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185 Understanding water, Wells and ASADA's in Costa Rica

185 Understanding water, Wells and ASADA's in Costa Rica
185 Understanding water, Wells and ASADA's in Costa Rica

Podcast Transcription

[Richard Bexon]
Good morning, Jerry.

How are you doing?

[Jerry Werth]
Good morning, Richard. Thank you. Very well.

[Richard Bexon]
Nice to see you. Yeah. Great to see you again.

I really appreciate you taking time to come on the podcast here and I know we're going to cover some exciting topics here, but the question I like to always get started with just to give kind of, I suppose, people an idea of like, you know, what's happening here, the volume of work, kind of the finger on the pulse of Costa Rica. I mean, you know, compared to, I would say, you know, Q4 2023, I mean, how is Q1 2024 looking for you, Jerry?

[Jerry Werth]
We're busy. We're busy. There's a lot of active projects going on.

I would say that we've seen an increase in the last six months.

[Richard Bexon]
Wow.

[Jerry Werth]
With active projects, definitely.

[Richard Bexon]
So, I mean, you know, you're typically in the initial stages of a project, right? Meaning that you guys are kind of in that water stage, which is vital here in Costa Rica. I've covered multiple podcasts on like, again, if you do not have legal water here, like you can't do anything.

[Jerry Werth]
It's essential, Richard. I'm the first guy you need to call. When you get off the plane, you call our company.

OK.

[Richard Bexon]
And it's so confusing as well, Jerry, you know, because again, is, you know, there are some areas, you know, again, there are setbacks, there are things you can do, things that you can't. There are processes you have to go through. But I mean, maybe you could just give us an idea of just generally, you know, the options available to people in order to get a, you know, a legal water source here in Costa Rica.

Yeah. I'd be happy to.

[Jerry Werth]
I'd be happy to. You know, I'll start off with the preferred method. And I look at, there's groups of people that come down and we're seeing all different groups and we're seeing families move down, not just the family with the kids.

We're seeing generations moving down and they'll buy, they're buying large parcels of land and they're building their little compounds. You have couples that are just building luxury homes. You have investors, obviously, that are building projects.

And my first and foremost, my favorite well for a water source, and excluding springs and excluding river concessions, it's always going to be a drilled water well for private use on one piece of property. And that is a private system that you have complete control over. You don't have to worry about any type of government entities coming in and making things complicated.

Now, the drawback to that is, is that two planos or two separate properties can share that well. That's the max. There's not any more.

And there's always these stories going around and I hear it weekly and I've been listening to it for over 15 years is, oh, but somebody told me I can do five properties or somebody told me I could do 10. I just heard it from an engineer the other day and he's telling me that he was going to go to Salaquart to fight and get 15 concessions. It's not going to happen.

It's not going to happen. So, that's my favorite. That's what I have at my house.

That's what I recommend for people. Now, if you're an investor and you're wanting to purchase land and build out properties, my number one favorite is build the project out as a horizontal condominium. And horizontal condominium in our language in the US, that's a subdivision.

And there's certain construction methods that you have to follow. You have to follow underneath the guidelines of ENBU and you have to do things like curb and gutter, overhead lighting, entryway sometimes. It's a nice project.

It's absolutely a nice project. Now, when you're a horizontal condominium, you can drill one well and according to your master plan, you can provide water to every lot on that property. And the horizontal condominium also allows you to segregate your property into much smaller lots.

So, for instance, if you're going to have an agricultural lot, which we call an ag lot here, that would be a farm for somebody. That would be no less than 5,000 square meters. You cannot segregate the property smaller than that.

With a horizontal condominium, you can take lot sizes all the way down. I've seen as small as 200 square meters. So, you really develop out the entire project with a well-thought-out plan, master plan.

And the water in the project maintains ownership by the association of the condominium. So, no problems, no outside influences, again, with government or other entities. And now, the third, and it seems like the most popular that everybody just conglomerates to, and we spend a lot of time working with clients on this, is that you can take your project, and you can segregate it into 5,000 square meter lots, and then you build out the entire water system, and you donate it to what's called an ASADA.

