A TPDEARR Article
Trans-Pacific Dynamic Equity Allocation Research Report
Welcome back to the world of water. If you think we focus heavily on water and water-related topics in our Natural Elements articles, we would say back to you that it is still not nearly enough! We cannot emphasize enough how significant it is to be in a circumstance in which we, and the rest of life on this planet, have, need and use liquid water1 on an ongoing basis, and particularly how its valuation is amorphous in our capitalism-as-usual based society.
Take a moment and picture the spectrum from richer to poorer nations; now separate out the populations of people who obtain their water resources via relatively-well-maintained pipes in their own homes, pumped-in all clean and potable from centrally-managed municipal services, whom also pipe out and dispose of any liquid waste a household might produce. These privileged populations must also benefit from a whole litany of other civil services that make such provisions possible, such as reliable access to electrical grids and laws/regulations that ensure safety, interoperability, and continuity of services, to name a few. Do these populations put the same absolute monetary value on a liter of water as those who must literally walk and carry it around in order to acquire it? Of course not; this valuation discrepancy is very much part of the economic problem/opportunity; or, in other words, the personal differences in valuing water exacerbate the problems of fresh water scarcity in some places and fresh water waste and tainting in others.
While in previous TPDEARR articles we’ve discussed water in other ways (such as its foundation of Pacific Ocean trade, which fundamentally undergirds our recommendation of [MAR.24 Squad Asset #4], or its impact on coastlines from sea level rise,) this quarter we wish to pull focus towards two other aspects of its societal use: how the loss of the fresh variety threatens global human hydration; and, separately, how it is being used to power a new variant of a burgeoning energy-production industry.
Unsalted, Please!
Water stress: a measure of how much freshwater a community uses and requires in relation to how much it naturally has access to. More use and lower access means higher stress, naturally. Or, from the investor perspective, the higher the water stress in an area, the greater the market opportunity (for, say, desalination technology, like with [MAR.24 Squad Asset #3]) as the local populations will more-highly value a particular commodity (water, duh) relative to its peers. Then, when looking at a global map of water stress, such as this one, provided by the World Resources Institute, one might read the higher-stress areas as simply holding more profit potential.
Holdup! Things are getting salty. Have we just crossed an ethical line?
As investors, we must straddle a particular ethic in the following respect: how can we (morally, ethically, psychologically) position ourselves on something like capitalist integration into the life-saving provision of freshwater to stressed communities? If one community has no natural access to freshwater and must acquire it from another, is it “okay” to profit from the uneven distribution of resources as an embedded feature of capitalist society? Rest assured, it is only via the levers of capitalism that such a feat as providing freshwater can be assured at population-sustaining scales; and since any chronically money-losing endeavor will inevitably fail, the only way to ensure a sustainable system is to ensure that it is at least profitable enough to persist. Even if governments/public entities fork up the funding, it is still capitalists (in market economies) who build and operate the enterprises that capture, clean and desalinate the water, package it for transportation, physically transport it (and build the transport itself, and provide the transport fuel, etc.), distribute it to communities, manage the logistics, staffing and financing of the multistage operation, and any other administrative or offshoot application of the whole shebang. All of these factors must exist and interplay, profitably, in order to be sustainable, and no modern economy has ever proved that it can be accomplished without capital flows.
Remember, individual investors today are not responsible for the locations of human settlements that stretch back for centuries, even if they have been guilty and complicit in exploiting certain populations for capital gain under different circumstances. Despite the bad rap, and the bad apples, we all still depend on the innovation and productive capacity of the commercial world and the capitalists who provide the capital flow for it. Capitalists/investors must participate by contributing their time and capital to the manufacturing and provision of water desalination, distillation and purification technologies, otherwise they will not exist; the life-or-death timeframe of the current generation is far too short to cross our fingers and hope that such tech will emerge from the evolutionary biosphere in the next few years.
So, what’s the question? To provide investment-based capital for the continuing development of life-saving technologies, or not? Logic suggests that the very existence of the critical, life-saving technology supersedes the debate about associated profits attributable to shareholders; in other words, in this case, it is better to first invent and produce the technology and then debate who gets to profit, and how much, later, rather than let the unsettled debate prevent the invention of the tech in the first place. The general public should be aware that shareholders, even individual minority ones, have more power and a bigger voice than some may think. It is possible to call attention to issues, such as profiteering, through shareholder-originated disclosures and announcements… assuming one actually is a shareholder. In public companies, there are levers of accountability in place, in fact. (Shouting from the outside won’t get one very far, despite what some concerted groups contend.) If you want to make a change, step in (financially) and speak up.
