower courts, but, not surprisingly, the Bush-approved conservative Supreme Court has decided to hear the appeal.

32% Gains. . . Each and Every Month

One group of energy investors has closed 45 winners in 12 months.

39 of them were double-digit winners.

Click here to see what their next move is.

We'll see this case again soon, probably after mid-January sometime. Let's just hope the Supremers don't set a precedent that's too idiotic in the meantime.

Water and Energy Investments

As I said, the fatuous case described so far isn't going to make us any money as investors. But it does bring to light three points that I want to make clear:

Our (the world's) water problems aren't going away, and they certainly aren't going to solve themselves
Water and energy are inextricably connected, and we need to start treating them as such
The solutions to water, energy, and water and energy problems offer a substantial profit opportunity for savvy investors

We all know about the first bullet up there. For a refresher course, check here and here.

For an explanation of the bond between water and energy, follow this link to learn about the energy water nexus.

Here are a few more bullets that clarify the connection:

It takes, for example, 4 barrels of water to produce just one barrel of oil. This could be water used for well-injection, cooling or a variety of other applications
The Canadian tar sands use more water than the entire population of Alberta (where they're located) on an annual basis
In the U.S., the transportation and purification of water consumers 4% of all electricity
In California, water consumes 19% of the state's electricity and 31% of its natural gas
50%-80% of desalination costs are for energy

In order to profit, we need to break the water industry down into sectors. Since desalination is a highly sought-after topic these days, let's begin there.

Since the amount of freshwater on earth is finite, our appetite for it is only going to grow, and we're already pushing the limits of our supply, we're going to have start producing copious amounts of potable water from the sea.

You can gain exposure to this industry via one of the conglomerates that provides reverse osmosis filters and other desalination technologies. Those companies are GE (NYSE: GE), Siemens (NYSE: SI) and Dow Chemical (NYSE: DOW), each of which have lost about 60% of their value in the past year and could be bargain buys at these levels.

But to get more bang for you're buck, I'd take a look at Energy Recovery (NASDAQ: ERII), which makes a product that helps optimize the energy intensive seawater reverse osmosis (SWRO) process by recapturing and recycling up to 98% of the energy in the high pressure reject stream, thereby reducing SWRO energy consumption up to 60%.

That's stock has only been on the market since July, and has garnered much attention from the water community. Levels below the $7.50 are attractive, and there seems to be support at that price.

Water Infrastructure Stocks

Expanding on the water industry, other sectors to watch out for are water infrastructure, which includes pipe replacement and upgrades.

In the coming years, we'll see thousands of miles of aging water pipes be replaced. And we'll witness the construction of many new water and sewage treatment plants to satiate the water demands of a growing and more affluent population. All of those projects are profit opportunities for investors in the know.

I'd take a serious look at all the major water players in this space. From Jacobs Engineering (NYSE: JEC) to Itron Inc. (NASDAQ: ITRI), many currently quiet water companies are bound to become household names.

We're certain to see interactive water meters, improved treatment technologies, and billions (in not trillions) in water infrastructure spending.

The water and energy problems are mounting, and will be a topical issue as the consequences start to hit home. It's time to take a serious look at investing in the various sectors the water problem has to offer.

Don't let this decades-long bull pass you by.

Call it like you see it,

Nick

PS. Analysis and recommendations like this are only the beginning of what Green Chip has to offer. In my premium service, Alternative Energy Speculator, I use information like this to make investment recommendations to thousands of savvy investors in real time. If you're ready to step-up your green investment game, the Alternative Energy Speculator can help you do it successfully. Join thousands of other investors in the know today!

Water Technology Investments

Iowa's got too much, and Australia hasn't gotten enough this year.

In the Middle East, it's a cause for war and a requirement for peace.

Though oceans and rivers are rising, fresh water is becoming as much of a worrisome commodity as sweet crude—and the change in supply of both is creating myriad market opportunities around the world through policy cooperation in water technology.

This week, Los Angeles Mayor Antonio Villaraigosa is just returning from a multi-day trip to Israel.

While in Israel, Villaraigosa met with security officials in charge of protecting Israel's Ben Gurion International Airport. Los Angeles will enlist some Israeli security consultants to help beef up Los Angeles International Airport (LAX), which has been named as a prime target for al-Qaeda.

