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Make every drop count

By AJIT GULABCHAND

Water must be managed by a coalition of public, private and civil society interests.

Water should be seen as a commercial good to avoid wasteful use. — Sushil Kumar Verma

Water should be seen as a commercial good to avoid wasteful use. — Sushil Kumar Verma

Water is one of the most indispensable of all natural resources. It is vital for the survival of human beings and the scarcity of water has a significant impact on our economic development and biological diversity.

Water is one of the most indispensable of all natural resources. It is vital for the survival of human beings and the scarcity of water has a significant impact on our economic development and biological diversity.

Nations across the world, including India, have recently been facing the challenge of rapidly growing water demands, driven by an increased population and economic growth, linked to urbanisation and industrialisation. Also, the prevailing water scarcity is not only a result of quantitative or qualitative scarcity but also a consequence of inefficient use and poor water management, which has been recognised in India’s draft Water Policy (2012).

Water security is one of the most tangible and fastest-growing social, political and economic challenges faced today. It is also a fast-unfolding environmental crisis. In every sector, the demand for water is expected to increase and analysis suggests that the world will face a 40 per cent global shortfall between forecast demand and available supply by 2030.

This outlook bears potential for crisis and conflict since water lies at the heart of everything that is important for human life: food, sanitation, energy, and production of goods, transport and the biosphere as such.

BASIC RIGHT AND BEYOND

Water has been argued to be a social good. It is commonly accepted that access to water is a basic human right. However, being a social good and private good are not mutually exclusive conditions. In fact, more water for one individual can mean less water for other individuals who share a water-supply system. Classifying water as a basic human right, therefore, introduces further social complications in terms of equitable distribution.

Water is a commercial good when it comes to farming, manufacturing, etc. Water is environmental good and we need to conserve it to conserve our environment.

Water needs to be defined not only as a social good, to which everybody is entitled free of cost, but also as commercial good — to be paid for and an environmental good that you treat with great respect.

India will face around 50 per cent of water shortage and an expenditure of around $6 billion per annum for the next 5-6 years is needed to restore the balance.

While the Government must be the ultimate custodian of the national water resources and plays the key role in setting frameworks and strategies, many other stakeholders also have a role to play in delivering solutions.

Proper coordination within government-set strategies requires sound facts and an approach that supports cost-effective solutions. The resulting need for multi-stakeholder engagement means that coalitions are required; public-private-civil society coalitions focused collectively on addressing the water security issue, each leveraging its own comparative advantage towards meeting the challenge within a common policy framework.

Theoretically, managing water as an economic good entails that water can be allocated across competing uses in a way that maximises the net benefit from the amount of water in question. Practically, the increasing financial burden on users to pay for clean water has social and political implications. There has been growing controversy over the privatisation of water worldwide as the economic principles of valuation, privatisation and efficiency are being applied to water, a resource that many consider a basic human need and right.

BUSINESS RISK

Growing competition for scarce water resources is a growing business risk, a major economic threat, and a challenge for the sustainability of communities and the ecosystems upon which they rely. It is an issue that has serious implications for the stability of countries in which businesses operate, and for industries whose value chains are exposed to water scarcity.

Recognising the gravity of the problem, The 2030 Water Resources Group (WRG) was formed in 2008 to contribute new insights to the increasingly critical issue of water resource scarcity. Members include McKinsey & Company and the World Bank Group (led by the International Finance Corporation – IFC) with a consortium of business partners, including Hindustan Construction Company.

All the competing sectors, be it agriculture or industry, must practise water use efficiency to the extent possible. Water efficiency measures must be viewed holistically within a business’ strategic planning. Businesses that use water more efficiently now will have a competitive advantage over those that choose to wait. A successful programme must prioritise needs, set well-informed goals, establish current performance minimums and carefully plan a course for action.

WAYS TO BOOST EFFICIENCY

Some ways to achieve water use efficiency within the fence of a given industry are:

Identifying and eliminating wastage and inefficient processes: This may be the most low-cost area for water savings, as it involves minimal capital outlay. Savings can be made through implementing procedural changes, such as cleaning plant areas with brooms rather than water.

Changing processes and equipment: A retrofit of key plant equipment may increase efficiency. Alternatively, upgrades to more efficient models can be factored into planned maintenance and replacement schedules.

Recycling and Reusing treated wastewater: This option may improve the reliability of supply, whilst reducing trade waste charges and associated environmental risks.

