How business can take action on the California water crisis

The recent discussion of the drought in California reminds me of the quote attributed to Warren Buffett: "Only when the tide goes out do you discover who's been swimming naked."

The state's drought is exposing the importance of water in agriculture, energy production, manufacturing, residential use, ecosystems and more. It is also beginning to highlight what needs to change with regards to how we value water and the importance of water stewardship.

A recent Reuters article summarizes the extent of the drought and the particular impact to the agricultural sector in California —  the nation's No.1 agricultural producer, responsible for half of the nation's fruits and vegetables. Some 500,000 acres of cropland are expected to be left idle in 2014 due to reductions in available water. The impact could be in the billions of dollars to the state economy.

The drought has prompted the governor to declare a state of emergency and to urge citizens to voluntarily reduce water consumption by 20 percent. Reportedly, there also could be a cutoff in state-supplied water sold to 29 irrigation districts, public water agencies and municipalities.

This issue stems from a lack of runoff from rainfall and snowmelt from the Sierra Nevada, as well as a depletion of groundwater. With a shortfall in surface water from rainfall and snowfall, we are essentially mining groundwater.

The California Water Action Plan's significant goals

To help address the problem, the Golden State released the California Water Action Plan (PDF) in January. As California's official vision, it recommends how to address water scarcity, with goals for management over the next five years. On a broad level, the plan describes the following 10 major goals:

1. Make conservation a California way of life.

2. Increase regional self-reliance and integrated water management across all levels of government.

3. Achieve the Delta Reform Act's "co-equal goals" of reliable water supply and improved environmental quality for the Delta.

4. Protect and restore important ecosystems.

5. Manage and prepare for dry periods.

6. Expand water storage capacity and improve groundwater management.

7. Provide safe water for all communities.

8. Increase flood protection.

9. Increase operational and regulatory efficiency.

10. Identify sustainable and integrated financing opportunities.

Specific actions for change

In addition to these broad goals, the plan also identifies specific actions, including:

1. Consolidate the drinking water, surface water and groundwater quality programs under the authority of a single agency.

2. Establish a new levee assessment district with authority to collect fees for funding the repair of more than 1,000 miles of Delta levees.

3. Provide increased funding to local governments and "integrated" projects that accomplish multiple water-related functions (e.g. water supply, water quality and flood control).

4. Clarify (possibly by legislative amendments) the application of Proposition 218 procedures to water-related fees and taxes.

5. Remove fish passage barriers within the Yolo Bypass.

6. Restore 10,000 acres of strategic mountain meadow habitat in the Sierra Nevada and Cascade ranges.

7. Update the 2003 "California's Groundwater" bulletin with the latest field data. 

In addition, the proposed budget for 2014-2015 includes an investment of about $618 million for water-efficiency projects, wetland and watershed restoration, groundwater programs, conservation, flood control and integrated water management. 

It is important to note that California is not the only state addressing water scarcity and investing in such projects. In November, Texas approved the Water Infrastructure Fund to address water scarcity in the state. If you are interested in better understanding the importance of water to the State of Texas, read "Water Scarcity a Potential Drain on the Texas Economy" (PDF) from the Federal Reserve Bank of Texas.

Tips for businesses

If you are a business operating in states and regions of water stress and scarcity, consider the following:

Business value at risk: Understand water-related risks and business values at risk from water across your value chain.

Water stewardship, not water management : Develop a plan to mitigate these risks, including establishing water governance, setting goals and targets, and creating collective action programs.

Watershed level thinking: Consider water risks and mitigation strategies beyond your facility. The watershed is now your area of focus to manage water risks.

Integrate water with energy strategy: Consider how water scarcity could affect energy production and ask whether renewables could provide a "low water footprint" option.

Innovation: Integrate innovative partnerships and technologies into your strategy.

Collective action: Using tools such as the CEO Water Mandate Water Action Hub, engage with stakeholders to address water-related issues.

Stakeholders care: Remember that investors and other stakeholders care about how you manage water, as it is a shared resource with shared risks. Refer to the CDP Water Reports for more information.

Finally, let's stop referring to "the drought" as if water scarcity is a temporary event and we just need to wait it out. In its 2014 Global Risk Report, the World Economic Forum identified the "water crisis" as the No. 1 risk, above "failure of climate change mitigation and adaptation" at No. 5 and "greater incidence of extreme weather events" at No. 6.

If you are a business, it is time to understand water-related risks and proactively mitigate them.

Drought photo by Meryll via Shutterstock