But what the Los Angeles Times didn't talk about is another major threat area where Villaraigosa is seeking Israeli help: water scarcity.

Israel and Los Angeles Water Technology Cooperation

City officials launched a 20-year, $2 billion strategic plan to combat drought and household water shortages in L.A. and its environs. General Manager of the Department of Water and Power David Nahai calls this "a radical departure for the city of Los Angeles," going on to call it a potential "beacon for other cities."

As far as pacesetters go in the water technology arena, Israel is in the world leadership. From reverse osmosis seawater conversion to efficient drip irrigation, the New Jersey-sized state has delivered top-notch solutions again and again.

That's why Villaraigosa told Israeli business newspaper Globes that the city government has signed a cooperation agreement with the Kinarot-Jordan Valley Technology Incubator, a start-up hothouse focusing on water reuse and desalination technologies.

L.A. will also work with Israel's Mekorot National Water Company, whose former head, Booky Oren, told me and a gathering of green entrepreneurs in 2007 that water technology could soon be the country's top export industry—surpassing even the high-tech field in Israel that gave birth to instant messaging, portable memory, and the Intel Pentium chip during the internet boom.

"Water is the next energy crisis...and a wonderful business opportunity," Oren said when I met him.

With only one source of fresh water, the Sea of Galilee, and other rivers and streams coming from the north in the enemy states of Lebanon and Syria, Israel has never been able to take water for granted.

In fact, current negotiations with Syria over the strategic Golan Heights heavily involve river water rights and a spot of shoreline on the Galilee that Syria claims.

Los Angeles policy makers won't have to fight anyone but their own citizens... Water Police vehicles now patrol neighborhoods in many southwestern cities like L.A. and Vegas, doling out fines for leaky sprinklers and running hoses.

So, as Globes asked, how will collaboration with the Kinarot incubator be implemented?

Kinarot CEO Assaf Barnea responds, "Israeli companies will have an open door for testing technologies at Los Angeles water facilities, which will test and install suitable technologies."

And we expect those technologies to emerge quickly in the form of profitable stock listings.

After all, Israel has more Nasdaq companies than any country but the United States, and more overall U.S.-traded companies than any land but Canada.

As Kinarot and Los Angeles take steps forward together, we'll let you know how to play their progress.

Regards,

Sam Hopkins

www.greenchipstocks.com

WorldWater & Solar Technologies

Our hearts go out to the citizens of Myanmar (Burma) suffering, and those who perished, from one of the worst natural disasters this decade has seen.

While world governments slowly pry open the sealed society to help prevent further suffering, we have to wonder...

Where will the necessities of life come from?

It turns out, the answer may come from the cleantech sector...

WorldWater & Solar Technologies: A Possible Solution?

U.S.-based company WorldWater & Solar Technologies (WWAT.OB) has experience in dealing with water-related crises. From New Orleans to the Middle East and hopefully soon to Myanmar, they create the solar panels that drive water pumps for many applications.

The panels are also co-generation units, meaning electricity is a byproduct of the water purification and pumping process.

Of course, both energy and water are in desperately low supply—millions of Burmese citizens are only getting drinking water from the falling rain after Cyclone Nargis hit last week.

While the degree of this disaster is escalated by the military government's incompetence, there's a persistent drinking water problem in many rural areas of the developing world that comes from lack of pure, unpolluted sources.

In countries like China and Vietnam, and even downstream in Myanmar, rapid industrialization and lax environmental codes have taken their toll on the water supply.

Asian countries now have some of the foulest waterways in the world—China alone has 16 of the 20 most polluted streams and rivers on the planet.

So for WorldWater, which provided off-grid, movable pumping systems to New Orleans in the wake of Hurricane Katrina, the challenge will be to move the bad water out, while getting good water in.

Water In, Water Out

WorldWater has shipped its water purification modules and irrigation units to Iraq to supply military bases and Iraqi farmers.

In that desert region, optimizing water use and eliminating waste is key. But limited access to clean freshwater isn't a problem monopolized only by desert and third-world nations - it is increasingly a problem in numerous industrialized and wealthy nations as well.

The problems in Iraq may not be dire—an aging infrastructure is better than no infrastructure—but they're in need of attention and investment dollars nonetheless.