Out of suggested measures, equipment (and/or process) changes may be viewed as a ‘permanent fix’ to achieve water efficiency. Changing employee behaviour, such as an operating procedure, may be viewed as a quick and inexpensive way to achieve similar savings without up-front capital expenses. Both the technical and human side of water management is important. Consistent training and awareness, in combination with proper tools and equipment, have the potential to achieve more permanent water savings.

Recycling or reuse of industrial wastewater is possible through adoption of preventive approaches at each production stage to minimise the generation of wastewater.

Segregation of wastewater streams is one of the commonly used preventive strategies to achieve efficient treatment of effluent aimed at recycle and reuse.

Although there is a growing awareness of the strategic importance of water, very few industries across India manage water in a systemic and holistic way.

Water management, in the majority of industries, is limited to ensuring the provision of water. In some instances, there are efforts to control or treat effluents and some responsible businesses go beyond the convention and adopt absolute water use efficiency. However, in most of the cases where water efficiency efforts are implemented as a mere formality, they tend to be unorganised, often leading to sub-optimal results.

These disappointing results may make the management more inclined to withhold its support for any future efficiency projects. Potential exists within the industrial sector to substantially boost water productivity provided it is being adopted/guided by an adequate mechanism.

(The author is Chairman and Managing Director, Hindustan Construction Company)

Why worry about water? A quick global overview

by Dominic Waughray* for the Guardian Professional Network

Dominic Waughray explains the need for urgency in dealing with the world’s growing demand for freshwater.

An iceberg melts in Kulusuk Bay, eastern Greenland in July 2007. Photograph: John Mcconnico/AP

An iceberg melts in Kulusuk Bay, eastern Greenland in July 2007. Photograph: John Mcconnico/AP

The future security of freshwater resources around the world is of increasing concern. Due to our interlinked global economy, water scarcity in many parts of the world could harm the global economy in ways we had not thought of. Shortfalls in crop yields and more variable food prices could be an early impact.

Our demand for water is closely linked to economic growth. As we grow wealthier, the more freshwater we require to supply cities, powerplants, factories, and the production of high-protein food such as dairy, meat, and fish.

It is not just a question of more people requiring more water. Rather, it is a case of more wealthy societies demanding much more water. In the 20th century, while the population grew by a factor of four, freshwater withdrawals grew by a factor of nine. If we take these past patterns and look forward, the outlook for 2030 is stark.

Currently, about 70% of the world’s freshwater withdrawals is for agriculture, 16% is for energy and industry, and 14% is for domestic purposes. Recent work suggests that unless we change our historic approach to how we use water, we could face a 40% gap by 2030 between global demand and what can sustainably be supplied.

Why is this so, and what are the implications?

To meet the forecasted growth in demand for food over the next 20 years, farmers will need to increase production by 70% to 100%. Changing diets will increase the demand for meat and dairy products in particular. A kilogram of meat requires up to 20,000 liters of water to produce (compared to about 1,200 liters to produce a kilo of grain), and the global demand for meat is forecasted to increase by 50% by 2025.

Herein lies the water challenge. If we already use over 70% of freshwater withdrawals for agriculture and face an increase in demand for food by 70% by 2030, especially for water-intensive meat and dairy, it is clear that a business-as-usual approach is not an option. We cannot use over 100% of our freshwater for agriculture. Significant, perhaps radical changes in agricultural water usage will be required.

At the same time, our demand for energy will also grow, and energy is also a thirsty sector.

The International Energy Agency forecasts that the world economy will demand at least 40% more energy by 2030. McKinsey and Company estimate that 77% of the power stations we will need by then have yet to be built. By that year, China will need to expand its power-generating capacity by over 1,300 GW (1.5 times the current level of the United States) and India by 400 GW (equal to the current combined total power generation of Japan, South Korea, and Australia).

Increasing access to energy is a priority for many countries. 1.5 billion people in the developing world still lack access to electricity, and over 3 billion rely on biomass for heating and cooking. Yet energy needs a lot of water. In richer countries, up to 50% of freshwater withdrawals can be used in the production of oil, gas, and electricity.

Take the United States (US) for example. The US Geological Survey estimates that to produce and burn the billion tons of coal the country uses each year, the mining and utility industries withdraw 55- to 75-ton gallons of water annually. That’s about equal to all the water that pours over Niagara Falls in five months. In other words, about half of all water withdrawals in the US today are used to cool electricity-generating stations. (It is important to note that this water is not consumed; it is withdrawn from rivers and reservoirs and used for cooling, etc., then returned. But access to freshwater is still vital. No water, no power station.)

