Here's an offbeat, long-term thought: People have been moving to warm, dry regions for decades, and they are now facing the inevitable conflict between falling water supplies and rising populations. For Americans living in Arizona, Southern California, and several other western states, life is about to become a lot more expensive and complicated as water prices rise to bring supply and demand into balance. And water problems are not confined to the Southwest. Georgia is in the grip of an unprecedented drought, and even Florida is running short of fresh water. The Sun Belt, in short, is no longer the cheap, restful place to retire or raise a family that it once was. Meanwhile, warmer weather is making those nasty northern winters a lot less onerous. How long before the realization begins to dawn that places like Michigan and Ohio offer an intriguing combination of cheap real estate and abundant fresh water? The northern United States has nearly 20 percent of the surface fresh water on earth. No one there worries about washing their car in the driveway or watering their lawns. Simultaneously, cities like Detroit and Cleveland are being hollowed out by people moving to the Sun Belt, leaving homes and land for laughably low prices.
Governors in the South and West are already calling for a "national water policy" in which Washington forces the North "share" its water ls> W O
Table 20.8 Systems Integrators
Company Ticker/Exchange Headquarters Market 6/27/08 ($ millions)
Akeena Solar AKNS/NASDAQ U.S. Residential solar 166
Honeywell HON/NYSE U.S. Power management 36,510
IBM IBM/NYSE U.S. Building automation 164,890
Johnson Controls JCI/NYSE U.S. Lighting systems 17,010
Phoenix Solar AG PS4G.F/Frankfurt Germany Large-scale solar 622
SunPower SPWR/NASDAQ U.S. Residential solar 6,160
WorldWater & Solar WWAT.OB/NASDAQ U.S. Water/solar 134 Technologies with dryer states. This is a nonstarter politically, but it will serve to draw attention to the growing water wealth disparity between the Rust and Sun belts. Over time, this might translate into a reversal of the post-World War II migration pattern, with people leaving the parched Sun Belt and moving north. The result might be increased demand for Rust Belt real estate. This is neither a clean-tech play (though it is driven by the same forces that make clean tech so interesting) nor actionable right away. In the short run, northern real estate is suffering along with the rest of the national property market. But at some point, it will become a classic value proposition. When that happens, the way to profit from it will be through the shares of the handful of home-builders, developers, and community banks that survive the real estate bust and are healthy enough to start lending and building again.
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