Navigating Troubled Waters: A Primer for Managers on Water Challenges and Opportunities

Nov 1, 2017 2:00 PM ET

Water everywhere? An emerging global water crisis

Dr. Montgomery currently holds a Visiting Research Scholar position at the University of Michigan’s Erb Institute | Business for Sustainability.  She is also cross-appointed at the University of Windsor’s Great Lakes Institute for Environmental Research (GLIER). Her research focuses on emerging pressures on water resources and institutions, specifically tensions over public versus private management of municipal water services and the impact of the UN’s recognition of a human right to water.

Water everywhere? An emerging global water crisis In 2014 the World Economic Forum identified the water crisis as number three in its annual list of world economic risks, stating that the "potential impacts are real and happening today" (World Economic Forum, 2014, p. 14).  United Nations estimates suggest that given average economic growth, global demand for water will exceed supply by 40% by 2030, and far earlier in many jurisdictions (UN Environment Programme, 2011).

Business Impacts
The water crisis and its resulting challenges have also impacted business and industry around the world, and will continue to do so. The expanding global industry in water-related products and services includes bottled water, water purification, desalination, and recovery technologies in addition to dam and pipeline construction, urban water and sewage infrastructure, irrigation technologies, and agribusiness. In addition, numerous other sectors are deemed to be particularly vulnerable to water stresses including waterintensive sectors such as clothing, automobiles, food and beverage, biotech and pharmaceutical, electronics, mining, refining, and electric utilities (Pacific Institute, 2007).

In line with many businesses’ dependence on plentiful, high-quality and low-cost water resources, industry associations around the globe are beginning to recognize the fundamental challenges that growing water shortages represent for operations (2030 Water Resource Group, 2013; CDP and Deloitte, 2011; KPMG, 2012). Industrial and agricultural water usage are forecasted to be key contributors to increased water demands, with estimates suggesting that China alone Figure 1: Water Supply Sustainability Risk Index 2030 (EPRI, 2011) could account for 40% (see Figure 2) of increased industrial water demand globally by 2030 (2030 Water Resource Group, 2013). Accordingly, water scarcity has been identified as a leading business concern among executives involved in corporate sustainability, as well as a key point of vulnerability for business (Ernst & Young, 2012). Water is also increasingly being recognized as an important business risk for a variety of reasons including: water shortages, quality issues, price and access volatility, brand and reputational threats, increased community and regulatory pressures, and employee and consumer health (KPMG, 2012; WBCSD, 2009). These risks, and the threats they pose to businesses and their supply chains, are only expected to increase as climate change exacerbates water scarcity in given regions (Columbia Water Center, 2013).

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