That's why Green Chip Stocks (and its sister publications) has implemented numerous tools to give you exposure not only to what's going on in the world of water and cleantech, but how to profit from them as well.

It is certainly an industry capable of delivering good returns through the pipe manufacturers, purification technology companies and more, that will undoubtedly receive increased business as this worldwide crisis unfolds.

But putting money in water is one of those double-bottom-line investments—it has both monetary and societal benefits.

Unfortunately, it may be too late for the unfortunate people of Myanmar, and for their rigid leaders.

And while we'd like to see the government snap out of it and snap up some Worldwater products, we know water-related technologies will soon have their day all over the globe.

Hopefully next time, they'll be implemented before disaster strikes.

Regards,

Sam Hopkins

Water Infrastructure Stocks

For a brief period on Saturday the streets of downtown Boston turned into raging rivers.

The flooding was so bad it forced the shutdown of a subway station and several major restaurants in the area.

Water even entered a major natural gas main, causing nearly 1,000 people to be without gas and hot water.

The flood was not caused by some freak meteorological event. It wasn't even raining in Boston on Saturday.

So what caused this freak flooding of Beantown?

It was a water main break. And a fairly large one.

I'll get into the lucrative investment potential associated with water infrastructure stocks in a minute. But first, it's important to get a grasp on what's going on with all those pipes beneath the surface.

Water Infrastructure Breakdowns

The pre-dawn rupture occurred in a 12-inch water main in Boston's financial district.

And I'm guessing this incident only garnered so much attention because of the location in which it occurred.

You see, water main breaks have become commonplace lately.

In fact, just this week, water mains in London, Austin, Toronto and San Diego have endured similar plights. And those are just the incidents in cities large enough to be mentioned by just one name.

Small towns like Windsor, North Carolina and Parker, Colorado have also experienced water infrastructure breakdowns this week.

Oftentimes—and I'm quoting stories from multiple instances: "The cause of the water main break was unknown, officials said."

That's nonsense.

Even I know the reason for the water main breaks. They're old.

While being old may not be the technical term for water main failure, it is certainly the main driver behind most water main issues.

Technically speaking, water mains fail for one of four main reasons:

tuberculation (the accumulation of rust, minerals, etc.)
faulty or deteriorated joints
inadequate hydraulic capacity
internal/external corrosion

But no matter the cause for water main failure, the result is always the same. They need fixed or replaced.

Water Main Replacement: A Boon to Water Infrastructure Stocks

In fact, the Environmental Protection Agency (EPA) recently estimated that $374 billion will be needed over the next 20 years for water main replacement and renewal. That works out to about $18 billion per year.

The problem: we currently only spend about $1.1 billion per year.

But that spending is growing at a 25% annual clip and is expected to continue to do so for the immediate future.

This is clearly going to create a bull market in the water main replacement and refurbishment industry. The only thing left to know is how to play it.

The way I see it, there are a few ways to go about it.

The most obvious way is to invest in pipe manufacturers.

Two of my favorites in the space are Northwest Pipe Company (NASDAQ: NWPX) and Ameron International Corporation (NYSE: AMN).

Both of those companies offer broad exposure to the pipe market and will see increased business as a result of water main replacement.

The second way to play this phenomenon is through pipe refurbishment and maintenance companies.

A company called LB Foster Co. (NASDAQ: FSTR), through its Tubular Products division, offers various preventative and repair products for water transmission systems, including specialty coatings for corrosion protection.

All three of those companies are well-established and the stocks should offer great upside potential as evidence of a real water infrastructure crisis continues to emerge and accumulate.

Call it like you see it,

Nick

P.S. Now that the Green Chip Water Index is a success—it's up 32% since 2007—I've decided to recommend water-related companies in my new service, Alternative Energy Speculator. Besides the companies mentioned above, I've got my eye on a company that can replace water mains without even digging them up by using trenchless technology. You don't want to miss this recommendation.

The U.S. Water Shortage

If any more evidence were needed to substantiate my claims of a looming U.S. water shortage, I think the last two weeks offered plenty.

On Valentine's Eve, a story broke that went viral on the web almost instantly. It's worrisome, however, that there was so much interest in the story for where it was happening, rather than why it was happening or how to solve it.

At issue, in case you're wondering, is a study by two researchers at the Scripps Institution of Oceanography at the University of California San Diego. The study claims that Lake Mead—Las Vegas's prime source of water—will run dry in 13 years if usage is not reduced.

