Jang 1

Kevin Jang
Ms. Polk
AP Macroeconomics and Microeconomics
24th September, 2015
Economic Literacy Project- Scarcity/Opportunity Cost/Choice
In the article, Investors Are Mining for Water, the Next Hot Commodity, done by the
New York Times, a Californian company going by the name of Cadiz which is located near
southern California is investing large sums of money to dig wells of water underneath the
Mojave Desert. The owner of the company believes that in the sums of money that is being put
into the project, the future would yield a wealthy profit for water is already a precious
commodity. With water becoming the new oil of the 21st century, the owner believes that there is
a lot of money out underneath the Mojave Desert. The item that is being produced in this
situation is wells and pipelines in search of water untapped underneath the Mojave Desert. But
the problem lies that the company is spending more than it makes annually by a drastic amount,
relying solely on investors and issuing more stocks.
The Handy Dandy Guide is a list of 6 principles that explain the economic way of
thinking. These set guidelines allows for an easy and complete way of deciphering how
economically thinking can help. Relating the Handy Dandy Guide to my article I have found that
the owner of the company is economically thinking for the betterment of his company. He chose
the alternative that involves the greatest benefit, though he chose the route that involved more
cost. He realizes all choices have a cost and gave the incentive of water to his backers and so on.
I support the owners actions of his company because I believe that the risks he took are
necessary in order to yield a future profit. Although he has only made $7.1 million, since 2005
and it costs him $10 to $20 million annually, I believe in his vision of water as a precious and
lucrative commodity. This relates to class because we are learning about opportunity cost and
how the loss of potential from other alternatives when one alternative is chosen. Cadiz has
chosen to invest large sums of money to dig wells in search of an underground river, while other
alternatives such as the desalination method exists with less financial risks. In the future I would
like to believe that the investment would yield a healthy return in the loss of finances of the past
couple of years. But in reality there are two things that can happen to this situation in the near
future; either they dig enough water to warrant the construction of 43 miles of pipeline, or the
failure of project the loss of millions of dollars.

Jang 2

Resources
Schwartz, Nelson D. "Investors Are Mining for Water, the Next Hot Commodity." The
New York Times 24 Sept. 2015: n. page. Print.