In the coming decades, a number of factors will strain the world’s freshwater supplies, increasing the need for effective water management. A growing number of companies have begun to prepare for the ensuing risks and opportunities–and they hope to gain a competitive edge by being better positioned for a future of water scarcity.

why should businesses conserve water?

Freshwater worldwide is limited, mostly inaccessible, and coming under increasing strain from several factors. According to the U.S. Geological Survey (USGS), only three percent of all the water on earth is freshwater. Of that, three percent, 68.7 percent is locked in icecaps and glaciers, 30.1 percent is groundwater, and only 0.3 percent is surface water–water found in lakes, rivers, and swamps.

Available freshwater may face a growing threat from climate change. If the polar ice caps melt, the nearly one-third of the world’s freshwater classified as groundwater could become contaminated along coastal aquifers from rising ocean levels. Changes in weather patterns could reduce the snow or rainfall in areas reliant on those sources of water. An increase in global temperatures could force farmers to use more water to grow crops.

Climate change is not the only force that could increase demand for freshwater. The growing global population and the rising wealth of third world nations are among a myriad factors sure to boost demand. According to the United Nations Population Fund, the world’s population has tripled over the last 70 years, yet water consumption has grown six-fold. Satisfying the needs of 77 million additional people each year requires a greater percentage of the available water.

The current world population is using 54 percent of the accessible freshwater. If consumption rates remain steady, by 2025 our global use of freshwater will reach 70 percent. But if per-capita water consumption rates increase worldwide to the levels in developed nations, 90 percent of freshwater supply could be in use by 2025. As the world’s freshwater needs rise, water management will become an integral part of doing business.

risks and opportunities

The World Resources Institute, Goldman Sachs, and General Electric Co. announced last month an initiative to measure water risks and opportunities. The initiative would include an index to identify and mitigate water-related corporate risks and would provide advice to business leaders and clients on water-related investments. The Water Index would use publicly available data on physical scarcity and water quality, and would examine the regulatory, social, and reputational factors not previously incorporated in water risk assessments. The creation of the index is evidence that these organizations believe water management will be a growing business issue. Some companies, including Walmart and Coca-Cola, are already attacking the water risk issue.

In a study conducted for Walmart, on site water recycling programs were found to save 80 to 90 percent of the water required from municipal water utilities, and 85 percent of the energy required to deliver that water to Walmart. The energy savings from on site wastewater recycling was found to be more significant than the savings from installing solar panels on the roof of that Walmart store.

Coca-Cola, a company already familiar with the social and reputational risks of water scarcity, announced via Chief Executive Neville Isdell that it plans to become water neutral. Though Isdell did not commit to a timetable, he said Coca-Cola wants to ensure that the more than 80 billion gallons of water it uses each year either returns to the earth, or is offset by conservation programs.

While we have already covered the business risks of water scarcity, the creation of a Water Index clearly indicates that leading organizations believe there are worthwhile opportunities for water management. For instance, aging water infrastructure in developed nations will need upgrades and replacement–providing project opportunities for many companies. In the developing world, the construction needs will be even greater.

There are other opportunities, too. Companies like Walmart and Coca-Cola will need technologies to help along their water recycling and management programs. New water extraction methods like desalination will see further deployment to meet rising demand. One such plant is being planned for Southern California. In nations where waterborne illnesses are rampant, purification or filtration technologies are needed to rein in what the World Health Organization calls the “world’s number one killer.” Rivers, lakes, and groundwater have been polluted by industrial waste, giving rise to the need for technologies that could extract the pollutants. Perhaps the most universal opportunity for water management is in agriculture, which accounts for an astonishing 70 percent of the world’s freshwater use annually.

In the greater business community, there seems to be a lack of awareness about impending water scarcity issues, and the business implications of decreasing available freshwater. Water prices worldwide are expected to rise in the coming decades. With demand for freshwater on the rise and supply remaining relatively constant, water volumes available to businesses will be smaller, more difficult to obtain, and more expensive. Water supply shocks in states like California, Texas, and Georgia did little to convince businesses to address the problem, but it’s clear that companies that move first to assess water risks and take action will have an advantage in what is sure to be a big business in the future.

photo credit: Hyflux Ltd

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.

As yet another example of the risks of water scarcity, China has begun to resettle 330,000 people so it can divert water from the Yangtze River to northern China. A canal is being constructed from the Danjiangkou reservoir in Bubei all the way to Beijing, according to the Xinhua news agency. Those living in central provinces such as Henan and Hebei are being relocated to make way for the canal.