In case you were wondering, Lake Mead is the largest man-made lake and reservoir in the U.S. And yes, it's the resultant body of water from the construction of the Hoover Dam—one of the stalwart symbols in American iconography.

But if the researchers are right, that may no longer be the case. The study concludes that there's a 10% chance Lake Mead will run dry in six years and a 50% chance it will be gone by 2021.

Of course, that's not the outcome the researchers were looking for. In fact, they "had not expected the problem to be so severe and so up close to us in time."

Ultimately, the problem boils down to taking more out the reservoir than is going in. And that problem will be exacerbated as water levels in the Colorado River, which is fed by annual snowmelt, fluctuate with climate change.

Water Shortages are Becoming Reality

Other support comes from Georgia, where lawmakers want to extend their border into Tennessee to put a crucial reservoir inside the boundaries of the Peach State.

The reservoir, named the Nickajack Reservoir, is fed by the Tennessee River and lies about one mile inside the Volunteer State.

In this most recent Georgian water case—they've been battling Florida and Alabama for nearly two decades—lawmakers claim that the border with Tennessee was erroneously surveyed in 1818. But this case is obviously about water, not imaginary lines.

Nonetheless, representatives from both sides seem to think the issue is a laughing matter, with each proposing ludicrous solutions like winner-take-all football games or wrestling matches. Yes, really.

The only person involved in the issue that seems to make any sense is Gil Rogers, a staff attorney with the Southern Environmental Law Center. He believes states should focus on conservation and sustainable development, not impromptu land grabs.

I guess desperation is starting to set in, with Atlanta's largest source of water, Lake Lanier, shrinking to historic lows.

Maybe they should heed Mr. Roger's advice.

The True Price of Water

That, of course, would start with conservation and continue with sustainable development.

Both of those industries are shaping up to be billion—and even trillion—dollar markets. And if I could just interject with two more recent financial headlines, I think a clearer understanding of the evolving water market can be attained.

The first came yesterday from the Australian Broadcasting Corporation (ABC). In its online rural edition, Professor Mike Young of the Wentworth Group of Concerned Scientists said that charging the real price for water would make consumers more efficient water managers. (This would also work with gasoline if lifecycle/defense costs were included.)

He believes that fixed water prices do nothing to encourage water savings or to aid in the implementation of new technology. Having the price reflect actual cost, he notes, would mean leading edge water management everywhere.

And apparently, that's what the staff over at Financial Times believes as well. They ran a story yesterday entitled, "Openings to Flow from Water Demand," which stated: "Increasing pressure on global water supplies will create opportunities for investors, according to a report from Zurich-based Sustainable Asset Management Group."

That report identified four main ‘themes' of water-related investing that have or will emerge. They were: distribution and management; advanced water treatment; demand-side efficiency; and water and food.

Green Chip Stocks members already have access to a Water Index which includes companies that fall under many of those sectors. In the coming weeks, I'll be shifting the index around to fully encompass all this opportunity has to offer.

To gain access to the Water Index you need to be a member of Green Chip Stocks. You can become a member here.

In the meantime, I'd take a look at Gorman-Rupp Co. (AMEX: GRC). This pump manufacturer recently posted stellar fourth-quarter and 2007 numbers and should be a good bet around or under $30.

Until next time,

Nick

www.greenchipstocks.com

Desalination Companies

In the rush of headlines about looming water shortages associated with climate change, increased population and falling water tables, many have been discussing options and looking to find the best investments to exploit the water crisis.

And, more times than not, desalination emerges as the potential solution to the world's water woes. But for all the hype and chatter surrounding this expanding industry, what, if any, are the best ways to play it?

As I've said before, the first wave of investing in desalination companies has come and gone. The available plays at that time—the first half of this decade—were bought up and merged into global conglomerates that knew exactly where the water industry was headed.

Zenon Environmental Inc. is a prime example. Their advanced membrane technology, used for wastewater treatment and desalination, made them one of the leaders in the fledgling desalination market of the early 2000s. From 2001 to early 2005 the stock rose more than 270% as they gobbled up large contracts in the US and Canada, and began to expand into Asia.

And at that point, the big boys had had enough. They were quickly bough out by GE and merged into its water division.