And ASADA is a local water board that is governed, well, regulated by IEA. IEA is like our federal department for water resources in Costa Rica. And people love that because they're always sold on, it's going to be fast, right?

And they're not going to have to do that many things. They're not going to have to do curb and gutter, and they're not going to have to do overhead lighting. The reality is they are going to have to do fire hydrants.

They are going to have to do a technical study. It isn't a super fast process. And I think the difference between a horizontal condominium project and an ASADA project is maybe six months, maybe a year longer, but the benefits outweigh the hassles, so to say.

And one of the problems that we see when you're connected to an ASADA, it's the way that they've regulated ASADAs. Now, remember, an ASADA is a rural water board, okay, that's actually a corporation, which we would call associate ad, so it's a private business that basically sells water to the public under the guidelines of AYA. Now, what happens is that most of these water boards are ran by local volunteers.

You have wealthy investors coming in that need water from this local water board, and that's when it gets really complicated.

[Richard Bexon]
Oh, I think people can read between the lines, Jerry. I mean, yeah, you know, and every ASADA works differently and has different agendas. I mean, I just had a great experience up in Aranau with the Water Association up there, and it was great.

I needed water for two agricultural lots I had, and I had to pay the engineer to do the study. He came back, then the ASADA came back and said, hey, pay me $20,000 for two waterlets, basically. And I just had to go and buy the materials, and they gave me my waterlets.

Actually, I should be getting them today, actually, I hope.

[Jerry Werth]
Yeah, no, and it's a good system. It just could be so much better, so to say, because the whole reason for an ASADA is for the government to control people from selling water, well, from distributing water without any type of regulation.

[Richard Bexon]
Yeah.

[Jerry Werth]
And ASADA's like you're talking about, and let me back up a little bit, because I'm not saying that ASADA's are bad. I'm saying ASADA's that you just need to be aware of how they operate, right? And you have two different types of ASADA's.

You have ASADA's that have a convenio with IEA, that means they have a chartership with IEA, and then you have ASADA's that don't have a convenio. And where you need to be very careful is that the ASADA's that don't have a convenio with IEA, they're pretty much doing whatever they want. They don't need to get anything approved with IEA.

And where the protection for the landowner is, is when you donate this water system to the ASADA, and you're looking to get in turn 100 water letters, you want to have backup that, you know, in five years when there's another board in that ASADA, it's not going to have problems. And they're constantly switching people, right? So those are the things.

And that's how we help clients. We have a group of four individuals that are from different companies. We have an engineering company, obviously us, a topographer company.

We have a negotiating company that goes in and negotiates things between the client and ASADA. The engineers will make sure that the technical studies that you just mentioned are approved by IEA, not just the ASADA. And when everything gets put together on the table, there's an attorney that puts everything written down, signed.

So it's a good concrete plan. I had a client that just winged it with an ASADA near Hakko. It wasn't in, it was near Hakko.

And he made a deal. And they said, ASADA said, yeah, let's hook up your project to our ASADA. So he spent a little over $300,000 and brought a brand water line all the way up to near Villa Caletas.

[Richard Bexon]
I know, I know the project and I know the individual. Yeah. I mean, it sucked, dude.

Sucked. Like that's horrible. Like he put in all that investment and didn't get those water letters.

[Jerry Werth]
He didn't get his water letters. And it's not his fault. It's just because, you know, there's a big, Costa Rica is the land of secrets when it comes to the proper way of doing things, you know, and it's not written in black and white and you have to have experts knowing what to do.

And that just takes experience and you have to pay for your education in Costa Rica. And that means, you know, you got to be here a while. You've got to take your licks.

[Richard Bexon]
You've got to lose some money, you know, and this is, I always say, I mean, you mentioned it's not the country of black and white. It's great. There's a lot of gray in everything here.

It's like, right. There might be black and white written down, but that's not how it works. And like people sometimes don't get that, that like it's written down black and white.

So why doesn't it work like that? And I'm like, I don't have an answer for you. It's just, this is the way it's done.

