(BY HUGO)

Just a quick post on the issue of hydraulic fracturing and contamination of underground drinking water already explored in a previous post. This article shows the potential repercussions of the internalisation of pollution costs on energy and gas producers. If the Amercian Congress regulates to protect groundwater, a merger between energy producers might be threathened. However, Congress is unlikely to act, as quoted analysts report...

I would like to add more points on Hugo's post. Another thing that will exacerbate the problem is the fragmentation of legislations covering groundwater. Under Indonesian Law for example, the regime for dewatering for mining activities is not covered by the regulation on groundwater, it falls under the mining law. Geothermal had a separate law and I have yet look deeper into how this issue is addressed under the implementing regulation of the Geothermal law. But looking at the mining experience and the volume of water used, there might be temptation for regulating it separately from the water law regime.

(BY HUGO)

A new report authored by Sharlene Leurig and titled «The Ripple Effect: Water Risk in the Municipal Bond Market» was published by Ceres last week.

The report studies water scarcity risks for public water and power utilities in the U.S.A and details the related financial risks. This is a very interesting read. Particularly refreshing is the section on why the model for assessing risks related to power utilities may be wrong (see p.41-42 and Annex C). You don't see such an admission often, but it is entierly consistent with the original intent: obtain the most accurate risk assessment possible rather than portray an abstract model as infallible.