The Global Water Crisis: Addressing an Urgent Security - Unu-inweh ...

If the market value of water is more significant than most people realize, water’s non-market values are simply staggering.
Watersheds provide benefits that literally enable, and enrich, life on Earth. The non-market value of a watershed includes
water supply, water treatment, ecosystem support, hydrologic stabilization, carbon storage, pest control, climate regulation,
cultural benefits to indigenous communities, and recreational benefits and opportunities for a wide range of land users.
Many consider these benefits to be priceless, but by placing a dollar value to them, environmental economists are able to
reveal values that are generally hidden from common decision-making metrics, and these values are of larger magnitude
than ordinary market values. For example, the non-market value of Canada’s Mackenzie River Basin is estimated to be
CAD $570.6 billion per year, over 13.5 times the economic value of the extraction industries in the watershed (Anielski
and Wilson, 2010).
2. The Economic Opportunity in Addressing Water Risks
2.1. Risks
As contamination, unsustainable withdrawals, and climate change are threatening the global supply of fresh water,
population growth, urbanization and rising incomes are steadily increasing the global demand. Many countries are now
facing the reality of a sizable gap between the amount of water they can reliably supply to their economies, and the
amount that is actually needed. By 2030, given average economic growth and assuming no efficiency gains, global water
requirements could exceed the current accessible, reliable supply by 40% (2030 Water Resources Group, 2009). The
situation will be worse in some developing regions, where it is expected that one-third of the global population will be
living in basins with a water deficit greater than 50% (2030 Water Resources Group, 2009).
The greatest increase in water demands will come from China, the US and India due to population growth, increasing
irrigation for food production, and growth in GDP (Lux Research, 2008). By 2030, demand for water in India and China, the
most populous nations on Earth, will exceed their current supplies (2030 Water Resources Group, 2009). The strain on the
world’s agricultural and industrial sectors will be substantial, as these countries’ populations move towards middle-class
diets and consumption patterns. The lack of available water will be compounded by issues of water quality. Pollution in
China is already so widespread that 21% of available surface water resources are unfit even for agriculture (2030 Water
Resources Group, 2009).
In addition to risks to global and national economies, individual sectors are now beginning to identify water as a substantial
risk to their bottom-line (Carbon Disclosure Project, 2011). The power-generation, mining, semi-conductor manufacturing,
and food and beverage sectors are particularly exposed to water-related risks (JP Morgan, 2008). Many businesses are
already suffering water-related impacts. In 2011, Kimberley-Clark reported a US $2 million loss at a facility in Malaysia,
while The Southern Company reported US $200 million in unanticipated electricity costs in the US (Carbon Disclosure
Project, 2011). The first case resulted in curtailment of production; the second, compensating for reduced hydroelectricity
production. Ultimately, both impacts were the effects of drought (Carbon Disclosure Project, 2011).
Risk management is complicated by the fact that exposure to water scarcity and pollution is not limited to onsite production
processes, but extends all along supply chains (JP Morgan, 2008). It will be further complicated by climate change, which
is making the prediction of key climate variables increasingly difficult and exposing all sectors to the impacts of floods
and droughts.
2.2. Opportunities
Where there is risk, there is often opportunity. Financial analysts are now predicting tremendous growth potential for the
water sector, particularly for those businesses focused on efficiency, re-use and source diversification (Lux Research, 2008).
In fact, revenues of the world’s water-related businesses are forecasted to rise from US $522 billion in 2007 to nearly US
$1 trillion by 2020 (Lux Research, 2008). The challenge to meet rising water demand presents myriad opportunities, in
several key areas, including the following:
60 The Global Water Crisis: Addressing an Urgent Security Issue