Water stress is an extremely difficult human predicament, made even worse with warming temperatures, to the tune of about a 20% drop in accessible resources for every 1oC increase in temperature, according to UN experts. Also of central importance to the prominence of technological focus on water treatment is the system of food production our society depends on. Our food, as it were, consumes way more water than we do. Only about 11% of potable water is used for domestic human consumption; agriculture uses in excess of 70%. We won’t belabor the wasteful system of mega-agriculture here as so much has been put forth already, suffice it to say that the importance of cleaning and desalinating accessible water is a growing issue for populations around the world. Human society can distribute the right technology to the right areas to help alleviate ills like water stress, and investor confidence is an intrinsic factor in the calculus of relevant capital flows; forget not the influence of the aggregate.
With that, it should be duly noted that [MAR.24 Squad Asset #3] has developed a novel desalination technology that’s specifically designed to plug-and-play into the modern containerized world for the utmost ease and installation of system transportation; shipping out thousands of units will require large and continuing sums of capital, but will also help reshape the human world, which includes more than just water for drinking. Guide your investments towards good ideas, and stay up-to-date on industry-reshaping evolutions, such as the reorientation presently occurring in the geothermal energy arena…
It’s Hot Down There
Let’s break things down to bare bones: “geothermal energy” refers to the generation of electric power from subsurface heat sources. That’s the gist of it. We won’t rehash the basics here as the US Department of Energy does a very sufficient job of doing so in their newly-released report Pathways to Commercial Lift-off: Next-Generation Geothermal Power, except to say that the old way, the “conventional” way, is substantially outgunned by next-gen geothermal technologies.
Conventional geothermal power generation is much more limited in its applicability as it relies on drilling down into specific and known hot pockets of liquid (which are highly uncommon and immovable) to access the heat therein. The new way can be accomplished, in theory, anywhere that hot rock can be accessed by drill, and with much less seismic disturbance. Drill a hole; send the water, which doesn’t even have to be clean freshwater, down to the hot rock below; pipe it back up and it’s hot enough to let off steam to spin a turbine. Bam, energy! Yes, there’re a lot of advanced technologies (and opportunities for optimization, nerds!) involved in the whole process, such as meticulously calibrated layers of alloys to shield drill holes and piping, but that’s the chain of physical forces involved in the operation to generate usable electricity, which we will not stop using more of.
The resource discovery opportunity is enormous as hot rock is virtually everywhere under the crust, weather and climate change don’t alter the volume of supply, operations won’t consume the freshwater we so desperately require, and the primary industrial procedure involved is that of basic subsurface drilling, of which there is already an enormous workforce (more than 300,000 in the US alone) that can be retrained and utilized to more-quickly advance the industry’s evolution. The new, next-gen process is an excellent, albeit unglamorous, step in our sustainable energy evolution.
To the detractors who may claim “Haste!” in reference to delays to profitability that may stem from long establishment times: Yes, it can take anywhere from 4-10 years to bring new generation nodes online, but the process is already well underway. Again, we will refer to the DOE’s Pathways report (because who reads something the first time it’s suggested to them, honestly?). Every year that passes from now will likely find more and more investment inflow until the level of next-generation deployment is no longer in its foundling stages, and the early entry opportunities have all been gobbled up to history. Sure, it may take a decade before geothermal generation as a whole starts to eat away at larger chunks of the fossil fuel market share of energy generation, but such progress will have been happening in fits and starts all the while; for this very reason we can’t help but point to [MAR.24 Squad Asset #6], an early leader in the next-gen geothermal space that is already operating around the trans-Pacific, with assets online across the US and Canada, as well as throughout the Asia-Pacific region, including in Japan, China, Indonesia, the Philippines, Thailand, and New Zealand, as well as a dozen other nations we don’t specifically cover in the TPDEARR.
By the time “the future is now”, it will be too late to have gotten in early on the groundbreaking (pardon the pun) technological advancements; the science behind it all is sound at the outset, enough so to convince the US government to outlay funds, such as with The Energy Act of 2020, or the Inflation Reduction Act of 2022. [MAR.24 Squad Asset #6] is a public company excelling in the geothermal space—perhaps the best way to get in early with the most pure-play potential. As more mainstream investors get wise to relevant scientific updates, headline interest in geothermal company equity will grow, as such things do via the influence of the aggregate. Entry into the subsector now precedes mainstream adoption of the strategy and coheres well with the intermediate-term timeframe of the TPDEARR.
Additional Notes
Water. It all comes down to water. Remember: we are water; we are one. Underestimate not the hydrological cycle, and the role it plays in your own life… and your own investments.
Alright, folks, that’s a wrap! Channel your capital wisely. See ya next time!
- Though recent research on the potential prevalence of subsurface liquid water in exoplanets around the universe blows open our understanding of how common water may actually be, the fact nonetheless remains that we humans are here, now, on this planet, constrained within these liquid-water-based circumstances as long as we are bound to our biological bodies. ↩︎
tkscm, limited 