By 2030, the US is forecasted to increase its energy demand by 40%. Using current energy systems, this could translate into a large increase in freshwater access needs, up to 165% according to some analyses. The maths suggests that, with the demands from other areas such as agriculture, this simply can’t be done.

More challenging still, many “clean” energy solutions that the US may wish to pursue to meet its wider environmental obligations, such as carbon capture and storage, shale gas, nuclear power, and solar thermal plants, can actually require even more water for their systems than a coal-fired power station.

Against this water and growth conundrum, General Electric has asked if there will be enough water in the US to power the future. The Economist has written about the end to farming in the California valleys as a result of water shortages and water reallocations. In the future, the US will likely have to depend much more on other countries’ agriculture and water, so it will import its orange juice and raisins (and potentially its wine). Even the US Department of Energy recently told Congress that energy production in the US is at the mercy of water availability.

This water for food versus water for energy dilemma that the US already faces is similar to that which many fast-growing economies will have to tackle very soon. As much of Asia urbanizes and industrializes (and is encouraged to pursue lower-emission energy choices), more water will have to be directed toward energy and away from agriculture. Some modelings suggest that a 76% increase in water demand for energy and industry will be required across Asia by 2030 compared to today. Recall that this will occur at exactly the same time as these countries will also need to almost double their food production. Against a baseline of 70% of water already being used for agriculture, how can these competing challenges be squared off?

We can see first responses to the growth challenge of the food-energy-water nexus already being played out around the world as water-scarce, fast-growing economies in Asia and the Gulf seek to acquire agricultural land in water-rich countries like equatorial Africa. These so called “land grabs” are really about water. If our global trading regime offered a more effective trade in agricultural goods, there would be much less need for such land/water deals.

This challenging scenario of water trade-offs over the next two decades should also be set against the context of today’s water management challenges. Unfortunately, the story gets worse. Due to historical profligacy of water use, the old adage of “You wouldn’t want to be starting from here” holds true.

Many countries are extracting groundwater faster than it can be replenished (Mexico by 20%, China by 25%, and India by 56%). Over 70 of the world’s major rivers now hardly reach the ocean due to the extensive diversion of water for human use. If current trends continue, by 2030, increasing water scarcity could cause annual grain losses equivalent to 30% of current world consumption (just as we need 70% more food). As demand continues to grow, competition for water will intensify between economic sectors, as well as between geographies.

In addition, let’s not forget that a potentially changing climate will simply accelerate freshwater security challenges faced in many places around the world. Unlike options in energy, there are no substitutes or alternatives to water. We will simply have to adapt.

This is not just a problem for the very poorest nations. Water security will affect people in Australia, the Balkans, California, China, India, Jordan, Greece, Mexico, North Africa, Pakistan, Saudi Arabia, Spain, South Africa, and Turkey among others. Even southern parts of the United Kingdom can already be classed as under water stress.

For all these reasons, business-as-usual is not an option. We cannot manage water into the future as we have in the past. Given the timescales associated with turning things around in the water sector, the need for long-term planning, and the dire conditions in which some countries already find themselves, senior analysts suggest we have about ten years to act.

The good news is that the next few years hold great potential for a transformation in the world’s water management. Unlike climate change, no one can argue that the problem does not exist, or that solutions are quickly required. New technologies, new arrangements, and new policies will be required.

The water services sector, water processing, water recycling technologies, and water policy links to the energy and agricultural sectors are fast becoming a busy space for business, financial, and professional services firms, policymakers, and issue specialists. The World Economic Forum itself has embarked on a major initiative to help develop an improved fact base, and a public-private platform of advisory services to help governments that wish to engage in transformational water reform. This will tackle many of the challenges set out above in real-time and in real situations, and I will write more about what we find as it gets underway.

Suffice it to say the arrival of a space to talk about water and its links to business, governments, and growth is very timely. My congratulations go to the Guardian Sustainable Business section for embarking on this exercise. I look forward to a vibrant expert community of bloggers emerging and sharing thoughts and experiences on water, water and business, and water and our wider economic growth.

*While Dominic Waughray is senior director and head of environmental initiatives at the World Economic Forum, he emphasizes that he is writing in a personal capacity. The views expressed here do not necessarily represent those of either the World Economic Forum or any of its constituent partners.