California has had a water problem since recorded time, as discussed in our blog of January 28, 2016, “Water, Water, Everywhere…But Not a drop to Drink.”
Typically, winter rain and snow provide much of the water used by Californians throughout the year. Recently, the state has suffered through several years of drought. One measure of the state’s water situation is the snow pack. At year end 2022, this was more that 200% of normal, compared to 20% of normal at the end of 2021. An increase in precipitation is welcome, but not the large and rapid succession of storms during the current season.
While some would like to attribute current conditions to climate change, which may be a contributing factor, it is important to note that California has a long history of wide swings in precipitation.
Investors should be careful in seeking to participate in potential solutions. As a general rule, until causes have been correctly identified, it is difficult to develop successful solutions.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA