Water Shortage Means Big Money for Small Alaska Town

Bellurget Jean Louis | Stock Image | Getty Images

Sitka, Alaska, is to water what Saudi Arabia to oil. Both possess seemingly bottomless amounts of their respective liquid assets.

Sitka, located in the state's Inside Passage, has less than 10,000 residents, but the town has more water than it knows what to do with.

What if Sitka, its city fathers have asked themselves, could sell water to those people or entities in the world's arid parts? Such a transaction would guarantee the town healthy revenue and put water where it's desperately needed.

The town is offering to sell 95 billion gallons a year—a tiny percentage of the water in its natural reservoir—for only a penny a gallon. It has invested more than $1 million in a pipeline that can move 33 million gallons of water per day from the mountain lake to the shore.

Liquid Assets - The Big Business of Water
Liquid Assets - The Big Business of Water

Sitka's water comes from the nearby Blue Water Lake, a gorgeous lake about 90 miles southwest of the capital Juneau. The area gets 86 inches of rain a year and 39 inches of snowfall, so it has plenty of a precious resource that drier parts of the world would envy.

As a point of comparison, New York and Miami, which aren’t considered especially dry areas, annually get 45 and 60 inches of rainfall respectively.

The plan is to pump the water into tankers, the same way oil is transported, and ship it to places like the Middle East or India that have a thirst for more water. Sitka’s leaders have even considered something called a “bladder”—a huge plastic bag that is attached to a boat and is dragged behind it while the container floats on the sea.

So far, their overall plan to sell the water hasn’t worked. Sitka officials are looking for a partner willing to invest in the infrastructure, so that a tanker can park near the pipe. In addition, the country or company that buys the water, naturally, needs to receive and store it on their end.

However, water experts contend that the plan isn’t likely pan out any time soon, because it costs so much to transport this cheap, but very heavy, commodity.

“They're dreaming. That's a dream that's never going come true, because the truth is, it costs more to drag that water through the ocean to the Middle East from Alaska than to desalinate it in the Middle East,” said Dr. Peter Gleick at the Pacific Institute for Studies in Development, Environment and Security in Oakland, Calif.

“A typical oil tanker full of oil is worth $200 million or $300 million on the market. If you were to fill that same oil tanker with water, it's only worth about $400,000 or $500,000.”

However, Sitka officials are optimists: They believe that the economics will become more favorable as the world’s population grows. And when those numbers climb high enough, the world’s dry places will need to look for more ways to get water.

And maybe, just maybe, they'll look to Sitka.

See more about the global water crisis, conservation efforts in the US and other countries, and how businesses are responding, in a CNBC Original Production,“Liquid Assets: The Big Business of Water,” Thursday September 30 at 9pm ET.