The Four Seasons Hotel
September 18, 2003

Water, Water Everywhere?
The 1974 film “Chinatown,” which was set in Los Angeles in the 1930s, had the struggle for water rights as a central element of its plot. While this was a fictional story, it reflected a very real conflict—a conflict that has only become more critical and more widespread over the years, and one that goes back in time thousands of years to ancient Mesopotamia where rival city-states fought an all-out war over water.

Recently, The New York Times ran a series of articles about water problems in Turkey, Syria, Iraq, China and the U.S. The availability and ownership of water poses strategic concerns equivalent to those surrounding oil, with the potential to pit regions within a country against one another (as is occurring in both China and the western U.S.), or one country against another (e.g., Mexico and the U.S.). The CIA has forecast that, as early as 2015, the world could witness major conflicts over access to clean water. From an optimistic perspective, there is the possibility that efforts to alleviate water shortages could lead to cooperation between nations and regions as they develop means for allocating and conserving shared resources—as Israel and Jordan are now trying to do with regard to the Dead Sea.

There are more than 1.1 billion people in the world without access to clean water and almost one-half of the world population (about 3 billion people) does not have adequate sanitation. About 80% of preventable disease in developing countries is a result of contaminated drinking water, and as many as 30,000 deaths a day are attributed to water-related illnesses. The World Bank believes that a lack of water will be a significant factor in restraining economic growth around the world. Worldwide disasters, which include drought, contribute to persistent poverty.

The fact is, there is a limited amount of fresh water in the world that is suitable for drinking and agricultural purposes, and demands for this water have been steadily rising. Approximately 50% of the available fresh water in the world is used every year—an amount that could rise to 74% by 2025 based on population growth alone, or as high as 90% if per capita use increase. In the U.S., it is worth noting, per capita water usage has been declining as a result of lower usage by industry and agriculture due to technological improvements and conservation measures. Growing American cities and suburbs, however, are using increasing amounts of water.

An increasing number of municipal water systems around the world are under the operation and management of private companies (two French firms, Suez and Vivendi Environnement, are the largest companies in the business). Not surprisingly, there is serious disagreement between those who believe something as essential to life as water is a fundamental right, and those who believe that efficient delivery of water can only be done by the private sector. These points of view are succinctly clarified by Gilda Pedinoce de Valls of Tucuman, Argentina, who says: “Water is a gift from God” and Olivier Barbaroux, president of Vivendi’s water business, who replies: “Yes, but he forgot to lay the pipes.”

If more private companies move into the business of water distribution, continuing to take it out of the hands of governments, the possibilities of inequitable distribution rise. This in turn has the potential to create civic unrest, pitting the wealthy against the poor and citizens against private industry (adding more fuel to the anti-globalization movement). Of course, keeping distribution channels in the hands of government is certainly no guarantee that corruption, inefficiency and inequity will be absent.

Implications:
If governments undertake more engineering projects that seriously alter the natural environment, as China is proposing to do by channeling water from the Yangtze River basin in the south to the cities of the north, there will certainly be unintended consequences. A prime example of this is the irrigation project of the former Soviet Union that resulted in the transformation of the inland Aral Sea into a salty desert.

Obviously, health and sanitation are two of the major concerns in regard to water shortages but other areas will also feel the impact. Agricultural production will be affected, which will in turn affect the development of alternative energies based on bio-mass technologies and bio-mass plastics that are consumer-and environment-friendly. The bottled water industry also stands to be affected by the water crisis—the number of fresh-water sources available for purchase by corporations may begin to shrink.

The need to find more efficient ways to use, conserve and share existing water supplies will become more urgent. New approaches will be critical in finding ways to end the world’s water crisis. Integrated and innovative approaches that make use of the growing trend toward convergence and link technologies in the fields of earth science, biology and the social sciences may offer the best hope for solutions.

Businesses will increasingly have to take the present and future cost and availability of water into account when considering relocation of facilities and people. New products and services that make water use more efficient and less costly will represent a great area of opportunity in coming years.

Issues Analysis provided by: Weiner, Edrich, Brown, Inc.
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