You know, it's funny, Jerry, though, because people are willing to put millions of dollars in land, but are not willing to hire consultants to make sure that they are making the right decisions in that, you know, in that investment. It kind of seems foolish sometimes.

[Jerry Werth]
I can't figure it out, Richard. I don't, it just seems like Americans, well, I don't want to say America, just foreigners in general, they get here, they're under this, this adventure mode, you know, and I remember when we came here 23 years ago, I was like that for about six months. You just love everything.

It's green. There's, you know, toucans flying and what you feel really connected to the local people. And you just want to, you know, be, you just want to love everything.

It seems like the thing is, you need to do your homework. You need to get references. You need to see, look, you contract with somebody here.

You check out what they've done. You talk to the people they've worked with. You see if it was successful, was not successful.

Because the mentality here a lot of time is, is like, oh, but I can do that for you, Richard. And I'm only going to charge you half. And the first thing we say is like, oh, great.

Yeah, let's go for it. You know, it's be careful, guys. Be careful.

[Richard Bexon]
I mean, I get surprised every so often, but it's like one in 20, you know, and it's like finding gold for me. It's like, you know, I recently found a great carpenter up in San Ramon area and he delivers stuff on time and exactly how I wanted it. And I was like, where's the catch here?

And then like, I started to give him more work and he's still delivering on time, but we need to like go and sit with him because we're giving him so much work now that we have to sit with him and be like, look, have you planned this out with everything? You know, because he was just a carpenter. And now, you know, it's taking on a lot of work.

So we just wanted to make sure that like he structured his business and timing and everything ready, doesn't start missing deadlines. Because dealing with another home finish there where a big company here has completely missed a deadline by like two months on that.

[Jerry Werth]
But anyway, it's become a lot better, though. The level of professionalism has increased tremendously after COVID.

[Richard Bexon]
Yep.

[Jerry Werth]
Yeah. So, I mean, they're catching up. People are catching up.

You got to provide customer service, you know?

[Richard Bexon]
I mean, just jumping back to your point on a condominium, I completely agree on instead of subdividing agricultural lots, you can still do a condominium with lot sizes large if you want to. I mean, it makes no difference. The good thing about it is you actually have a formal HOA, like where you can have rules and regulations on how big a house, how high, what color it's to be, etc.

You know, which some people don't like, but I kind of look at it and go, look, it protects your asset. Absolutely.

[Jerry Werth]
There's no other way. If I came to Costa Rica and I was retiring and I wanted to buy a pre-build and not go through the construction process, it would absolutely have to be horizontal condominium. Your investment is protected.

You don't have to worry about the guy. Container homes are so popular here now. And I go see these projects and the guy's got a million-dollar home and the guy next to him just put a container home up.

[Richard Bexon]
On agricultural parcels, you can do that. But in a condominium, you cannot. Well, Jerry, some interesting stuff's been happening, I suppose, over the past couple of years.

They keep shooting satellites up in the air, which I understand has changed your business quite a bit. Maybe you could just give us a bit more information on how you guys are using technology and finding water in Costa Rica, because everyone's like, Costa Rica has tons of water, just the infrastructure is not great. And it used to be people used to go out there with the rods and etc.

I mean, give us an idea of kind of, I'm sure that you're not running around with rods, like kind of what technology you guys are using.

[Jerry Werth]
You'd be surprised, though. It's like once a week, you know, you don't have the little rods on you, do you? No, I don't.

No, it's, you know, a short, I'll make this very brief, very short. And it's just a little bit about my history. I moved here in 2001 and I came here because my kids at the time were 7 and 10 years old.

And I wanted, they were doing the video game thing back then. They were like the pioneers of staying inside and playing video games. And I was like, I told my wife, oh no, you know, I had a drilling company in Colorado for 17 years and we just sold it.

So we were, we were like, you know, like, what do you call that? A gap year, definitely. You know, I said, let's go down to Costa Rica.

My wife was born in Mexico, raised in the United States. So she spoke Spanish and I was like, you know, we'll wing it. She can translate for me for a while.

I bought property in Nosara. And Nosara back then was like, man, it was nothing like it is now. And I started looking for, you know, developing this land.

