Water: Threat, Stress and opportunity

25th January 2012

At the end of October last year the UN estimated that the human population passed seven billion; moreover, it predicts this will rise to nine billion by 2050. The exponential increase in population (it was only 1.8 billion in 1900) will place unprecedented strain on the world’s resources from mineral commodities to agricultural land, to fish stocks and this will include an ability to access fresh water. Feeding and watering the population in a sustainable way is already exercising industry – and it’s why Ecclesiastical support the CDP Water Project, so that water sustainability is viewed as a priority for water intensive businesses by encouraging the world’s largest companies that are water-intensive or particularly exposed to water-related risk, to disclose information on water use and management.

Few people realise just how much water is needed to provide us with our everyday consumer products, from 3-4 litres to produce 1 litre of bottled water, to 50 litres of water being used to produce 1 litre of soft drink, 2,700 litres to produce a tee-shirt, while 15,500 litres is needed to produce 1 kg of beef. In the developing world water demand can be as little as 10 litres per day because there is so little of it – but the US manages to use on average a staggering 400 litres a day per person.

In the developed world industry is the greatest single user of water, so business has to be at the forefront of a sustainable revolution to reduce, re-use and recycle its use of water.

It is really encouraging to see that some of the most well known companies are already alleviating water shortages in their business dealings. For example, PepsiCo has been able to recycle 3,000 litres per hour at its UK factories by employing a relatively simple condensing technique. Ultimately the company expects this will enable it to ‘unplug’ its factories from the UK grid by 2018. Tesco working with suppliers at 15 factories and employing 175 relatively low cost measures has already saved 300 million litres in a year, whilst Pennon (South West Water), operating in the parched South West of England, has achieved significant conversion to water metres among its domestic customers that has helped save millions of litres a year.

The risk for business in doing nothing is stark; many areas of the world are already officially in water stress, and this will impact those industries requiring a ready, uninterrupted supply of fresh water for their processes – a single semi-conductor plant for instance needs 2-4 million gallons of fresh water every day, the equivalent of a town of 50,000 people.

The global water sector is worth an estimated $450bn and is alive with innovation and opportunity, for instance in the growing interest in desalination. Unless business takes responsibility to manage water risk, licenses to operate, abstract and exploit water resources will be curtailed or terminated; this has already begun to happen in the copper industry in Chile.

Responsible investors need to understand the risks and encourage change through basic consumption reduction, enhanced by technological innovation. Ecclesiastical have just published an Amity Insight research paper on this which can be downloaded here.

 

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