This post is a continuation of this week’s theme of “peak” resources. This time, the attention is on the most essential resource of them all: water.
As we learned in grade school, we humans are about 70 percent water. We cannot survive without it. And, like minerals, metals, and oil, water is a finite resource. Pressure on all finite resources is mounting as the world’s population grows and countries with massive populations like China and India move from developing to developed status. According to one estimate, there’ll be an additional 3 billion middle-class consumers on the planet by 2040.
At the same time, climate change models predict some regions of the world will grow drier. The US Southwest is one example. Also, glaciers in the world’s mountain ranges are receding, and snowfall and melting cycles are shifting. For instance, climate change in the Himalayas is already affecting billions of people in Asia, where snow melt from the mountains feeds major rivers, including the Indus, Ganges, Mekong, and Yangtze.
Manufacturers cannot survive without water, either. Whether companies make cosmetics, textiles, or high-tech gear, water is essential for production. It’s also essential for energy generation. From hydroelectric to nuclear to fracking for natural gas, it takes a lot of water to generate power. So as the water supply is affected and demand increases, the cost of a megawatt will increase.
By 2030, there’s projected to be a gap of 30 to 40 percent between global water supply and demand, according to McKinsey & Co. Research conducted by Veolia Water, the world’s largest water services company, in cooperation with the International Food Policy Research Institute revealed that about 20 percent of the world’s GDP is produced in water-scarce areas. By 2050, that figure will be 45 percent, assuming a business-as-usual trajectory. Of course, when it comes to water, business as usual is not an option.
The solution for companies, of course, is to have a long-term water strategy in place for dealing with the risks associated with shortages, cost, and availability. Beverage companies such as Coca-Cola are leading the way in water conservation strategies and investment. But so are apparel makers like Levi Strauss, cosmetic companies like L’Oreal, and semiconductor companies like Intel. And vendors like GE, Johnson Controls, Siemens, and Veolia are doing a brisk business supplying water conservation and purification solutions.
But companies don’t operate in a vacuum. They rely on municipalities to set standards and households to be educated and responsible water consumers. One municipality that gets it is Singapore, a hub of high-tech manufacturing. The city-state buys its water from neighboring Malaysia. However, to be more self-reliant, Singapore is investing in desalination plants and a wastewater treatment plant that would enable the reuse of wastewater for industrial purposes. The treated water is brought to the level of “pure” water, which is necessary for production in the semiconductor and electronics industries.
By 2060, Singapore expects to be able to meet up to 50 percent of its domestic water demand through these technologies.
If you manufacture in Singapore, the chances are good that you’ll still be there in 10 or 20 years. But what if you’re in Arizona or New Mexico? Do you know your municipality’s water strategy? Does your company have a handle on water risk? Do you have a long-term plan?