20 December 2010

Business and water

A few weeks ago, I attended a conference on business and water in London. I was under the impression that the conference was aimed at water footprinting (my views in The Guardian and International Herald Tribune), but it was much more interesting than that (read the report by Dan Bena of Pepsico here.)

[In 2008, I blogged on the anti-capitalist backlash against this kind of conference]

In my talk (11 min, with slides), I pointed out that the water supply risk that businesses worry about comes from poor water governance, which is often the result of political and bureaucratic failure.

Others made a number of interesting points:
  • Jason Morrison from the CEO Water Mandate/Pacific Institute explained how businesses are trying to engage with civil society, while keeping the taps flowing (see this post). Unfortunately, the Mandate's goal of facilitating collective action for better policy is hampered by its bureaucratic (UN) roots and "comprehensive" embrace of stakeholders. They are talking the talk, but it's hard to walk the walk.

  • Most companies know way more about their water use than home owners, politicians, environmentalists. Farmers know plenty as well.

  • A huge enterprise looked at their operations worldwide and found little or no correlation between water scarcity and water prices. Another one found weak correlation with widely-accepted indicators of "water stress" and the actual situation at their production facilities. The first problem arises from prices that are based on the cost of delivery; the second from the lack of detail (and the absence of a dimension for governance) in water stress indices.

  • A water-energy nexus person pointed out that low carbon regulations can increase water consumption (e.g., corn ethanol needs FAR MORE water to produce fuel than refining oil). I'd call this the regulatory version of wack-a-mole.

  • Rule of thumb: Diversions that exceed 40% of a watershed's (cachement's) flows stresses the environment.

  • Several presenters dropped the triple bottom line BS; they preferred to pursue "green [behavior] is green [money]" policies.

  • Water footprinting is nice for clarifying operational consumption but cannot do much to increase profits. Investors do not know how to use footprinting data, just as they do not know how to use water disclosure data, because they cannot turn these data into financial indicators now (or maybe ever) due to the numerous ways of calculating and interpreting water consumption statistics that vary by sectors. Consultants, OTOH, can make good money on footprinting (see this post).

  • Footprinting provides trivial data but does little to reduce political risk, overuse by neighbors, or ideological pressure to "do something."

  • Companies are sometimes forced to do the government's job: providing water meters or water supplies to outsiders, but they are cautious about lobbying for change or good management, since they can then be attacked.

  • Lots of resources! (Some old but most new to me!)
One elephant in the room was the basic question of consumption. Many presenters pointed out that 95% of the water impact from their products occurs when they were used. Does that mean that maybe people should not use it? Dan from Pepsico said [paraphrasing] that Pepsi is a "fun product that should be consumed as a treat, but that Pepsico has no intention of ending its production -- only changing their portfolio to more healthier products." This answer is true, in the sense that someone else will sell a sugary drink and Pepsico can use $ from one brand to do good works or develop other brands, but it doesn't end the bigger discussion.

That's the discussion few people are willing to face, the one on how real change means less consumption (I've said this here, here, here and here.). A recent New Yorker, for example, discusses [$] the Jevons Paradox -- that increases in energy efficiency do not reduce total energy use. People just find more ways to use energy (e.g., more cars, driven more often). Stack that effect on top of growing population and growing affluence, and you can see how our total energy consumption will continue to rise and its impact on the (non-priced, unmarketed) environment will grow even greater. Read more at Grist.

Bottom Line: Big companies are very interested in sustainable water supplies (folks in finance are waiting until the crisis gets profitable enough), but most of their actions and impacts are superficial relative to the inactions and adverse impacts of the politicians and bureaucrats who manage water (let alone consumers who want to use more). Unfortunately, politicians and bureaucrats did not seem to care about attending this meeting, sharing their perspectives or learning how to improve their business of delivering reliable water service.

1 comment:

Shahram Javey said...

So nothing will make a difference until politicians start taking note of water management? Water scarcity is a myth? Reduction in use will have no overall impact? Party on.