Since then, as I've reported before, investing in desalination stocks has offered few pure plays. One of the best ways to get in now may be through Consolidated Water Co. Ltd. (NASDAQ: CWCO).

I was bullish on that stock back in '07, when it was trading just above $30 and before Barron's warned that its shares could lose half their value if a dispute over desalination revenues was not settled with one of its largest customers, the government of the British Virgin Islands.

The dispute went on and shares fell to $24.60 on Christmas Eve. The stock has since started to rebound, and now may be a good time to pick up a few shares in this market of limited options.

But another option may be on the way.

Desalination IPO

IDE Technologies Ltd., a joint venture between Israel Chemicals Limited (TLV: ICL) and Delek Group Ltd. (TLV: DELEKG), may soon have its shares floated on the London Stock Exchange.

In fact, the initial public offering (IPO) was supposed to happen in November 2007, but was postponed because of "global market conditions."

Nonetheless, on December 30, it was announced that IDE won a $100 million contract to build a desalination plant in Australia, with construction to begin this year. And they've got plenty more experience under their belt.

In 2005, the company, along with Veolia Environment (NYSE: VE) and Dankner-Ellern, built the world's largest desalination plant in Ashkelon, Israel, capable of delivering up to 6% of Israel's water needs. In 2006, less than a year after initial production, it won Desalination Plant of the Year at the Global Water Awards.

And it doesn't hurt that IDE has its home in a country that is a world leader in desalination technology. Israel—along with the rest of the Middle East—will be a hotbed of desalination investment in coming years, and IDE is a leader in reverse osmosis technology.

Rest assured, I'll be covering desalination and other water-related opportunities as they continue to develop in our latest publication, Alternative Energy Speculator. And while we don't have a desalination company worthy of our investment dollars just yet, you may be interested in taking profits from this other salt-water related opportunity.

Until next time,

Nick

http://www.greenchipstocks.com/

Desalination Stocks

I've had some requests lately to provide updates about what's been happening with desalination stocks. And, frankly, I can't say there's been too much.

You see, desalination has been around for quite some time. Long enough, in fact, that the big boys have had time to buy up nearly all emerging technologies and companies. Conglomerates like Dow Chemical (NYSE: DOW) and General Electric (NYSE: GE) are now some of the biggest desalination players in the market.

That said, let's take a look at exactly what technologies are out there and see whether there's still a legitimate angle for playing desalination stocks and the sector as a whole.

Desalination Technologies

The most common method for desalination is reverse osmosis. Using this method, water is forced through a series of semi-permeable membranes using increased pressure as the pores in the membranes become smaller and smaller.

I had a chance to see a membrane, cut in half, at the International Water Conference a few weeks ago. The best comparison to it is a cigarette filter—layers and layers of fibrous material. The one I got to see had actually been used, and if you ran your fingers along the fibers you could feel the remnants of a salty white residue.

That particular membrane belonged to Dow, and I was hard pressed to find another manufacturer at the entire conference—a clear indication of a tightly controlled market.

The second most common method of desalination (even though it produces about 85% of desalinated water annually) is multi-stage flash distillation. In this process, saltwater is sent through a series of low-pressure chambers where it is flash-boiled into steam. The steam is then condensed on rows of heat exchangers, with the excess heat sometimes used in cogeneration plants for the production of electricity.

Using excess heat and steam for electricity production can reduce the overall cost of desalination by up to two thirds. However, in the Middle East, where most of the world's desalination plants are located, oil is abundant and most of their plants are fired that way.

Desalination Hurdles

In a nutshell, desalination is simply still too expensive. For the same cost as desalination, fresh water from other sources can be pumped to an altitude of 6,000 feet or transported a distance of nearly 1,000 miles. Even in certain areas of the US, desalination still costs five times more than other sources of fresh water.

And then there's the massive amount of energy that these plants consume. Typically, it takes 4 kWh of electricity to desalinate one cubic meter of water. So a 15-million-gallon per day facility would use around 228,000 kWh of electricity. At an average electricity cost of $0.10/kWh, that plant would be spending $28,000 a day just to run. That doesn't include the cost of transporting the water and disposing of saline waste, or the ever-increasing price of carbon emissions.

