World Economic Forum Water Initiative
Water Security
water-security
Water Security: The Water-Food-Energy-Climate Nexus. The World Economic Forum Water Initiative (Geneva). Washington: Island Press, Feb 2011, 248p, $30.
 
 
At the WEF annual meeting in Davos in 2008, business leaders set out a Call to Action on Water to raise awareness, to develop a better understanding of how water is linked to economic growth across a nexus of issues, and to make clear the water security challenge we face to 2030 if a business-as-usual approach continues. This report builds on earlier WEF reports on water (e.g., The Bubble Is Close to Bursting, 2009), and is supported by contributions from leading academic, NGO, and business commentators who have been involved with the Water Initiative over the past few years. After an introduction, nine sectors are explored in individual chapters, each with several statements by individuals at the end, and each exploring options for what can be done.
 
Introduction
“The world’s food, water, and energy resources are already experiencing significant stress or shortfalls—and yet, in the next 20 years, demand for these resources is project to increase significantly as populations, economies, and consumption rates grow. The world appears ill-equipped for the changes, investments, and trade-offs that will be required.” To meet growing demand in the next 20 years, farmers will need to increase production by 70-100% and reduce postharvest loss. Agriculture already accounts for 71% of water withdrawals today. Many countries are extracting groundwater faster than it can be replenished (Mexico by 20%, China by 25%, India by 56%). “If current trends continue, two-thirds of world population will live in areas of high water stress by 2030.” As demand continues to grow, competition for water will inexorably intensify between economic sectors, as well as regions and nations.
The scramble for resources will generate new geopolitical dynamics, potentially coalescing around national interests and alliances, thus bringing a retreat from multilateral globalization. Unable to rely on trade to ensure their food security, fast-growing economies are increasingly striking land-lease deals with poorer nations that have fertile, well-watered land. Japan now has three times more land abroad than at home. Saudi Arabia, Kuwait, South Korea, and China have secured deals in Sudan, Ethiopia, DRC, and Pakistan. In effect, “one can better view these so-called land grabs as water grabs.” It is likely that these lease-land deals will continue, and they may accelerate.
 
1. Agriculture
 The challenge that the Club of Rome identified in its 1972 Limits to Growth report “is very close to the challenge our global agricultural sector now faces with regard to water: how to get much more crop with many fewer drops.” The Club of Rome also warned that as growth overshot planetary limits, shocks to the system would arise from the collapse of resource stocks, perhaps in the early 21C, as reflected in prices. “Arguably, the early stages of these signals are now starting to be seen.” For 50 years or so, we have enjoyed steadily falling food prices due in part to technological advances, but mostly to our failure to internalize water, energy, and environmental and costs into food prices. “If the forecasts are even halfway accurate for the coming two decades, substantial reform is imperative.” A key component of change is to stimulate innovation in the water-agriculture nexus. Reforms to agricultural water rights and water prices must also be pursued, as well as efficiency gains in irrigated agriculture.
 
2. Energy
 There is a strong link between water and energy, which has taken on a new urgency. Energy uses about 8% of all freshwater withdrawn worldwide, and as much as 40% of freshwater withdrawn in some developed countries. Water is used in producing nearly all types of energy, and energy is used to provide water and to treat wastewater. Minimal water is used in producing traditional oil and gas (3-7 liters per GJ), but unconventional oil and gas requires much more water, and petroleum refining requires another 25-65 liters per GJ. According to some estimates, production of biofuels could consume between 20% and 100% of the total quantity of water now used worldwide for agriculture.
Water consumption by power plants can be reduced by switching from water cooling to air cooling, or by other new technologies. Other effective strategies include more zero-water wind power, desalination plants using renewable energy, and combining water and energy efficiency efforts. Peter Gleick, author of the authoritative biennial report on The World’s Water (latest edition, June 2011/400p from Island Press) adds that “nuclear and fossil-fuel energy systems require far more water per unit of energy produced than most renewables,” depending on cooling system type, and we can already see examples of energy production constrained by lack of water.
 
