Skip to main content

Liquid Assets

Why water is a business issue

<p>There is a temptation to brand water as the &quot;new oil&quot; or treat it like GHG, but these comparisons aren&#39;t appropriate.</p>

[Editor's note: In honor of World Water Day today, GreenBiz is launching Liquid Assets, a monthly column that will explore water as a business issue and the ways in which companies can manage water-related risks in an increasingly constrained world.]

Water has emerged as a prominent business and public sector issue in recent years, driven by the lack of access to clean water and sanitation, interruptions in business operations and food production, climate change and more disclosure of water risks.

A growing number of government agencies, investors, NGOs and other stakeholders are also releasing reports on water risks and the associated business opportunities. We're also seeing more water accounting and water risk evaluation tools being developed by several NGOs.

My goal in forthcoming columns is to provide additional insight into why water is a business issue and discuss approaches to mitigating water-related risks and new business opportunities in "water tech." More importantly, the focus will be on how water is connected to other resource issues, such as energy and agriculture, and integrated (systems thinking) approaches to addressing risks.

I come at the water issue as someone with a technical background -- I started my career as a hydrogeologist -- and a sustainability strategy focus. As such, my goals are to provide a practical view of water stewardship, along with insight and perspective on risks and business opportunities.

I will focus on water primarily as a business issue. However, this is not as straightforward as it sounds. Innovation in partnerships is now referred to as collective action. Technology developments -- the boundaries between private and public sector water issues and responses -- is now blurred. Water is a shared resource and engaging with a wide range of stakeholders is essential in developing solutions.

Many are tempted to brand water as the "new oil" or develop water strategies in the same manner as greenhouse gas strategies. In my experience, however, the comparisons aren't helpful in addressing water risk or identifying business opportunities. Water is fundamentally different and these differences are essential in developing long-term water stewardship strategies.

In short, water has economic, environmental, social and cultural dimensions. Unlike carbon, water is not fungible; a liter of water in the U.S. is not the same as a liter elsewhere. The quality of the water, the timing of the withdrawal, etc., all matter. While access to water and sanitation are global issues, solutions are local and stakeholders within a watershed care about how businesses use water.

While it is also tempting to include water technologies under the clean-tech tagline, it is not helpful to do so, either. The water industry and issues associated with commercializing water technologies are different than the bundle of technologies under the clean-tech umbrella (more on this in a later column).

Finally, we often refer to the concept of water scarcity. We should be clear that water is globally abundant but finite. Within a watershed and region, demand can often exceed supply, or there is a drought and in these cases water is "scarce." The bottom line: Water is globally abundant but it can be locally "scarce."

Water is old business and the issues in some ways haven't changed. What has changed is that water management has moved to water stewardship and the true value of water is now being better understood.

I suggest a couple of reports to frame the business issues and value of water. These reports explain why water is a business issue and get the conversation going on the specific risk, opportunities, strategies, public policies and technology developments:

2012 CDP Water Disclosure reports (Global 500 and S&P500)

U.S. Environmental Protection Agency report on the importance of water to the U.S. economy

I am looking forward to the monthly conversation.

Leaking pipe image by BEEE via Shutterstock

More on this topic