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Understanding water risk

Source: Thomson Reuters Foundation - Thu, 22 Mar 2012 16:15 GMT
Author: Manish Bapna and Betsy Otto
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Any views expressed in this article are those of the author and not of Thomson Reuters Foundation.

By Manish Bapna and Betsy Otto

It’s rare for water to make waves at the World Economic Forum’s annual gathering of business leaders and finance ministers.

But the most recent Davos summit was an exception. A new eye-opening report ranked water supply among the top five global risks in terms of impact – on par with systemic financial failure and fiscal imbalances.

As we mark World Water Day, the alarming statistics underlying water scarcity are worth repeating. Worldwide 2.7 billion people are currently affected by water shortages. As the global population races toward 8 billion and beyond, upward trends in food demand and economic growth promise to further strain freshwater resources, especially in the developing world. Climate change, of course, is exacerbating these water challenges.

Clean, abundant water is essential for life and economic growth. Since it is a finite resource, we need to find solutions that will ensure we can use water more efficiently and mange water systems more wisely.

Making this happen is easier said than done. Success depends on the recognition of three essential characteristics. That is, water risk is: multi-dimensional; local; and requires a collective response.

WATER SUPPLY AND DEMAND

Scaling-up innovative, integrated water solutions is essential, but first we must understand the distinct and often complex nature of water supply and demand.

Different users have different water needs. For instance, a power plant might need a reliable and large supply of water to cool its facility. By contrast, a semiconductor manufacturer needs extremely high-quality water. A city needs both a large supply and high-quality water.

While information is expanding and new technology – like satellite data – is opening new doors, there is still a lot we don’t know. We need better and more comprehensive data on water: where it is scarce, where it is abundant, what the quality is, and who is using it.

WATER IS LOCAL

Understanding local conditions – such as weather patterns, hydrology, geology, demand and use – is also essential. If you are siting a factory, you need to know the local conditions: Is it an arid region, is there high precipitation, or is it some combination of the two?
 
In the United States, for instance, the Southwest saw record droughts last year, whereas the Northeast had unprecedented rainfall. According to NOAA, just last month 13 percent of the country experienced severe to extreme droughts, while 9 percent had severe or extreme wet conditions. These distinctions are common around the world.

COLLECTIVE RESPONSE

Given the competing demands for water – from food and drinking to manufacturing – water security must be a shared endeavor. Effective solutions will require collective action drawing on input from all users: communities, industry, agriculture, governments and more.

A recent example of an integrated approach comes from a Volkswagen factory in Mexico, where water supply is critical. The factory began working with the government and a local university to gather information and increase water availability in the area. According to the company, the collaboration has added 1.3 million cubic meters of groundwater reserves per year, which should benefit Volkswagen and the local community, alike.

MOVING TOWARD SOLUTIONS

The good news is that a growing number of businesses, investors and governments are making the connection between water risk and sustainability. The Carbon Disclosure Project’s recent request that companies reveal key information about their water use and management strategies was backed by 354 financial institutions, with combined assets of $43 trillion.

Similarly, India’s government recently announced plans to invest $1 billion over five years to map its underground water supply to improve management and avoid a water crisis. According to Bloomberg, more than 85 percent of Indian villages depend on wells for water. And water irrigation has tripled since 1950. An effective response is needed to ensure that the 2nd most populous country continues to have access to water for its people and the economy.

Clearly, better and more holistic information is needed to prevent current water risks from turning into a full-blown water crisis.

That’s why the World Resources Institute (WRI) has partnered with several businesses to develop new tools and resources to collect global water data. WRI’s Aqueduct project aims to meet the growing demand for information about present water supply and future risks. Launched last fall, with support from GE, Goldman Sachs, and others, Aqueduct collects, combines, and maps comprehensive data on water and related risks for businesses and investors.

The United Nations CEO Water Mandate, endorsed by several dozen leading international corporations, is another important initiative that aims to categorize various water risk assessment tools and drive business innovation to manage water more efficiently.

These examples reflect real progress in developing better information about water risk.

Yet protecting future generations and economies from water shortages will require even greater commitment, creativity and collaboration. World Water Day is a good time to start turning these goals into reality.

Manish Bapna is interim president of the World Resources Institute. Betsy Otto directs WRI’s Aqueduct Project.

 

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