3. Trade
 About 1,300 liters of water are needed to produce one kg. of wheat, and 10,000 to 20,000 liters of water are needed to produce one kg. of beef. Wheat and beef are much easier to ship than water. So rather than importing water for agriculture, water-stretched economies import grain and meat, thus “virtually” importing water. “Virtual water,” a concept conceived over 20 years ago, “has had a major impact on global trade policy and research, especially in water-scarce regions, and has redefined discourse in water policy and management.” The US, Argentina, and Brazil “export” billions of liters of water per year, while Japan, Egypt, and Italy “import” billions. A further and more recent development related to the virtual import of water embedded in food or consumer goods is the “water footprint” of a product, industry, or country—an indicator of freshwater used to produce goods and services.
By 2030 nearly 55% of the world’s population will be increasingly dependent on food imports as a result of insufficient domestic water. If the trade system is not fixed, one could expect acceleration in land-for-water deals.” The FAO warns that the race to secure farmland overseas risks creating a “neocolonial” system. “A rapid retreat from a globalized, 21st-century world back into a 19th-century-style network of bilateral alliances and trade deals is possible.” Such a shift in the geopolitical landscape could bring the roles of international organizations and NGOs into question, and companies may face a baffling new landscape where the rules have been significantly changed or are not being followed. “The international playing field for securing and managing water resources may become far from level or transparent.”
If international arrangements are adopted to reflect water scarcity issues, trade in virtual water can hold real promise for triggering a better spatial location of water-intensive production. But fair terms of trade are central to resolving this issue. One possibility for 2030 is a Global Water Court to supervise the bidding for rights to parcels of water as part of a wider economic development plan.
 
4. National Security
 Water scarcity brings stress, which can lead to conflict or mass migration. Trans-boundary tensions are likely to escalate as water security issues deepen within and between nations. The scale of national interdependence is huge: 145 countries are in shared water basins. Yemen could be the first example in modern times of a nation-state collapsing due to extreme water scarcity; some hydrologists estimate that within five years its capital of two million people will run out of water. Among China’s 669 cities, 60% suffer water shortages and nearly half lacked wastewater treatment facilities in 2005. The International Red Cross estimates that there are already 25-50 million climate change/water security refugees (compared to the official international refugee population of 28 million), and the IPCC suggests that “150 million environmental refugees could exist by 2020.” Governments in water-scarce areas must be enabled and emboldened to take the important and necessary steps to address the water-national security nexus.
 
5. Cities
Many cities around the world are facing increasingly chronic water quantity or water quality issues.” Of the world’s 20 largest cities in 2010, there were media stories on water shortages in the past three years for 14 of them. It is common for 30-40% of urban water supply to be lost due to leakage. Cities are also subject to challenges arising from too much stormwater all at once. In a decade, 60% of humanity will live in cities, and 70% will do so by 2050. This will add 3 billion new citizens to cities around the world, placing further stress on existing urban water supply and sanitation systems. Traditional centralized wastewater treatment services are often too expensive for many LDC cities, and authorities have no choice but to allow wastewater to be discharged straight into water bodies, polluting the ecosystem and causing many problems downstream. “These trends will likely continue and worsen.” By 2015, the OECD estimates that an average of $770 billion/year will be required for water and wastewater services worldwide.
Twenty years ago, desalination was extremely expensive. Due to improvements in membrane technology, costs have significantly declined so that “medium- to large-scale desalination is quite often cost competitive with alternative supply options.” Today there are >13,000 desalination plants worldwide, though many are still comparatively small. But together they account for only <0.5% of total global freshwater extraction. Because desalination is seen as a climate-independent supply option, it is now a first-choice option for some water utility supply strategies. But it cannot be applied everywhere, scale is an important variable in plant costs, and it is energy-intensive.
Bullish forecasts for the desalination market see “20% or more annual growth in China, India, Australia, and the US through 2015, and then for an acceleration.”
 
6. People
 The UNDP’s 2006 Human Development Report estimated 1.1 billion people living without clean drinking water, and 2.6 billion who lack adequate sanitation (access to toilets or latrines that allow defecation in safety and privacy). The Millennium Develop Goal 7 seeks to halve the proportion of world population without sustainable access to safe drinking water and basic sanitation by 2015 against a 1990 baseline. The Sept 2010 MDG assessment shows that if current trends continue, “the world will meet or even exceed the MDG drinking water target by 2015.” But the issue of sanitation is much less rosy, concluding that the 2015 target appears to be out of reach. “Worse still, sanitary conditions in cities around the world in developing countries could decline still further…this is probably the most urgent issue that will affect people’s health, wealth, and livelihoods.”
Geographically, cities across southern Asia will likely bear the brunt of this challenge if business-as-usual continues. To accelerate the innovation that is needed for water and sanitation services, new public-private-civil arrangements must be tried out and helped to get to scale. (This chapter includes an essay by Jack Sim, founder and director of the World Toilet Organization, who encourages market-based approaches over donor-based approaches, and celebrating World Toilet Day on November 19.)
 