I bought it right by the beach. And it's called drilling companies, called drilling companies. I couldn't get anybody to return my call.

Long story short, finally got a guy came out and he wanted a ton of money. And I was like, I'll just bring a small rig down and just drill it myself. When I'm done, I'll sell the rig.

And I started drilling that well, you know, this is a dinky rig. And I had this guy helping me. And people lined up, I mean, literally lined up down the road in Playa Pilata.

Hey, you got a card? Hey, can you come and drill for me? I got no water.

And it was just like, bling, you know, seems like people need water here, right? We moved on. And pretty soon the boom came of 2000.

This about, we did that for about four or five years. The boom came and it had all this money coming into Costa Rica. And I got guys saying, hey, can you drill for me up on this mountain?

I'm like, absolutely not. This rig's probably good for, you know, 100 feet, 200 feet. And believe it or not, two different individuals came up to me and said, how much one of them rigs cost that he can drill on that mountain?

I'm like, I don't know, half a million bucks probably. If I get the rig, can we trade and work? I'm like, absolutely.

Let's do it. Now, keep in mind back then, if you asked any geologists, Costa Rican geologists, you asked any government agency, there's zero water in the mountains. That's what they would tell you.

There's no water in the mountains. Do not waste your time. There was no well drilled deeper than like 30 meters.

So we got, we brought in this big air rig. I worked a deal with this guy and he had a lot of land. And we kept busy with him for like three months, paid off the rig.

And we started getting down around 200, 250 meters. And we're getting nervous. And all of a sudden, boom, I mean, we just hit this massive amount of water.

And everybody's, you know, happy, right? So then we just discovered something, you know, that was going to be like, change our whole aspect of things. So that went great.

And then that's when we started getting into geophysics. Geophysics, because we found that we could hit water in one spot, but then move over to the neighbor's property and not hit anyone. Right.

And we were finding places that sometimes we would, it would be a dry hole here. And we've moved the rig over one meter to the South and have water. So we figured out the water's cruising in the veins of the rock and the fractures of the rock.

So that's what we, that's when we really started getting, I started getting interested into geophysics. So we invested some money, brought some specialists down and we started doing geophysical surveys on these properties. And it worked out great.

Very labor intensive. You have to stretch out like a kilometer, thousand meters of cable across the property. And you have 84 sensors on it.

You inject high voltage DC current into the ground. And basically it's a high-tech ohmmeter. You collect about 10,000 readings and you come back with a 2D graph that shows you where the fractures are in the formation.

And we started doing that. And it's great. But again, it was very hard to do because a lot of these properties up in the mountains are very steep, you know, and you can't walk them and you can't stretch cable out.

And where we found water, we couldn't get a rig in there. So fast forward, that was our, we did that for many, many years and that's been, became kind of like a stable here in Costa Rica as far as finding water. One of the most trustworthy ways.

Here recently, in the last, this technology that we're able to use now is using satellite technology. And it's been around for about 20 years. The World Economic Fund put together this technology doing an inventory on the world's groundwater resources.

And it was more of an academic resource for providing data. And I think they came up with some astronomical, each country, they put it together in cubic kilometers of water. And Costa Rica has something crazy like, you know, a 990,000 trillion cubic kilometers of water.

It's huge, the amount of water. What has happened in the last five years is that more and more satellites have went up. And now there's four private companies that are offering this service for identifying where groundwater is.

And it's not, we're not looking anymore for the obvious areas where there's water. When I say obvious, we're not looking at areas that are recharged with rainfall. We're not looking at areas that are recharged with the river flows.

We're looking at what's called deep-seated water. And the theory is, is that on the ocean bed, there's a natural reverse osmosis effect that takes place with saltwater. And through the fractures of the formation, this water that filters through the formation of the seabed, in turn, returns back to the mountainous areas, especially volcanic areas like Costa Rica.

