One of the Largest Public Health Issues of Our Time

As the planet’s once plentiful blue resource gets used up, companies are acting to secure their supply and become more efficient users of water.  A business publication from the UK called Ethical Corporation has published an interesting report on this trend, which we’ve pulled excerpts from here:  

The world’s water supplies are drying up. Half of the planet’s wetlands have disappeared over the past century. In Europe, six in every 10 cities with more than 100,000 people are using their groundwater supplies at a faster rate than they are being replenished, the European Environment Agency reports.

Water experts have coined the phrase “water stressed” to describe the scenario. It’s reckoned that countries require 4,654 litres of water per year per person to meet citizens’ needs. If they fall short, they are said to be stressed.

Today, the term covers about 440 million people, including the inhabitants of European states such as Denmark and Poland. In much of the Middle East and some parts of Africa the situation is even worse.  By 2075, the number of people in regions with chronic water shortages is estimated to be between three and seven billion, according to the Stockholm International Water Institute.

So what’s behind the water scarcity? In short: man. The world’s population has tripled over the past century and is expected to increase by about 50% to more than nine billion by 2050.

Simple population growth is not the whole answer, however. Rapid rates of industrialisation, urbanisation and wealth accumulation mean that people are now using on average six times more water than they were a century ago. Water consumption is expected to continue doubling every two decades, a recent report by Goldman Sachs says.

Virtually every industrial activity requires water. The likes of power-generation, mining, paper and drinks sectors are particularly water intensive. Non-industrial services, meanwhile, such as tourism and entertainment, can depend heavily on water resources as well.

Even the water that industry doesn’t use up is often made unpotable. Back in 2001, before an official crackdown on pollution, Chinese businesses were dumping an estimated 23.4bn tonnes of sewage and industrial waste a year into the Yangtze river. In Europe, only five of the continent’s primary rivers are considered pollution-free.

Farming’s thirst

By far the biggest water-use culprit, however, is agriculture. Farmers are thought to be responsible for 70% of all human water use. That percentage is set to rise, according to the Sri Lanka-based International Water Management Institute. Farmers will need 2,000tn litres of water a year by 2030 to keep pace with the world’s growing food needs, the institute says.

Climate change presents an additional threat to world water supplies in the coming century.  It is predicted that global warming will increase evaporation rates across much of the planet and cause freshwater held in glaciers to melt. Rainfall could also drop off dramatically in some parts of the world.

It’s not only policymakers that need to worry about a world with less water. Business should be concerned too. Today’s panic over the scarcity of credit could be minor in comparison with tomorrow’s threat of water scarcity.

“Lack of water of adequate quality directly reduces production,” says Marc Levinson in a recent report by the investment bank JP Morgan. Agriculture, drinks and food processing are most vulnerable to water shortages, he says. All businesses, however, would be affected by the increased input costs that would result from diminishing water supplies. Companies would also see their capital expenditure rise as they were forced to find expensive new ways of treating and extracting water.

Levinson raises the further spectre of regulatory risk. To date, rules governing water use and discharge have been relatively light for companies. Many countries subsidise water use for agriculture. Introducing water permits and fixed prices are two obvious ways governments could intervene to control water use.

Drought-hit Australia shows what might be round the regulatory corner. Earlier this year, it introduced a cap on ground and surface water usage for the Murray-Darling Basin, the country’s most important agricultural area.

The probability of reputation damage presents a third major risk for the business community. As access to water decreases, people will be looking to point the blame. “Water is a very emotional issue and, although business isn’t the biggest user of water, it risks being the first to be cut off,” says Anne Léonore Boffi, water project office at the Geneva-based World Business Council for Sustainable Development.

Coca-Cola knows this only too well. Five years ago, campaigners in the south Indian state of Kerala began blaming the US soft-drinks company for a sudden shortfall in local water supplies, dubbing it “Killa Cola”. Its bottling plants were accused of polluting local aquifers.

Many risks lurk in multinationals’ supply chains rather than their own direct activities: food and drink companies, for example, depend heavily on irrigated agriculture for raw materials.

JP Morgan estimates that the combined water consumption of Nestlé, Unilever, Anheuser-Busch, Coca-Cola and Danone approaches 575bn litres a year – enough to cover the daily basic water needs of everyone on the planet.

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