In my opinion, a plant in Perth, Australia has one of the best solutions. There, they power their desalination plant with renewable energy from the Emu Downs Wind Farm. And a soon-to-be-built plant in Sydney will be run entirely by renewable resources. But using renewable energy—even though it drastically reduces carbon emissions—still adds to the initial capital costs of a desalination facility. And while some communities are willing to sacrifice the additional money for clean energy, the economics, and therefore the investment possibilities, are not good.

So for now, with exception of wealthy coastal countries, widespread use of desalination as a main supply of fresh water is still a pipe dream.

Desalination Stocks and How To Invest

The best way I've seen to invest in desalination stocks is through a medium-sized water desalination company operating mainly in the Caribbean. The company, which I've written about before and included in the Green Chip Water Index, is Consolidated Water Co. Ltd (NASDAQ: CWCO).

Consolidated Water, together with its subsidiaries, engages in the development and operation of seawater desalination plants and water distribution systems in the Cayman Islands, Belize, Barbados, the British Virgin Islands and the Bahamas. The company processes and supplies water to various customers, including public utilities, commercial and tourist properties, residential properties and government facilities.

Consolidated Water is up over 25% for the year and should continue to thrive as the economics of desalination become more affordable. For now, though, this company will continue to make the bulk of its profits from its utility business, providing risk relief from investing solely in a desalination company. And when desalination really takes off, you'll already have a stock position in your portfolio.

For more advances in the desalination industry, and to learn how we're investing in water, stay with Green Chip. And, if you're not already, consider becoming a premium subscriber.

At a cost of only $79, you'll get stock recommendations, company profiles, weekly updates and more—including access to my water index.

To learn more, click here to become a member today.

Until next time,

Nick

Investing in Water

Yesterday, in a city of nearly 700,000, thousands of people lost access to clean running water . Eleven schools were closed, forcing children home early. And what began as an isolated incident quickly spread, as residents all over the city noticed either water discoloration or a substantial drop in water pressure.

This mishap did not occur in some far-off undeveloped country. It happened here, in downtown Baltimore. The city Green Chip Stocks calls home.

Apparently, at around 10:30 a.m., a 48-inch water main broke that sits on the bottom of the Patapsco River and brings water into South Baltimore. The location of the break was not discovered until early afternoon, and still has not been repaired.

This is just another in a long line of incidents that illustrates what I've been writing about for the past few months.

Last week I told Green Chip Stocks members about a town in Massachusetts that was nearly out of water, and about Birmingham, Alabama, where the city has issued incentives to catch people who are stealing water. (I guess that's becoming a significant issue there.)

It seems nearly every day there is a story somewhere that, in one way or another, highlights the notion that water is the new bull market.

Pure Water, Pure Profits

Now, there is a multitude of ways to play the water angle. In past issues I've talked about various ways to take advantage of a looming water shortage . I've talked about everything from desalination to meter manufacturers.

And although there are definitely ways to profit from all the opportunities I've talked about, the market has been extremely favorable to purification technologies of late.

Basin Water (NASDAQ: BWTR) uses an ion exchange system to purify water for utilities, municipalities, and real-estate developers. Their systems purify over 75 million gallons of water a day, and they're contracted with some of the nation's largest utilities.

In the past year the stock has almost doubled and it shows no signs of slowing down. Take a look:

There's also the success story of Pittsburgh-based Calgon Carbon (NYSE: CCC). This company is the world's largest manufacturer and supplier of granular activated carbon purification systems. It is also the company that sparked my interest in the water investing revolution.

In the past year, this company has seen increases of over 231%. Their most recent earnings report beat Street analysts by $0.04 per share, and the stock is now predicted to rise at least 25% in the coming year. Of course, I think it could go even higher. Check it out:

And who could forget about WorldWater and Power (WWAT.OB). This superstar stock has, at certain times, seen gains of up to 1,700% in the last year. WorldWater makes modular water purification systems that are powered exclusively by solar panels.

Fortunately, WorldWater was one of Green Chip's first recommendations and our members have been basking in its gains since 2005. Take a look at its performance over the past two years:

I've also got my eye on a small Canadian water purification company that has recently announced an upcoming contract with a major American water company.

And folks, this is just the beginning. Soon, all sectors of the water industry will start to flow freely. It will be a proverbial high tide of profit-taking.