7. Business
 Over the last few years, “more and more business associations, financial analysts, and companies are looking at the strategic importance of water security to their operations or investments. Water is now a fast-moving space for those at the forefront of the business risk agenda.” The UN Global Compact CEO Water Mandate is a good example of such activity. It is a unique public-private initiative designed to assist companies in development, implementation, and disclosure of water sustainability policies and practices. As of Sept 2010, some 70 CEOs from around the world have endorsed the mandate to make water resources management a priority and to work with governments, NGOs, and other stakeholders. The CEO Water Mandate covers six areas: direct operations, supply chain and watershed management, collective action, public policy, community engagement, and transparency. McKinsey & Company has formed the 2030 Water Resources Group, and the World Business Council for Sustainable Development has developed a “Global Water Risk Mapping Tool” (www.wbcsd.org). Another notable and recent development is the Carbon Disclosure Project Water Disclosure program, which began in 2010, providing critical water-related data from the world’s largest corporations, as regards water use and exposure to water stress (www.cdproject.net/water-disclosure).
 
8. Finance
 The finance-water nexus is both old and intricate. “There are now a wide number of water index and hedge funds that track performance in both the water manufacturing industry (producers of pipes, pumps, desalination, new hydro-tech) and those companies that are involved in the delivery of water and wastewater services around the world.” An increasing number of analysts view the high future demand for water- and sanitation-related infrastructure as an attractive investment opportunity. Pension funds embrace water stocks because they involve secure, multiyear contracts. The economics driving these opinions are compelling, because “water is a commodity with no alternative and no substitute, which all human activities require, and for which anaysis suggests we will face a 40% global shortfall between demand and supply by 2030.” As a consequence, new technologies and new business models in the water sector abound, e.g. new membrane technologies for wastewater treatment, the market for toilets in the developing world, innovations in leakage control and water quality improvement, turning water vapor into rain, bringing down desalination costs, and water reuse.
“Over the next decade or so, it is not unreasonable to predict a blue-tech water efficiency theme emerging from the financial sector as strong as the recent green-wave new energy theme…Could Australia, Israel, or Singapore house cutting-edge ‘blue business technology parks’ to promote this innovation wave, creating significant opportunities for their chronic water security challenges?”
 
9. Climate
 The most advanced climate system models project “significant changes in the space and time distribution of water availability and floods across the globe over the 21st century, particularly 2050 and beyond. These changes will affect all aspects of water supply and demand, and hence increase the risk of supply-demand imbalances as well as the degradation of water quality and ecological functions.” In particular, tropical and subtropical regions of the world, where >60% of the global population lives, are especially susceptible to increasing risk of drought and floods. There is still considerable uncertainty, however, as to how rainfall patterns may actually change for specific locations. In almost all places, especially in developing countries, water storage capacity for surface water is limited to a few months or at most a few years. Groundwater has slower fill and drain cycles, but stocks are being rapidly depleted in many countries as use rates exceed recharge rates.
“By 2025/2030, average water supply-demand imbalance is expected to become critical in much of eastern, southern, central, and western Asia, in much of Africa and the Middle East, in southern Europe, the American Southwest, Mexico, the Andean region, and northeastern Brazil.” Persistent, multiyear drought, either by climate change or as part of a natural cycle, “could significantly exacerbate this situation in one or more of these regions.” Depletion of high mountain glaciers in certain regions may also exacerbate these problems.
 
Conclusion: The Davos Initiative
 Summarizes new economic frameworks for decision-making (e.g., the Planetary Skin Institute) and the “Davos Initiative” building on the work of the 2030 Water Resources Group, which will follow six principles: 1) create supportive country-level coalitions and networks; 2) accelerate change by using these networks to leverage and amplify existing efforts and to disseminate knowledge widely; 3) recognize links between energy, food, and water security, and the win-win alignments that smart management of these linkages can create; 4) incorporate breakthrough ideas from all sources; 5) leverage deep content experts and shared intellectual resources; 6) highlight collective and individual leadership in the water space.
 
Comment
 An extraordinary report that encourages a broad view of water and its linkages to nine other sectors and issues in the next two decades, and seeks to encourage appropriate actions.
For further links to important recent books and reports on water and food, see the free GFB Update newsletter for April 2011, accessed from the GFB Newsletter page for non-subscribers.
 
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