The high-profile but temporary unavailability of semiconductors and other industrial components is getting a lot more coverage these days than the chronic shortage of an even more vital resource: water.
The global water crisis was in evidence long before COVID-19 appeared on the scene, and coming out of the pandemic it’s only growing worse. In 2015, the World Resources Institute projected a 40% gap between fresh water supply and demand by 2030; it has since bumped that number up to 56%.
Many locations are already in crisis. WRI reports that 17 countries, home to a quarter of the world’s population, are currently experiencing “extremely high” water stress, while 44 countries with a third of the world’s people are facing “high” stress. WRI defines “extremely high” as situations in which agriculture, industry and municipalities consume 80% of available surface and groundwater in an average year.
Emilio Tenuta, chief sustainability officer with Ecolab Inc., says the water shortage has become “mainstream” over the last decade in California, which suffered extreme drought from the end of 2011 to March of 2017, a period that included the driest years in the state’s recorded history. Without adequate surface water from which to draw, California’s farmers and food processors have had to rely on a shrinking supply of groundwater. “To me, that’s when it became real,” Tenuta says.
Even more frightening are “Day Zero” scenarios such as that which threatened Cape Town, South Africa in 2018. The city narrowly averted having to shut off its municipal water supply entirely. And three years of severe drought in Chennai, India between 2016 and 2018 forced citizens there to obtain water from trucks.
Nevertheless, awareness of the problem is lagging. While environmentally conscious companies have begun reporting their carbon footprint, fewer are disclosing water usage. “The last thing investors want to hear about is strained assets due to lack of water,” Tenuta says.
It’s not just a question of irrigating crops; many industries such as apparel and other types of consumer goods use huge amounts of water in their industrial processes. And lack of adequate supply is already affecting their operations. Chile’s mining sector, accounting for 10% of the country’s gross domestic product, recently announced a cutback in production of copper due to the worst drought in 50 years, Tenuta notes.
Water scarcity is a symptom of population growth and the climate change, he says. Recent reports reveal that signatories to the Paris Agreement need to do much more to meet their commitment to limit global warming in the 21st century to below 2 degrees Celsius, and preferably 1.5 degrees C. Meanwhile, it’s becoming increasingly evident that “the number-one physical stress to companies is water stress.”
Some recent moves by global business suggest that the message isn’t being heard. Tenuta notes plans by Taiwan Semiconductor Manufacturing Co. to build a giant manufacturing facility in Phoenix, an area that is already stricken by drought. The water level at nearby Lake Mead stands at a historic low, at around 35% of capacity, while Lake Powell, the second-largest reservoir in the U.S., is at 30%. It takes an estimated 10 gallons of water to make a single computer chip, and the average semiconductor factory consumes around 20,000 tons of water a day.
Tenuta does see positive action by business and government to tackle the water crisis. He calls The California Water Action Collaborative, founded five years in Southern California, “a transformational moment, and a model of how private and public partnerships can come together in an at-risk watershed.” And the Water Resilience Coalition is a CEO-led initiative that pledges to have a net-positive impact on water supplies by 2050. The effort was spearheaded by the UN CEO Water Mandate and seven private companies, including AB InBev, Diageo, Dow Inc., Ecolab, Gap Inc., Microsoft and PVH Corp. Other members include The Coca-Cola Company, Levi Strauss & Co. and Heineken. It has set a participation goal of 150 companies, which together impact a third of the world’s fresh water use, Tenuta says.
Much more remains to be done. Companies need to adopt technology for metering water use in their facilities, while ramping up efforts to re-use wastewater, of which just 3% is being reclaimed today. The impact from an increase to 10% “would be huge,” Tenuta says.
Component shortages come and go, but water is a precious resource that must be constantly managed among all buyers, manufactures and suppliers. “Businesses have to lean in on this,” Tenuta says. “It impacts not only our operations but also the whole supply chain.”
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