The multi-billion-dollar project was originally envisioned as a three-line system of canals and pipes, moving water via eastern, middle, and western routes to the north. The canal from the Yangtze River is part of a central line in the system. The plans called for the middle and eastern routes to be completed by 2010. However, objections from environmentalists, difficulties resettling the population living in the construction zones, and the cost of treating badly polluted water have helped delay the project’s completion until 2014.

The China’s South-North Water Transfer Project document (PDF) shows that northern China has only 19 percent of the country’s water resources, yet accounts for 47 percent of the population, 64 percent of the cultivated land, and 45 percent of the country’s GDP. In order to sustain economic development and growth in the north, water resources must be diverted. When completed, the water diversion project is expected to push about 460 billion cubic feet of water through the central canal each year.

China has outlined the threat of the northern water crisis in the South-North Water transfer document. The report declares that the lack of water resources in the north:

• Is an obstacle to the enhancement of people’s living standards
• Causes further worsening of the ecological environment, and is associated with environmental problems like land sinking and seawater intrusion
• Restricts agricultural development and threatens food safety
• Threatens national economic development, and will hurt the national economy should the water crisis worsen

Supply infrastructure alone may not be enough to solve China’s water problems. A World Bank report indicated that water prices should be allowed to rise to reflect the scarcity as well as to promote conservation. Whatever steps China takes to resolve its water scarcity, one thing is clear–its economy and people cannot thrive without water resources.

photo credit: PeaMasher 2002

This is World Water Week in Stockholm, where the goal is to raise awareness around access to water as development and climate stress an already limited resource. As water scarcity continues to gain attention, so should the companies actively working to reduce their water footprint.

Kraft Foods is a recent example of a company making a big splash in the news for using less water. They have managed to reduce their water use by three billion gallons in the past three years, and have exceeded their water reduction goal two years early.  As Steve Yucknut, vice president of sustainability, says:

We’re changing behavior and getting results. Around the world, thousands of our employees are working on projects that help us reduce our environmental impact. We focus on manufacturing, since that’s where we use the most water for internal operations. And we pay particular attention to water-scarce areas, where the need is greatest.

Here is a company who appears to really understand the risks posed by water scarcity, and has taken steps to mitigate those risks. As we look at some of the programs Kraft has implemented, what is impressive is how effective small changes like fixing leaks, reusing water, rethinking cleaning processes, and developing closed loop systems have been in generating major reductions in water use. These changes have been so effective Kraft shrank its water use 21 percent since 2005.

Not only are they saving water, but improving inefficient machinery, infrastructure, and processes lead directly to cost savings. For example, in their Atlanta, Georgia bakery, employees reduced the amount of water used for cleaning specific equipment and also eliminated unnecessary re-cleaning of equipment. Thus increasing the number of line production hours.

We believe every company can and should review their water, source material, and energy needs. By ensuring that we conserve, even abundant resources, we create a more competitive business and a better planet. Is your business creating a sustainability program? We’d love to share ideas, technologies, and programs from organizations large and small.

For more about Kraft Food’s sustainability program, which includes details on how they’re making progress on reducing CO2, solid waste, and energy use, see their Better World website.

Lately, it seems a variety of companies are really beginning to take notice of water scarcity. Take Molson Coors for example. Last week they announced a strategic partnership with Circle of Blue, an international network focused on global water issues, in an effort to protect global freshwater supplies. Their first initiative is to survey  public concern and awareness of water issues in 25 nations. Molson Coors will join Circle of Blue in presenting the results at World Water Week in Stockholm, Sweden, August 18th.

President and CEO of Molson Coors, Peter Swinburn believes

Safeguarding supplies of fresh water is essential to the sustainability of the Molson Coors business. Strategically, it is important to us to learn how policy makers, government leaders, and our own customers and employees view this precious resource, and to develop new ideas about how to engage them in water issues in their communities. By supporting Circle of Blue’s critical reporting and research efforts we will be able to provide leadership and valuable insights about attitudes around the world toward retaining and restoring the world’s critical fresh water supplies.

Molson Coors is part of the United Nations CEO Water Mandate which aims to gather business leaders around addressing the emerging global water crisis. Other participants include Coca-Cola, Heineken, Nestlé S.A., and PepsiCo, Inc.  As part of disclosing their efforts towards water sustainability in their operations and supply chain, Molson Coors has devised water metrics, which they publish in a sustainability report. They are also a member of the Beverage Industry Environmental Roundtable (BIER) , which is an organization of global beverage companies working to advance water conservation and resource preservation. Molson Coors is doing more than talk about water conservation. Every one of their breweries achieved their 2008 goal of a four percent overall water reduction, a definite step in the right direction towards being good stewards of our natural resources.

As a company dedicated to water conservation, we look forward to seeing the results of the survey, as well as the promised substantive changes to how Molson Coors does business.