Water and the transformational agenda

Swaminathan’s much celebrated Tamil play Thaneer Thaneer (Water, Water – 1981) is about a remote village in rural India, facing severe water shortages. All their efforts to deal with the issue are met with no more than the indifference of local politicians and the apathy of the local press. The drama is compelling with an outsider helping to launch a cooperative scheme to bring water from a spring ten miles away and, various twists in a drama that ends in tears. It straddled the ever widening gap between rural and urban communities and, highlights an issue that is starting to ignite unrest and, strategic debate at the highest global levels.

In India human settlements are called “abadi” – which means that they are based on water. The word for water is “ab” in Persian and “ap” in Sanskrit. And “Abroo” means human dignity – which is a function of access to water itself. Global population is climbing from 6 to 9 billion by 2050, and our approach to all global resources has to respond. Oil and carbon dominates debate; food production will have to rise by up to 70 per cent to meet projected demand but, water is no less a challenge. The issue is way beyond drinking, cooking and washing – water is embedded in all products and shortages challenge human dignity, sustainable communities and business continuity alike.
According to the Organization of Economic Cooperation and Development, one in eight people in the world do not have access to safe water and 47 per cent of the world’s population will face severe water shortages by 2030. In fact, total global investments in water and sanitation would need to double for the Millennium Development Goal targets of halving the proportions of people living without water and sanitation by 2015 to be met. This means that multinational corporations now face “water risk” to their operations and brands — even though water is described as no more than “noise” in a profit and loss statement for most multinationals.

Many women and children in rural areas in developing countries spend hours each day walking kilometres to collect water from unprotected sources such as open wells, muddy dugouts or streams. It is no shock that waterborne diseases and the absence of sanitary domestic water are one of the leading killers worldwide. In urban areas they collect it from polluted waterways or pay high prices to buy it from vendors who obtain it from dubious sources. The water is often dirty and unsafe, but they have no alternative.

In fact, worldwide, there is inadequate drinking water for about 885 million people; inadequate access to sanitation and waste disposal facilities for over 2.5 billion people and for children under age five, waterborne diseases are the leading cause of death. At any given time, half of the world’s hospital beds are occupied by patients suffering from waterborne diseases. According to the World Bank, 88 per cent of all waterborne diseases are caused by unsafe drinking water, inadequate sanitation and poor hygiene. In other words, diarrhoeal diseases caused by unsafe water and poor sanitation, such as cholera, typhoid and dysentery, are common across the developing world – killing 4,000 children every single day.

Meanwhile, a typical aircraft carrier in the U.S. military uses nuclear power to desalinize 400,000 gallons of water per day. And, while desalinizing 1,000 gallons of water can cost as much as $3, the same amount of bottled water costs $7,945. And then, there is the impact of globalisation and stretched supply chains on water use.

Take the case of the case of asparagus grown for the international market in Peru’s Ica Valley, a large proportion of which is sold in the UK, in a trade worth US$230 million (£149 million) a year to the Peruvian economy. It reveals how a lack of coordinated planning and scant consideration of the long-term sustainability of water resources is threatening the water supply of a third of a million people – and may leave some of the region’s inhabitants without water in as little as 25 years.

Progressio, the Peruvian Centre for Rural Development (CEPES) and research and advocacy group Water Witness International say that water levels in the Ica Valley – one of the driest places on earth – are falling dramatically. The report – ‘Drop by Drop’ – shows that it is not just a lack of water but a lack of responsible water management – from local government through to international investors – which is leaving poor and vulnerable communities at risk in the Ica Valley and beyond. The report highlights a growing concern about the impact of developed nations’ ‘water footprints’ – or the volume of water that is used to produce goods and services in one country which are then consumed or used in another. The report shows that:

• The responsibility for the formidable water problems facing Ica lie in part with the Peruvian government, including “a lack of political will” to regulate water use in the valley.

• Poorly designed and unenforced water laws have permitted some agribusinesses growing asparagus for overseas markets to gain an unfair advantage in their use of local water resources, at the expense of poorer communities.

• Investors, such as the World Bank’s investment arm, have contributed to the situation in Ica by not sufficiently considering the water impacts of investment in the region.

• The production standards imposed by UK retailers importing asparagus from Ica do not adequately consider or address the impacts and future viability of water resource use in Peru.

In some areas of Ica wells are drying up, leading to the loss of drinking and irrigation water and throwing local livelihoods into jeopardy. In some cases, local people are surviving on as little as 10 litres of water per person per day, compared to the 50 litres specified by the World Health Organisation as the minimum needed for basic health maintenance. Progressio, the Peruvian Centre for Rural Development (CEPES) and research and advocacy group Water Witness International say that water levels in the Ica Valley – one of the driest places on earth – are falling dramatically.

