The economic slump still with us after several punishing
years is largely rooted in living beyond our means too
much spending and not enough money in the bank to cover
peoples expectations for the future.
This disconnect between actual and expected means is at the
root of much of the financial markets distress. But it is
also threatening another resource that modern society depends
heavily upon: fresh water. If investors and companies do not
plan for this already unfolding global threat, they are as
vulnerable as overextended banks were when the housing bubble
We live in a thirsty world. Climate change, population
growth and pollution make quenching this thirst dramatically
more difficult. Our over-leveraged global water position is
fundamentally unsustainable, and the business community is
already feeling the pain. Consider the following facts:
· In a recent survey backed by 354 institutional
investors, 59 percent of the 100-plus largest global
corporations report exposure to water-related risks, with over
a third already suffering financial impacts.
· Ongoing drought in Texas has devastated cattle and
cotton production and threatened power blackouts. The U.S.
Department of Commerce reports drought-related losses in Texas
and six neighboring states totaling $10 billion.
· New Chinese government figures show that 52 percent
of the countrys industrial output over $4.5
trillion in value comes from regions facing serious
water scarcity. Global banker HSBC warns that businesses
operating in 14 water-scarce Chinese provinces need to plan for
significant resource constraints.
· A recent study led by McKinsey and the World Bank
projects that by 2030 world water demand will outpace supply by
40 percent under a business-as-usual scenario.
Business as usual is already changing in significant ways
for companies like Coca-Cola, which knows full well that a lack
of sustainable water supplies is the ultimate show-stopper.
With some 900 bottling facilities worldwide, Coca-Cola and its
bottling partners depended on 295 billion liters of water in
2010 to drive $100 billion in revenues.
To put that in perspective, its less than half of what
the city of Atlanta used last year. Yet beverage companies are
a relatively small example of water-dependent industries. From
farms to power plants, mining to microprocessors, water is
But many in the private sector continue valuing water under
stale assumptions: Its seen as cheap, stable, and
uncontested, when increasingly its none of those.