Citizens of Ankara are thirsty… very thirsty. Two Fridays ago a good portion of the city’s 4 million residents took to their prayer mats, imploring divine help to solve their worsening drought crisis.
“Drought has struck the world suddenly,” said Melih Gökçek, the city’s mayor. “We didn’t presume that God would allow such a disaster… God knows everything. If God wills it, our water shortage will immediately end.”
Whether God has a greater plan, or was simply out of the office for the day, we are unsure. We do know that since this city-wide prayer was offered the drought has worsened considerably. Local newspapers report horrendous stories of diseases spreading due to desperate consumption of contaminated water. Stray dogs are dying in the streets.
Comments made by Mayor Gökçek, imploring residents to “take a holiday, but only wash your hair,” have done little more than enrage the city’s residents….
In an ill-conceived attempt to stave off a crisis earlier this month, Gökçek divided the city in to two sections, alternating supply with a two-day-on, two-day-off water conservation plan. The plan backfired. Some districts suffered through three and four day periods without water. The constant diversion of this precious commodity placed huge strains on already insufficient infrastructure. On August the 4th, and then again two days later, parts of the city became flooded when water mains finally gave out. Following the burst, the municipality announced it would be unable to provide the entire city with water for three days. Hospitals were forced to stop admitting patients and non-vital surgery had to be postponed. Predictably, angry protests erupted around the city.
Since this catastrophe, the price of bottled water in Ankara has skyrocketed. Water containers, which sold for 6 Turkish lira (US$4.50) before the water cuts, are now selling for 17 Turkish lira (US$13).
Turkey’s agriculture industry has also been hit hard. According the country’s Agriculture Union, farmers in the western and southern Anatolia regions have lost crops to the value of more than 5 billion Turkish Lira (US$3.9 billion).
“This is the most destructive summer we have ever suffered,” says Semsi Bayraktar, president of the Turkish chambers of agriculture, which compiled the figures.
Some will undoubtedly fob this off as just another foreign crisis, a catastrophe restricted to the plight of second or third-world countries and far off deserts. This is simply not the case. Rainfall does not discriminate on grounds of a region’s economic prosperity. It takes no account of race, GDP or – despite enthusiastic prayers from millions of people here in Turkey – religion. But rainfall is only one part of the problem. What to do with the water once it has descended from the heavens is at least equally important. Gross mismanagement (as has been seen here in Turkey) and insufficient infrastructure is also to blame.
Here in Turkey, for example, real GDP growth hummed along at an impressive 7.2% for the period between 2002-06. Its largest city, Istanbul, is a bustling metropolis of some 12 million residents and joining the European Union looks likely in their not-too-distant future. Despite this, resource management in the capital city of Ankara has been nothing short of a disaster.
The State Hydraulic Works warned Mayor Gökçek about possible water shortages back in 2004. The official warning proposed Mayor Gökçek take immediate steps to tap reserves from nearby Gerede. Rather than heed the call to action, Mr. Gökçek stubbornly persisted with his own pet project, a subway system. The daily newspaper “Hurriyet” quoted him as saying, “We will not be able to be involved in the financing of the water supply project because we must secure our financial resources for the priority project.” It is worth noting that no other city in Turkey, including Istanbul, has a subway system.
Of course, it is difficult to manage water that is simply not there. Other nations around the world are suffering through serious dry spells.
Australia, one of the world’s strongest performing economies over the last decade, is in the throes of its worst drought in recorded history. Earlier this year, Prime Minister John Howard told a largely non-religious Australian population to, “hope and pray there is rain”.
Down Under, drought is wreaking havoc on the nation’s major export crops. Production of cotton, a notoriously “water-heavy” crop is predicted to fall by 29% this year. Given that Australia is the fourth largest cotton producer in the world, this is bound to have widespread effects. Many industry analysts believe the chance for Australia’s cotton industry to recover for the 2008 period has already expired.
Wheat is another crop that has been all but decimated by lack of irrigation. In Australia, the world’s third largest producer of wheat, the 2007 crop fell a staggering 29%, down almost 10-million tones. On the other side of the equator, droughts in Canada have contributed to its wheat production forecast being cut by up to one fifth and China’s output is estimated to come up around a tenth lower thanks to water- related catastrophes – both drought and floods. Over in the Ukraine, the world’s 7th largest wheat producing country, shipments will be a full 58% lighter this year thanks to, you guessed it, drought.
These shortages, coupled with rapidly increasing demand from emerging nations, has seen wheat prices soar to record levels. Last week, wheat traded for US$7.44 a bushel on the Chicago Board of Trade. In the UK, bread making wheat was trading at almost US$400 per tone… double last year’s price.
And it goes on…
In Kentucky, TN., cattle farmers are desperately selling their herds off at local auctions, unable to feed them any longer. Pastures are simply non-existent and bales of hay, which some farmers have had to drive interstate to obtain, are selling at up to triple their usual price.
From Turkey to Kentucky, parched lands and the people that live off them are desperate for water. Smart investors will see this as an opportunity to top their portfolio up.
The Daily Reckoning Australia