The report – ‘Drop by Drop’ – shows that it is not just a lack of water but a lack of responsible water management – from local government through to international investors – which is leaving poor and vulnerable communities at risk in the Ica Valley and beyond. The report highlights a growing concern about the impact of developed nations’ ‘water footprints’ – or the volume of water that is used to produce goods and services in one country which are then consumed or used in another. This is one of the first times that the impacts of unsustainable water use linked to the UK’s ‘water footprint’ through produce grown for the UK market, has been researched in detail to highlight its social and environmental impact on developing world communities.

Fast forward to recent weeks and, as various reports highlight, underlying the unrest in north Africa and the Middle East is rising food prices caused by a largely overlooked but looming water crisis. The fact is that the hugely diverse states that make up the Arab world from the Atlantic coats to the antique land of Mesopotamia, now Iraq, are oil rich but water poor. This is exacerbated by the growth in population that will see a doubling in the area to 600 million by 2050. So much for the shortage at home. However, this has become so acute that the short term solution has become part of the long term problem.

These Arab countries depend for their food security on other countries and this has been graphically illustrated recently with floods in Queensland affecting wheat and other climatic disasters worldwide impacting food security far more than any progress on yields and productivity in domestic agriculture. Then, there is embedded water – that is, water in various food imports from all over the world. This is a major shift in policy from a time when , in the 1970s nearly 20 per cent of all Saudi oil money was used to generate clean water to grow wheat and other crops in regions that would not normally be able to do so. And this is not to mention the profligate chill in the Shopping Malls – not just the chill in the Supply Chain. This all costs huge amounts of energy – an estimated 550 litres of water per day per person in Abu Dhabi alone. So much so that Saudi Arabia said in 2008 that they would cut domestic wheat production by 12.5 per cent per year to save its water supplies. We use water for drinking, cooking and washing but significantly more is used in production of leather, food and textiles. For example, cotton requires 256 GM3 of water per year but, in the 25 countries of the EU 84 per cent of the water footprint of cotton is located beyond the EU itself  – the main impact being in Uzbekistan and India.

Looking closely at the water footprint of a list of typical products we can highlight: 140 litres of water for a cup of coffee; 1,000 litres for a litre of milk and, 16,000 litres for 1 kgs of Beef.* This is a sobering set of statistics and, when we look at bottling plants for soft drinks worldwide, we start to see the combined impact of man-made water drought as high-volume plants drain local acquifers and, toxic waste dumping. Clearly, it is time to take water far more seriously as a community as well as a business risk and this means working on a series of initiatives.

  • Understand the end-to-end water footprint of a given supply chain. This must include the embedded water in key products.
  • Develop strategies to reduce use in all processes end-to-end. This must be equally rigorous for direct and indirect water.
  • Incorporate water into a business wide initiative to go beyond carbon footprint and look to a comprehensive resource footprint – energy, materials and water.

A 2006 United Nations report focuses on issues of governance as the core of the water crisis, saying “There is enough water for everyone” and “Water insufficiency is often due to mismanagement, corruption, lack of appropriate institutions, bureaucratic inertia and a shortage of investment in both human capacity and physical infrastructure”. We need to add the supply chain perspective of an end-to-end review since the impact of water abuse is increasingly felt far from the consuming market and has to be traced to source.

Finally, we need to take more seriously the issue of monopolies in water trade worldwide. By 2010, over 900 million people were served water and sanitation services by Private groups. There were six markets with an extensive private sector presence at the start of 1987: the USA (mainly regulated activities, rather than the non-regulated O&M outsourcing contracts which emerged in the 1990s); France (the private sector share has advanced from 72% in 1987 to 80% in 2009); Italy (11% of the market was served by the private sector and semiprivate companies in 1987); Spain (the private sector share has advanced from 35% in 1987 to nearly 50% in 2009); Germany (Gelsenwasser and certain local companies held approximately 8% of the market through long-term contracts); and England & Wales (there were 29 statutory water companies serving 13.8 million people when privatisation occurred in 1989).

This makes a total of 800 million people worldwide are served by private companies for water and sanitation – this is up from an estimated 550 million in 2005. In China this has grown from 8 per cent to 38 per cent in 2009. These are big numbers and, any reading of business history since the 1980s would highlight huge optimism for competition in Utilities in general and water in particular; the wisdom of the day being that private companies would generate all of the benefits of competition. Reality did not follow the market fundamentalist script and, water has become the most extreme example of monopoly capitalism. For example, by 2002 the two French companies of Suez and Veolia held together a 60 per cent market share of private customers. In fact, the sector features very little competition and this has been due to the fact that all concession s operate over the long term and this mitigates against the sort of completion seen elsewhere – though as other posts illustrate – monopoly capitalism sees many major global industrial sectors from pesticides to pharmaceuticals to FMCG to Retail with the top ten players controlling between 55 to 75 per cent of the market.

