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Integrated Markets / Without Water, Lower Agricultural Yields, Fewer Ships Required

May 21, 2013
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Three integrated industries, water, agriculture and shipping face an interesting long-term problem resulting from the depletion of the High Plains Aquifer in the U.S. Should the expectant result come to pass, global markets will also be impacted.

The High Plains Aquifer (“HPA”) that begins beneath Wyoming and South Dakota and stretches clear to the Texas Panhandle is the key source of water for agricultural production in the U.S. Portions of the High Plains Aquifer are rapidly being depleted by farmers who are pumping too much water to irrigate their crops, particularly in the southern half in Kansas, Oklahoma and Texas. Draining the HPA has been occuring for years and now the results of pumping for irrigation such quantities of water are becoming increasingly apparent in the southern areas of the HPA. While in many locations the HPA may support water demands for in excess of 100s of years, as one goes south, increasingly the HPA is dry, having been impacted by irrigation and drought. 

“Vast stretches of Texas farmland lying over the aquifer no longer support irrigation. In west central Kansas, up to a fifth of the irrigated farmland along a 100-mile swath of the aquifer has already gone dry. In many other places, there no longer is enough water to supply farmers’ peak needs during Kansas’ scorching summers,” stated The New York Times. “Most of the creeks and rivers that once veined the land have dried up as 60 years of pumping have pulled groundwater levels down by scores and even hundreds of feet”.  Corn production is becoming increasingly impacted.

The impact is clear, we can expect lower yields as the HPA is drained for agriculture production. We can also expect farmers to shift from high water demanding crops to low water demanding crops.  Furthermore, we can expect greater use of low water plant technology. Finally, one can expect, global markets to become increasingly impacted by a lower water table in the HPA (Note: there is no limit to the impacts and outcomes). And while this is a long-term story, the impact on shipping will be felt in years to come. Potential export controls of grain and less cargoes are likely. The problem is clear, the solution is more challenging.

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