By Andy Wegleitner
CESR Student Assistant
As the summer begins to heat up, so does the news surrounding the drought in California. The Golden State is entering its fourth year of drought and has recently made strides to solving its major problem. California Governor, Jerry Brown, ordered the first ever state-wide restrictions on water usage in an attempt to reduce overall usage by 25%. Through limiting commercial and residential water usage, the state’s initiative has captured attention nationwide.
However water scarcity is not just a California problem, it is a global epidemic. At the current rate of water usage, worldwide demand for water will exceed supply by 40 percent by the year 2030. If we continue to ignore this problem, the number of people impacted will double from 2.4 billion to 4.8 billion, which is over half of the global population (3).
Water scarcity also a puts the global economy at high risk. It would cost $50-$60 billion each year for the next 20 years to correct a supply shortage of this scale (2). In order to maintain stability in a rapidly developing global economic environment, we must first address the water issue.
The Business of Water
CESR hosted a panel highlighting how business is the solution to the water crisis earlier this month. The panel consisted of two leading experts in the field: Wendy Pabich, Artist, Author, and President and Founder of Water Futures, Inc., and William Sarni, Director and Practice Leader, Enterprise Water Strategy at Deloitte Consulting LLP. To an audience of MBA students and water-activists, Pabich and Sarni provided unique insights into the trends and issues surrounding water.
#1 Global Risk
Earlier this year, the World Economic Forum identified the world’s lack of clean water as the #1 global risk based on its potential devastation to society. Lack of access to clean water and sanitation has drastic humanitarian and business implications. For a resource that comprises almost 70% of our bodies and our planet, the water crisis is an issue that can no longer be ignored.
We live in a world where more people have mobile phones than toilets. 750 million people lack access to safe water and 2.5 billion people do not have access to adequate sanitation worldwide (1) (2). As a result of the shortage, people are suffering. More than 840,000 people die every year from a water-related disease, which is equivalent to the entire population of San Fransisco (1). Children under the age of five account for a majority of those deaths, as every minute a child dies from a water-related disease (1). The major humanitarian impacts of water scarcity demand that society take action and fast.
CSR to the Rescue
Although many people look to the public sector to solve infrastructure issues, businesses should work together towards a solution. Corporate social responsibility has become a major point of emphasis for growing corporations as consumers are demanding that businesses have a bigger social impact. 68% of people think that businesses need to deliver more positive social and environmental change (4).
As demand for a solution to the water crisis continues to grow, companies are realigning their values to solve these pressing issues. Companies such as Unilever, AB InBev and PepsiCo, have all started making changes to their business model to address the issue (5). These companies have taken the initiative to not only reduce their operational water consumption, but also increase access to clean water worldwide. In doing so, large companies create positive environmental change while improving their brand image.
Although costly, devoting resources to solving the problem is a smart business investment. A $1 investment in water results in $4.30 in gains through increased productivity (2). Lack of productivity is a direct result of a lack of clean water as people are forced to spend more time collecting water and live unhealthy lives. As of now, it is estimated that losses due to water scarcity totals $260 billion annually worldwide (1). As international companies continue to grow, it’s important that they provide the infrastructure necessary to conduct business. This opens up new opportunities and markets for these corporations in places they originally may not have seen as profitable. It’s not just the right thing to do, it’s the smart thing to do for business.