By Michael Hendrix, Research Manager
Water is important to business and business is important to water. That’s not as far-flung as it sounds (and I’m not referring to the water cooler here). Water is in or is part of the making of nearly every good imaginable. Water is used for farming, of course, but so too for energy generation. Even if water were removed from every good we produce, we humans couldn’t function without it. Whether or not we have the right kind of water in the right places at the right time matters to industry, customers, and communities. The private sector is beginning to recognize this and offer their own solutions, which the public sector in turn is seeing as essential to the future of the economy and the critical resources upon which it runs.
Since demand for water is great, it’s a good thing that supply is just as vast. While it’s true that fresh water is available in far fewer sums than salt water (about 1/37ths of what our oceans hold), lakes, rivers, and aquifers still hold tremendous reserves. The real issue comes with location. Water does not blanket the earth equally. Nine countries account for 60% of accessible fresh water. Some places have practically no access to water and other places are surrounded by only the frozen kind. And in the end, water is a scarce resource that is extremely local. How water resources are divided has an impact not just on national security but on the bottom lines of the companies relying on these sources.
As an article in the McKinsey Quarterly noted, “Companies have begun paying much more attention to the water environment in which they function.” Of all the water consumed each year, industry takes up about 22% of that sum. Over the past fifty years, that level of demand has quadrupled. These statistics simply show that water is important to our global economy. What’s not shown is how much more productive we’ve become with each gallon of water — the dramatic decline of water use to GDP clear tells this story.
Private sector innovations in water management are having a tremendous impact. Beyond just the agricultural and waste management industries, the consumer beverages, energy, and mining businesses are coming up with new ways to get more product out of less water. Linking these advancements with policy approaches will be just as important.
“The most far-sighted of these companies, however—with Nestlé as a leading example—recognize that while companies have to manage water efficiently behind their factory gate, society (along with companies and their suppliers) needs an equitable, efficiency-stimulating, and predictable legal and regulatory environment that governs all water uses. These companies also believe that private businesses have useful and legitimate inputs to make into the policy-formulation process, and that good business practices can guide effective implementation.”
It turns out that a predictable regulatory environment goes part and parcel with an efficient use of our water resources. Rather than shunning the private sector from the management of a resource that critically matters to the entire economy, the public sector appears to be starting to recognize the benefits of cooperation. As an emerging issue that’s becoming ever more essential to business, this may be a hopeful sign.