Earlier this week we talked about how China’s economy is already being effected by climate change and man-made water shortages. As another report this week points out, China is not the only place water resources are being strained and investors need to take note.

The Carbon Disclosure Project (CDP), an independent not-for-profit organization holding the largest database of primary corporate climate change information in the world, just released their second annual Water Disclosure Global Report 2011 [PDF]. This survey of 190 companies from around the world found that over one-third are already experiencing water-related disruptions. The survey was taken at the request of over 350 institutional investors.

The goal of the report is to help companies that are recognizing the fragile nature of water resources and taking steps to transform their businesses “by encouraging meaningful and systematic reporting on water globally so that investors and their stakeholders can understand how companies are building water into their core business strategies, and so that leading practices can be shared.”

Continue reading ‘investors want companies disclosing water risks’ »

As the U.S. continues to languish in a stagnant economy and some E.U. member states seem to be headed for bankruptcy, some may think that China’s economic power is the most stable. However, that isn’t necessarily the case. There are more than a few issues China has to deal with to continue its amazing growth. As an example, last week, HSBC strategist Wai-Shin Chan wrote in an article for ChinaDialogue, that China is one of the world’s most vulnerable countries with regard to climate change.

Chan points out that the Chinese government is well aware of the impact climate change is already having on their economy and population and is making long-term plans. After all, water scarcity is already costing the Chinese economy 2.3 percent of its Gross Domestic Product (GDP) and factories have already had to close due to lack of water, and water prices are on the rise. To address the issue, Beijing is already putting in place tighter environmental regulations, and is starting to focus on water efficiency and conservation.

investors need to consider water risks

But, it’s not enough for the Chinese government to take steps, Chan wants investors to make sure they’re factoring in these same risks as they review their investment options.

HSBC has a list of questions it suggests investors use to asses risk levels, corporate strategies, and operational efficiency. But they do note that getting answers to the questions can be difficult as companies aren’t always aware of their full exposure or don’t want to disclose them. Here are a few questions from Chan’s list:

• Which companies are directly exposed to serious water availability constraints?
• Which companies are located in provinces with ambitious energy intensity reduction targets?
• Are the risks of resource stress in China understood at board level?
• What contingencies have been put into place to respond to disruption of resources?

If nothing changes, or not enough, it’s likely that China will face massive water shortages by 2030. And if the droughts continue, there’s reason to expect power disruptions, civil unrest, and more government action in the coming year. In the short and long-term, China’s water scarcity will have an impact on business.

What are you doing to protect your investment or the part of your supply chain that comes from China?

Water and energy. Few people grasp how intertwined those two critical resources have become. Even fewer know that today’s energy production methods consume and contaminate freshwater at a rapid and unsustainable rate. A recent report from the non-profit Circle of Blue sheds light on the issue and warns that the escalating clash between energy demand and freshwater supplies could cripple the world’s two top economies–those of the United States and China.

Both nations have long recognized that energy supplies play a central role in economic strength and quality of life–and each has made energy production a national priority. However, it seems neither country has fully recognized that the pursuit of energy threatens clean water supplies.

it takes water to make energy

In the United States, our energy comes primarily from four sources: coal, natural gas, hydroelectric, and oil. Alternative and renewable sources such as solar, wind, geothermal, and tidal represent a tiny percentage of energy production. All major sources of energy are heavily dependent on water resources.

Continue reading ‘the nexus of water and energy’ »

What is the value of nature? Currently, our economic system only values nature’s products—i.e., fish are worth X, timber is worth Y, and agriculture is worth Z. But is nature’s worth really just the value of its products, or is there additional value to our economic system that has not been recognized or quantified?

A recent report titled the U.K. National Ecosystem Assessment (NEA)—assigns economic values to some of nature’s less obvious benefits. The idea is that in order to protect nature’s ecosystem, we need to understand the “value” of it.

“The natural world is vital to our existence, providing us with essentials such as food, water and clean air–but also cultural and health benefits not always fully appreciated because we get them for free,” U.K. Environment Secretary Caroline Spelman told the BBC.

Continue reading ‘the value of nature’ »

With the gluttonous feast that is Thanksgiving now behind us, many have turned their thoughts to the December holidays. Few have considered next year’s Thanksgiving or the ones after that. The holiday could ultimately be stripped of its traditional bounty, however, if water scarcity and climate change continue unchecked.

Dwindling water supplies and ongoing climate shifts could bring about worldwide food shortages or dramatic increases in food prices. The latter is far more likely, but the result could be the same: An end to cheap, readily available food at a time of explosive growth in the world’s population.

The U.S. Drought Monitor has found that one third of the continental U.S. is suffering from abnormally dry, or drought conditions. Drought conditions are the most acute in the Western U.S., according to the report, produced jointly by the federal Department of Agriculture and the National Oceanographic and Atmospheric Administration. The nation’s groundwater, which provides 50 percent of the water used for drinking, irrigation of crops, and industry, is diminishing .

“Basically the groundwater is being depleted of its resource,” said Kevin Dennehy, project coordinator for the U.S. Geological Survey’s groundwater program. “It’s been happening for quite some time and it’s going to continue to happen. The removal of water from the aquifer is at a greater rate than water is being re-charged in the aquifer naturally,” Dennehy said in a story published by CircleOfBlue.org.

Scientists and resource specialists have warned that freshwater scarcity is hurting farm productivity. Farmers may see their crop yields decrease because there is not enough water, or because conditions limit the amount of water a farmer is allowed to use.

Even amid diminishing water resources, paradoxically, flooding is on the rise.

