From this source,
We answered this question on the show...
We posed this question to Dr David williams from the Veterinary School
at the University of Cambridge... David - First of all, what actually
makes something smell? Molecules have to leave the smelly objects
and get to your nose through the air and that means that these
molecules must be very small and volatile. That's to say they must be
easily evaporated. The chemicals that make dogs smell are mostly what
we call volatile organic acids and they are produced by bacteria from
the fats that are breaking down from sweat; and that's maybe why we
find these body odours unpleasant. They signal a presence of bacteria
and decay and death to us.
Their [dogs] skins mostly have
Staphylococcal bacteria, which don't produce much in the way of a
smell at all, but they've also got some yeasts too which are really
pongy. But why does the smell seem worse when the dog is wet? Here,
I think we have to go into some physics. The amount of evaporation of
a substance is related to the concentration of the compound on a
surface it’s evaporating from and the amount of compound that's in the
air, just above the surface.
So how might that change when it’s wet?
Well, if the organic acids are dissolved in water on the fur of the
wet dog, as the water evaporates, the concentration of those smelly
acids increases, so they'll evaporate more, so there are more
molecules in the air for us to smell. Diana - A bit of evaporation
can effectively amplify the amount of volatile chemicals that emanate
from a dog’s skin, and Dr. Williams thinks it’s the same effect that
causes that damp earth smell when it rains. It may also alter how
dogs interact with each other when they're wet. So, if you have a
dog, watch to see if it sniffs differently at other dogs on a dry day
versus a wet one...
There's a start, sounds legitimate to me...