Every aspect of the water industry, from pipe replacement (as we just saw in Baltimore) to desalination and wastewater treatment, will soon begin to deliver scads of profits for the savvy investors who stay ahead of the curve.

To help make that happen, I've compiled a detailed report on the current state of the water industry and how to profit from emerging opportunities. You can view this free report by clicking here .

For our subscribers, I've compiled the Green Chip Water Index—a list of 20 companies (each with its own report) that I believe are going to grow as this water market matures. But you have to be a member to access this information.

Enjoy the free report.

Until next time,

Nick

Investing in Water

We are at the crux of disaster—a crisis so big that it already affects well over one billion people and will soon affect everyone on earth.

The calamity we face is a serious lack of fresh water.

All over the world, wells are running dry, aquifers are shrinking, and rivers are so polluted they no longer can sustain aquatic life.

This is a problem we read about everyday, and yet it rarely leaves a lasting impression. One look at just a few headlines from the past few weeks serves to illustrate the severity of the problem.

Las Vegas Growth Depends on Dwindling Water Supply
$82 Million Water Pipeline to Lexington Proposed
Seawater Could Help Solve Florida Water Woes
Iraq Calls for Water Treaty to Avert Crisis
El Paso's 15-year Wait for Desalination Plant is Over

Here we have a major U.S. city and tourist attraction that's growth is contingent upon securing additional water supplies; a city in Kentucky that's struggling to provide adequate water to its citizens; a coastal U.S. state already having to rely on desalination for ample water; a country in the Middle East already in shambles, now having to face even more problems as the Tigris and Euphrates shrink; and a Western Texas city that's clearly had insufficient water for well over a decade.

And while all of these stories are prime examples of the water woes being felt around the world, the El Paso story is particularly poignant.

Earlier this month, the City of El Paso opened up an $87 million desalination plant capable of supplying 27.5 million gallons of drinking water daily.

But here's the kicker—El Paso is nowhere near an ocean or a gulf. The closest saline body of water, the Gulf of California, is over 350 miles away. Take a look:

You see, that part of the country is so dry, and has used so much of its groundwater supply, that saltwater is now coming in from underground and filling their wells and aquifers. This phenomenon is called saltwater intrusion. And it's happening all over the world.

Not Just Scratching the Surface

As you can see, the looming water crisis isn't just about what lies on the surface. This is an issue that runs very deep.

With disappearing groundwater supplies and an aging and decrepit infrastructure, avoiding this calamity will surely prove to be a monumental task requiring unprecedented investment.

And, as is always the case with crises, there are plenty of opportunities to capitalize on the solutions that will help revamp the water infrastructure and ensure the continued availability of clean freshwater.

The obvious play here would be water utilities—and that's not a bad route to take. In fact, in any random five-year period during the last 25 years, water utilities outperformed all other leading industry groups on a total return basis.

Plus, with the dividends they pay, it's usually hard to go wrong.

But if you want the quick, hard-hitting gains now emerging in the water sector, you have to look beyond just the utilities and do a little digging to find the companies providing purification and desalination systems, pipes, pumps, chemicals, valves and meters, and other technologies that aid in the production and delivery of safe water.

And Green Chip has had its eye on a good play in this sector for a while now.

World Water and Power (WWAT.OB) provides water and power solutions using solar technology. The devices they manufacture and sell are capable of pumping and purifying water remotely, using only solar power.

The units are modular and are mounted on trailers that can be towed nearly anywhere in the world. From disaster preparedness to emergency response, the uses for these units are truly limitless.

Most recently, World Water received an order to provide 10 units to the drought and genocide inflicted region of Darfur, Sudan. So not only is this company providing incredible humanitarian relief, but they're increasing value for their stockholders as well. To view a video of some of the things this company is doing, click here .

In the Green Chip Stocks portfolio since early 2005, our readers have seen gains in excess of 425% on this single water-related play alone. Take a look:

And this isn't the only water stock going gangbusters. With global water concerns coming to a head, the entire industry is buzzing anticipations.

For that reason, I have created the Green Chip Water Index, a compilation of 20 companies that stand to make huge gains as the water crunch is realized.

One of the picks is up over 115% since January!

To gain access to this incredible index and receive updates on the water industry and its dominate players, you have to be a Green Chip Stocks member.

To make that happen by taking advantage of our special discounted rate, click here .

Until next time,

Nick