“We know that that’s already a problem,” Melanie Fitzpatrick, a climate expert at the Union of Concerned Scientists, told Circleofblue.org, “Spring flooding is a problem in agriculture in terms of farmers getting into their fields to sow their crops, and we’ve seen some really significant flooding.”

Climate change, food production, and water scarcity are inextricably linked. At the United Nations’ World Summit on Food Security, Secretary-General Ban Ki-moon declared, “There can be no food security without climate security.”

Even as climate change and water scarcity are making it difficult for farmers to increase yields, the world’s population is set to explode. The U.S. Census Bureau estimates that by 2050, the world population will reach over nine billion. Representatives of nations participating in the World Summit on Food Security have agreed that agricultural output must increase 70 percent by 2050. Yet, threats remain.

The U.N. Secretary-General told the summit gathering:

Weather is becoming more extreme and unpredictable. In many parts of the world, water supplies are declining, agricultural land is drying out. Food security and climate change are deeply interconnected. If the glaciers of the Himalaya melt, it would affect the livelihood and survival of 300 million people in India and China and up to one billion people throughout Asia. Africa’s small farmers, who depend primarily on rain to produce most of the continent’s food, could see harvests drop by 50 percent by 2020.

Now let’s get back to Thanksgiving. It’s my favorite holiday, and I am not prepared to have my future Thanksgivings jeopardized by solvable problems. If we’re not going to solve the water and climate problems because it is the right thing to do, we might as well consider solving them for reasons we care about – the turkey, ham, stuffing, cranberries, yams, potatoes, gravy, and various pies.

So don’t forget about the Thanksgivings of the future. One day, the thing we are most thankful for on Thanksgiving may be the food itself.

Photo credit: donkey in the drought stricken maize field by Ray Weil.

Without water there could be no human life on earth. That is a simple, clear fact that is indisputable. It is so important, nations are willing to relocate hundreds of thousands of people to divert water to a new location. But what would happen if the earth no longer had enough freshwater to support the population, or corporate interests controlled the water that was available? War. At least, that’s the theory behind the documentary Blue Gold: World Water Wars.

Filmmaker Sam Bozzo and his team present the idea that future wars will be fought over water resources, just as wars today are fought over oil, gold, or diamonds. Narrated by Malcolm McDonald, and based on a book by Maude Barlow and Tony Clarke, Blue Gold is a shocking, engaging film full of expert opinions, historical references, and the politics behind water resources. The movie, which won the audience choice award for environmental films at the 2008 Vancouver Film Festival, documents our mismanagement of water resources and the rise of corporate control over them worldwide. Given the importance of the subject, this film should be high on everyone’s Netflix queue.

Here are some water facts from the film:

• 97 percent of the world’s water is salt water. Three percent is fresh water–and much of that is polluted.
• We are pumping out 30 billion gallons of water a day and depleting the earth’s groundwater 15 times faster than it can be replenished through natural systems.
• Dr. Michel Kravcik believes the earth’s water systems could collapse in just 50 years.
• Florida has giant sinkholes from over-pumping groundwater.
• Manufacturing a car takes about 335,000 liters of water.
• In much of Africa, Coca-Cola’s Dasani brand water costs more than the company’s flagship cola.
• The Aral Sea, a giant lake in the former Soviet Union, has been mostly drained to irrigate cotton crops being grown in the desert.
• To get water to some Southern California homes, it must be transported via pipeline from 1,400 miles away. That’s more than half the width of the United States.
• The world’s largest water resources are located in Brazil, Canada, and Russia.
• Most U.S. cities get water from private companies.

According to the Pew Research Center, “there has been a sharp decline over the past year in the percentages of Americans who say there is solid evidence that global temperatures are rising. And fewer see global warming as a very serious problem–35 percent say that today, down from 44 percent in April 2008.” This decline in belief transcends political parties, regional views, and most age groups.

In April 2008, 83 percent of Democrats, 75 percent of Independents, and 49 percent of Republications believed there was solid evidence of global warming. Today, those numbers are down to 75, 53, and 35 percent respectively – amounting to an 8 percent drop among Democrats, a 22 percent decline among Independents, and a 14 percent reduction among Republicans.

There are regional differences in opinions on global warming, but across the board, all regions were less likely to believe there was solid evidence to support the climate fears. The greatest decline in this belief came in the Mountain West region, where 31 percent fewer people this year believed there was solid evidence. People in the Northeast, South Atlantic, and Pacific West were most likely to respond that there was solid evidence of global warming.

The study also broke the responses into age groups. Across all age groups 30 years old or older,  respondents who believed there was solid evidence of global warming declined. Young people were far more likely to not only believe that there was evidence of global warming, but also that it was a “very serious” problem. Five percent more people under 30 answered “very serious,” compared to a decline of 14 percent among people 30-49 who were asked the same question.

Source: Pew Research Center for People and the Press: 10/22/09

Despite growing skepticism of global warming evidence, half of Americans favor setting limits on carbon emissions – even if a carbon limit leads to higher energy prices. Although the national media focus is shifting back towards climate legislation, the topic does not currently resonate widely with the public. The Pew survey found that “just 14 percent say they have heard a lot about the so-called ‘cap and trade’ policy.” Over half of Americans (55 percent) said they have heard nothing about proposed climate legislation.

The same survey found that only 23 percent of those polled were able to correctly identify cap-and-trade as an energy and environment issue being discussed in Congress. Nearly half of survey respondents were unsure of the meaning of cap-and-trade, and 29 percent mistakenly answered that cap-and-trade deals with health care, banking reform, or unemployment.

Questions remain as to why the public is less concerned with global warming this year. Is there less media focus on the issue? Would the results have been different if Pew had used the term “climate change” instead of global warming?