And remember, Costa Rica has formed volcanic action. So what we're doing with this technology is that this deep-seated, it's not only coming from the ocean bed through reverse osmosis, but it's also coming from deep-seated water that's coming from hydraulic pressure from other groundwater sources that may be higher, say like a mountain that's higher than the other mountain. That's why if you go to the top of a mountain, sometimes you'll see a natural spring coming out of the top of the mountain.

And what you see is like, where's this water coming from? It's because it's coming from a higher pressure source, right? So in a nutshell, it's much more complicated than this.

These satellites are cruising around. You send us a copy of your plan. We load it up on the Google Earth.

We send this remotely to our partnership in Spain. They come back about five or six days later, and they're able to identify the actual veins that are running through your property. We can identify the depth of the vein.

We can identify the amount of water that the vein can produce. We can identify whether it's cold water. We can identify whether it's thermal water.

We can identify whether it's steam water to the temperature. And the way that we're doing that is that we're collecting magnetometry. We're doing resistivity values.

We're looking at vegetation history, soil composition, electrical conductivity that are coming from all these different sensors on the satellites. And it's super accurate. They say there's a 95% success rate on it, but the people I'm working with in Spain, they're second generation scientists.

Their dads started this, and it's two guys. They've never drilled a dry well. So when I say this, when I say it's sustainable, is that, Richard, you can go buy a farm now, and before you even close on it, I can tell you how much water is on that property and where you need to drill before you even close on it.

And it's very economical, this type of service.

[Richard Bexon]
And I'm sure that you could tell me the investment that I'm going to need to make in order to drill to that depth then as well. Because again, the thing with... I had a project a while back where they drilled on it, and they only got to like 50 meters, and they kind of somewhat ran out of money.

And I was like, dude, I think you need to go deeper than that. But anyway, then the owner came in afterwards, and I was like, dude, I think if you keep drilling, you're probably going to get water. And he went down to, I think, about 100 meters and hit water.

And that's the thing is, a lot of the time, you don't know how deep to go and stop, because you just keep putting money in and putting money in and putting money in, as you said. So I mean, something like this is kind of like an insurance policy.

[Jerry Werth]
Oh, definitely, definitely. And the nice thing is, is it's priced in like a three-tier type system. So for instance, you send me the plano, and it costs around $1,300 for me to do an initial study.

And I come back with a map, and I show you where the veins are at, are on your property, and the characteristics of the veins of water. They're not exact, but they're within five meters, because we don't want people to look at these maps and then go try to drill there, obviously. The second phase is that there's a fee for us to send out a topographer with a high-tech GPS meter and mark that location within one millimeter, where it needs to be.

There's a fee for that. And then the final fee is based off the amount of water that the well produces. And it goes anywhere from three liters a second up to 200 liters per second.

And we know that. We know that data before we start drilling, because we had the initial report. So these studies can run anywhere from as low as $1,200 to have an idea.

And they can go all the way up to like $40,000 or $50,000, depending on the amount of water that the well produces. Richard, I don't care how good of a businessman you are, when you drill a client, a dry well, nobody's happy after that.

[Richard Bexon]
Correct.

[Jerry Werth]
No one is.

[Richard Bexon]
There's a finger pointing going everywhere, Jerry.

[Jerry Werth]
Everywhere, everywhere. I mean, that's why I'm so passionate about being able to find water. Because it's the worst part about my job is having to call somebody and say, look, I know you just spent $20,000, $30,000, but I have to tell you that there's no water.

[Richard Bexon]
What part are you still able to, because there was a, are you still able to drill perforated wells in Guanacaste at the moment? Oh, definitely, yeah. Yeah, there's restricted areas.

Okay, there are restricted areas. I mean, parts of Costa Rica, is there just an abundance of water? And which one is, would you say that like, you need to do some pretty thorough due diligence?

[Jerry Werth]
Well, you know, we'll back up. Guanacaste has restricted areas where you cannot drill, but those areas that are restricted is actually where the most water's at.

[Richard Bexon]
Right.

[Jerry Werth]
Yeah, and they're doing that for a reason, they're protecting it. Now, areas where it's very difficult to find water is Santa Teresa.

[Richard Bexon]
Yep.