This is hardly the much vaunted competition so useful to the consumer. Water is big business and is becoming a big problem – the nature of which needs far closer inspection and more innovation to ensure that real embedded use is fully appreciated and that every effort is made to ensure that use is valid. Recently, I gave a paper at a Conference on Food Security and a consultancy presented a hugely technical analysis of water use in FMCG products. Amidst the data sets on water use from one end to another of the supply chain for toothpaste – from packaging to distribution – one category stood out on the graph. Over 90 per cent of the use was water out of the tap when brushing your teeth.

Profligate use is a luxury we cannot afford. As has been illustrated above, the issue is way beyond what we drink, cook and wash with. Embedded water in imported goods is becoming a classic way to avoid the problem and one which the developing world is paying for. We need to move to a transparent review of the specific use of water from end-to-end of all supply chains and this will help us transform the way we value water itself. A can of cola in the UK – which contains only 0.35 litres of water, requires an average of 200 litres of water to grow and process the sugar needed to make the cola itself – not to mention the litres required for the process that extracted the bauxite to make the can.

Swaminathan’s, play Thaneer Thaneer was about far more than water. It was about a crisis of government authority to deal with a basic crisis affecting livelihood at a local level and, of the regime of development itself at a national level. In other words, water had been no more than a given for the villagers and then, a point of passive resignation. Suddenly, it became a catalyst to question the fundamentals of society and the spur for action to transform things – with echoes of recent events in a number of Arab States and others after the fall of the Berlin Wall in 1989.

How prophetic the closing words of the play will be; only time will tell – “The villagers asked – will there be no dawn for us? don’t we deserve to live? Will our condition ever change? Society must put a stop to these question marks … Otherwise the day will surely come when these marks of interrogation turn into marks of violence.”

* Statistics from various World Bank Reports; the WWF (2008); Hall & Lobina (2007) and, Hoekstra and Chapagan (2008)

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2 Responses to Water and the transformational agenda

  1. John Methuselah says:

    Thanks for posting such informative, incisive and introspective story of water.Water is a luxury for a minority and a penury for a neglected majority. Mother Theresa rightly said that the ailment that the world is suffering from is ‘neglect’. The world seems to resort to the ‘avoid’ approach towards the water conflict. Now ‘avoid’ is no more an approach but it is a self-deception making us a part of the ‘neglect’.Educational institutions must focus on churning out discussions to resolve the local issues on water.

  2. M.S.P Rani says:

    Dear Sir,

    You brought out a great insight on the issues with respect to water management in this article especially with reference to Peru and UK. I feel that when we are talking about water crisis, Singapore needs a transformational agenda as much as the devastated countries. When I have been to Singapore last year this time, I asked the localites i met what is one major issue that a country like Singapore should have to bother about and they all said ‘Water’. I learnt that Singapore, which is not even 1/4th size of many Indian cities, has no fresh water lakes or rivers. Singapore’s only indigenous source of water is rainfall collected in the reservoirs they built. More than 55% of the water consumption is from households alone and interestingly that found that flushing toilet was one major culprit. As the space is limited and they cannot accommodate more reservoirs they are depending on import from Malaysia and Indonesia for water. Another issue is damming the sea between islands wouldn’t provide a big enough catchment area for rainfall. They are looking at sea water desalination given they have limitless supply of sea water but the issue is it requires vast amount of energy which is also scarce in the island. One of the most shocking things to me was the country does not even allow growing big trees in the country because they consume a lot of underground water.

    However, I was happy to learn that they have achieved remarkable progress in water management based primarily on urban catchment management and water reuse. They have built more reservoirs, efficient sanitation systems and brought out much legislation with respect to pollution control and water management. They have also brought out a four taps strategy which is very impressive but subject to a great challenge ahead. But are these enough to sustain growing urban population in the country? Can they build a more comprehensive transformational agenda to sustain the water sufficiency especially in the purview of so many constraints? If the neighbouring countries refuse to export water in near future can islands like these act independently? Singapore today we know is on the top of LPI, but can they use this to their advantage to solve a serious problem like this? What will an industrialised country like Singapore which needs embedded water for almost everything; live a balanced life in future? Singapore is listed by the World Bank as the 165th country out of 173 in the amount of water available per capita. Although they are the pioneers in water management in the world right now, and are prepared to face water shortages in future, question is for how long?

    I believe water reuse and desalination are only alternatives and if some other solution is not thought of then its not the drought prone countries or dry lands in Africa that are going to fall but Resource poor countries like Singapore. And if Singapore as a country is affected, what about the world trade which mostly revolves around this country? They can win nature by their water management skills in the short run may be but not in the long run. It is the biggest challenge for all such highly urbanised countries to look for more alternatives and I think it is time for all the countries to sign an international treaty on water co-operation and management and come to each other rescue for mutual benefit.

    M.S.P Rani
    GITAM School of International Business

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