If water is a necessity for life and diamonds are not, then why are diamonds so much more expensive than water? Economists explain this paradox by saying that water is more available and easier to acquire, but the availability of water is about to change, Bay Area venture capitalist Martin Lagod told about 30 students at a Friday afternoon lecture.

The talk was the latest in a series hosted by the environmental engineering and science program (EES), a subprogram of the civil and environmental engineering (CEE) department.

As water becomes a scarcer resource, it may command a high price and become a source of investment, said Lagod, a managing director at Firelake Capital Management.

“There is a big market for water,” he said, “but right now there is still a scarcity of experienced entrepreneur teams and big, innovative ideas to tap into that market.”

Lagod emphasized that while the water market has potential for the future, this would involve a large-scale infrastructure construction.

“Water is an inherently local resource,” Lagod said. “As of now, existing channels of water transport are not viable for large-scale entrepreneurship in the water market.”

Lagod also emphasized that this entrepreneurship must begin in developed countries such as the U.S.

“In many developing countries the baseline is so low that the economy is still focusing on satisfying basic human needs,” he explained. “There, the only way to initiate infrastructure would be individual projects, which would mean very high costs.”

Because the seminar approached civil engineering from an entrepreneurial perspective, a handful of Graduate School of Business students joined CEE students at the event.

“I’m glad Martin came to speak about water,” said Kelsey Lynn M.B.A. ‘08. “It’s an overlooked area of clean-tech.”

CEE students who attended the seminar said they appreciated hearing about the real-world applicability of what they learn in environmental engineering classes.

“It’s interesting to listen to a discussion on water from a venture capital standpoint rather than from a technical standpoint,” said CEE graduate student Holly Johnson. “In the engineering and science programs the classes are very rigorous and technical, so it’s nice to get some financial exposure and real-life application.”