[Jerry Werth]
Very, very difficult. That's one of the hardest locations, and it's for the type of formation, but it's one of them crazy places again. We drilled a well there back in August of last year, and I don't know, 140 meters, and the lady, she has three liters a second coming from the mouth of the well without a pump.

It's an artesian well.

[Richard Bexon]
Yeah.

[Jerry Werth]
Yeah, so we hit that fracture, you know, this vein that I was talking about. And Santa Teresa is very difficult. Sometimes you can go out there, send a rig out there for a couple of months and not find any water, and all of a sudden, get a couple of wells.

San Juanillo also up in Guanacaste is a little tight. Every area has its areas, there's many areas that you just need to kind of be worried about or be concerned about, not worried about. Which are areas where you're just like, well, this is going to be easy, guys?

Yeah, well, anything in Guanacaste and Liberia, lots of water there, and real easy drilling, like a mega, like when I say lots of water, you can drill wells out there that have over 100 liters per second near the airport.

[Richard Bexon]
Yep. Wow. Yeah.

What about in like more, I don't know, southern areas of Costa Rica? You know, Manuel Antonio, the Uvita area, all those areas.

[Jerry Werth]
Yeah, Uvita's kind of hit and miss. It seems like there's a couple ridge lines there that it's a little difficult sometimes to find water, but for the majority of the area, it's pretty good. We've had some dry wells there.

Patio, right outside of Dominical, that is, it seems like the higher you go, the better you are off on water. The lower you go, there's no water.

[Richard Bexon]
Hmm, wow.

[Jerry Werth]
Which is kind of backwards, right? And the way that we kind of analyze that is that the lower portion is a different type of formation. It's more of like a, it's a rock, but it's got some clay lenses that are in the fractures.

So that's why you're not seeing too much water. So, and we've recently ran into some problems finding water on a project in Tienamaste. That's like a local area that's becoming kind of hot.

Yep. But the property's not big, so we weren't... Keep in mind, these projects that I'm talking about, we haven't done any type of geophysics on them.

Yeah. We just drilled. Yeah.

So, you know, unfortunately, a lot of people do geophysics after they drill the dry well. Yeah, I'd probably do it first because that's the cheaper part, right? But it's so expensive to drill a dry well.

[Richard Bexon]
They just don't understand, you know? I know. I mean, having been burnt here in Costa Rica, I do my due diligence thoroughly, dude, now, you know?

And since then, I've not been burnt, thank God. But I mean, yeah, I mean, we all have to go through all these processes sometimes, Jerry. It's just, again, I mean, you know, your project is only as good as your team.

And I've said it on multiple podcasts before. So you just need to make sure you've got a great team. Right.

Absolutely.

[Jerry Werth]
Absolutely. Yeah.

[Richard Bexon]
Well, Jerry, this has been an amazing podcast, sir. And I think anybody that's looking to develop or buy land here and doesn't have water should probably, not probably, should have a conversation with you beforehand. And definitely, again, doing due diligence is do this initial, you know, this initial study here.

And you said, I mean, it sounds like a pretty quick turnaround, Jerry.

[Jerry Werth]
Oh, yes. It's that those days that things take in five years and it's absolutely, you know, things move quick. And like you said, it depends on your team.

[Richard Bexon]
Yep.

[Jerry Werth]
Depends on your team. So it's the days of projects being stretched out for years and years and years gone.

[Richard Bexon]
Yeah. Yeah. Well, Jerry, an absolute pleasure to have you on the podcast again.

Anyone that wants to get in contact with you, I'll put all of your contact details in the description. But thanks very much for coming on.

[Jerry Werth]
Thank you, Richard. Have a great day. I appreciate it.

[Richard Bexon]
Okay. Take care.

[Jerry Werth]
Bye.

Let's Get in Touch!

Water is key in Costa Rica to building and developing; without it, you won't get building permits. We chatted with Jerry Werth of Pura Vida Drilling about the rules and regulations, what you can and cannot do and what ASADA's are the functions they play.

15 minute free consultation: https://meetings.hubspot.com/jake806/crconsult
Contact us: info@investingcostarica.com

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