8 Nov 2018

Access to freshwater will be an escalating challenge in the next few decades as cities deal with intermittent water crises much like Cape Town’s recent drought. I want to talk about rented-out desalination as possibly a partial solution to some of these problems in the context of recent economic trends, specifically the less than stellar fiscal health of cities. I’m basing a lot of this on a pew report about US cities, so mileage may vary if you applied this to cities internationally. [1]

What stood out to me is, despite moderately increasing revenues and reserves, cities are spending a lot of money on new bonds and incurring a lot of debt. This signals to me that, if a water crises (or really any other crises) were to strike, cities wouldn’t be super well prepared to deal with it, especially if it lasted 2+ years. Cities could affect the demand side of water with rationing, jacking up prices; however, they couldn’t do much for the supply side.

First of all, it requires a lot of money upfront, which most cities are unwilling to do outside those that face recurring drought or are in arid areas (see Israel and Saudi Arabia). To fund a good sized desalination plant, it’ll take quite a bit out of the cities reserves, which based on the pew article isn’t a whole lot, or they’ll need to issue even more municipal bonds, which most cities have already issued a lot of. Also, from a political calculus perspective, it’s just not worth it to spend tens of millions to solve a problem that may only last for a year or two.

Second of all, there’s a lot of lag time between allocating funds for a desalination plant, and it being fully operational. For example, the US’s largest desalination plant, Carlsbad, took about 3 years to build [2] The intervening time it takes to build desalination plants takes a toll on the reservoir levels.

So clearly cities need some interim way to deal with a water crises from the supply side that doesn’t involve constructing desalination plants. They could do a better job conserving water for droughts, but that may be a heavy lift politically if there’s a large sector like agriculture that depends on a lot of cheap water. An easier way would be to just rent desalination plants. What would this look like you ask? Well I see there being two possibilities: one where desalination plants are containerized, and the other where there giant floating platforms not unlike oil rigs. The first is already happening to an extent, and there are a number of companies that do this; however, they mostly cater towards businesses and individuals rather than cities and governments. The second one hasn’t been created as far as I know, and I’d be interested to see what its costs and benefits are compared to the smaller land-based ones. I won’t dig into the details, as I don’t really know what I’m talking about as far as the engineering goes.

Regardless of the actual form, I think the idea of rentable desalination units fits within the larger trend we’ve been seeing of preferring renting over owning, especially for capital intensive investments (see everyone’s favorite ride-sharing app). I think this trend has still not been fully exploited. It would take a lot of capital and engineering innovation, but I think there’s still a lot of metaphorical gas left in the tank of the sharing economy, especially when it comes to multi-million dollar expenditures on hard capital. Off the top of my head manufacturing, energy generation, and agriculture. So if anyone wants to become the, wait for it… Uber for water (I’m so sorry), then I’d be interested in seeing how that pans out.