The global market gives value to water in two main areas: investment in water companies and corporate water stewardship. However, regional differences throughout the market present challenges to all organizations, for-profit and nongovernment organizations (NGOs) alike, making it tough to attract investors.
Some of the regional differences that present challenges are climate change, population growth and size, geographical boundaries and access to water.
“Investors that are seeking big results over time are increasingly looking to back companies who are innovating solutions to combat the effects of climate change and population growth,” says Sarah Evans, Founder and Executive Director of Well Aware. “As water scarcity and contamination inevitably move to the forefront of company and community sustainability concern, businesses that are successfully mitigating these challenges become wise places to place stakes.”
According to a report from the UN in 2014, more than 47% of the world’s population today is facing either a physical scarcity or economic shortage of water. An economic shortage of water comes from the lack of infrastructure that takes water from rivers and aquifers. “In under ten years, the UN is forecasting that two thirds of the population of the world will be suffering from water stress,” says Evans. “The current global water supply, distribution and treatment methods will not accommodate expected needs.”
National Geographic reports that just 1% of our freshwater is easily accessible, with much of it trapped in glaciers and snowfields. This means only 0.007% of the planet’s water is, loosely, available to 7.4 billion people.
“As companies assess their future risks for profits and appearances, the dwindling safe water supply becomes more important to their investors and customers,” says Evans. “To a certain degree, all business relies on water for production, and a growing number of investors are demanding plans for accommodating water issues.”
Some companies are improving their water usage by reducing the amount of water they use to manufacture products. For example, in 2004, Coca-Cola used 2.7 liters of water to produce a 1 liter bottle. In 2015 that number was reduced to 1.98 liters, and their goal is 1.7 liters by 2020.
Developing strategies to make the most of water-reuse is where companies will find they can add the most value to their organization. The next big opportunity for companies lies in water stewardship.
“While there are few investment opportunities in emerging markets regarding water scarcity right now, trends indicate that, as other technologies make their way into Africa and India, so will the need for water companies and corporate water stewardship.”
Water stewardship is defined as the use of water that is socially equitable, environmentally sustainable and economically beneficial, achieved through a stakeholder-inclusive process that involves site and catchment-based actions.
“Companies such as Well Beyond, previously known as Aurora Global, are mobilizing to address water stewardship, by providing the expertise that is currently lacking in these regions by partnering with organizations with boots on the ground. By leveraging the public-to-private partnership, we can set the new standard for access to clean water.”
Clean water is becoming more scarce throughout the globe. “In China, 80% of the rivers are too toxic for consumption, and in 1997 the lower Yellow River did not flow 230 days out of the year,” says Evans. This was more than a 2000% increase since 1988, and their water supply is expected to further suffer in years to come.
She continues, “Meanwhile, California is spending about 20 billion every year on their water supply, and stakeholders are preparing for that number to increase as well.”
And as the stakes for clean water accessibility increase, so too will the market for clean water. According to Evans, “Opportunities to invest in water scarcity exist everywhere, and global water sustainability projects are expected to grow each year up to 8%. We’re excited to be at the forefront of this shift.
“However, there will be challenges in developing communities where the private sector intervention could pose a threat to the local economy. For-profit aid work puts local outlets out of business, which defeats the purpose of the intended social impact. Comprehensive regional analysis is needed prior to entry, ergo there cannot be a ‘template’ solution across all global target areas.”
To combat this risk, NGOs can form partnerships with the private sector. Their partnerships may help increase the long-term value of water by supplementing each other’s weaknesses with their own strengths.
“An NGO increases the long-term value of water by realizing where their strengths and weakness are and seeking partnerships with the private sector,” says Evans. “As an industry, it’s important for NGOs to leverage the capital and strengths of for-profit companies to help bridge the gap between the two.
“For-profits bring efficiency, expertise and capital to NGOs that have regional knowledge and boots on the ground. It’s much more efficient for each sector to bring their strengths together for social impact, as well as generating revenue. Additionally, NGO donor stewardship can remain intact and impact without disrupting their nonprofit model, while their for-profit partners work to enhance their efficiency.”
Many challenges lie ahead for companies looking to excel in corporate water stewardship, as well as those seeking to attract more investors. However, with many of the challenges identified, companies can seek out partnerships to overcome these obstacles. The value of water is only going to increase, and the sooner companies innovate solutions the sooner they can attract investors who recognize its long-term value.
Sarah Evans will be a moderator, facilitator and panelist for three panels at the Water & Long-Term Value program in San Francisco, California on Oct. 24-25 at the Fort Mason Center.