Subscribe
Sign up for timely perspectives delivered to your inbox.
George Crowdy, an Investment Manager within the Global Sustainable and Responsible Investment (SRI) Team headed by Hamish Chamberlayne, examines the challenges of providing a safe and reliable water supply but identifies how better and increased use of data and technology provides reason for optimism.
An accelerating global water crisis is evidenced by its increased scarcity, widespread pollution and rapid declines in biodiversity. The sixth of the United Nation’s Sustainable Development Goals (SDGs), Clean Water and Sanitation, is focused on addressing the issues preventing clean, accessible water for all.
There is sufficient fresh water on the planet to provide clean, accessible water for all but due to physical shortages, inadequate infrastructure and inefficient usage, millions of people die every year from diseases associated with inadequate water supply, sanitation and hygiene. Water scarcity is estimated to affect more than 40% of the global population and will continue to be pressurised due to population growth and climate change. Substantial investment is required in infrastructure, alongside behavioural changes in order to bridge the supply gap.
The United Nations’ Sustainable Development Goals include:
Source: United Nations Development Programme: Sustainable Development Goals 2019
Within the United States, the issue of water scarcity is both a social and an environmental problem; a lack of supply is being met with high demand and is having the impact of increasing water bills. According to watchdog organisation Food & Water Watch an estimated 15 million US citizens were recorded as living without a water service in 2016 as shortages drove up water bills. The Southwestern United States, already arid due to the ‘rain shadow’ generated by being situated on the leeward side of the Rocky Mountains, is now gripped by a crisis that could soon spread as other waterways become less able to replenish their resources to meet growing demand.
The Arizona region of the Colorado River, where Horseshoe Bend is located, is suffering from a 19-year drought; its most severe in 1,250 years
Image: Getty Images
Lake Mead and Lake Powell, two major lakes in the Colorado River Basin supplying millions with water and irrigation, are drying out as higher temperatures reduce the water content of mountain ‘snow packs’, creating ever lower levels for the rivers and streams that depend on snow melt. As well as the near certainty of water shortages affecting the populations and agricultural production of California, Nevada, Arizona, New Mexico, Colorado and Utah, the pernicious drought in California from 2011-2017 caused the death of approximately 62 million trees in 2016 alone.
Conversely, another example of shifting and more extreme weather patterns is in the Midwestern United States, which has experienced heavy flooding since March. Here, late in the season, snowfall has been followed by high temperatures, resulting in the snow melting at such a pace that it is unable to be absorbed by the ground. As of May, the flooding was estimated to have caused US$12bn in damage, impacting homes, businesses and agriculture and displacing residents.
While there is no quick fix to the challenges mentioned above, outdated and ineffective infrastructure is responsible for the loss of billions of gallons of water and here, technology provides reason for optimism.
The water industry is regarded as something of a ‘dinosaur’ when it comes to effective use of data and technology. Part of the reason for this is the highly fragmented nature of water utilities, which often do not have the scale to deploy technology broadly and part is due to a cultural reluctance to change. Another headwind to technology and data adoption has been that start-ups, which typically develop new technology, have been too small (and therefore risky) for water utilities to work with.
This, thankfully, is now changing as both utilities and residential customers are better understanding the benefits of data and technology. In North America, non-revenue water (water ‘lost’ due to poor maintenance or operations) can be 20-30% for a utility and can be a result of leaks, unauthorised use (e.g. theft and tampering) and inaccurate billing. Smart metering and infrastructure monitoring technology helps to address this wastage, providing not only a financial benefit to the utility but also an environmental and social benefit by reducing water wastage.
Crises such as the lead poisoning in Flint, Michigan had the impact of damaging the public’s trust towards utilities but also increasing the public’s focus on water quality. There has subsequently been an increase in demand for home filtration systems which has had the positive impact of moving households away from purchasing single use plastic water bottles. Growing public awareness of water shortages and water quality issues has additionally put greater pressure on municipalities and corporations to be responsible users of water. In the US, one example is the City of Las Vegas, where in 2008, 70% of the city’s water supply was being used to irrigate residential lawns and the city’s 60+ golf courses. The growing water crisis led to the South Nevada Water Authority’s ‘Cash for Grass’ rebate that paid homeowners US$1.50 for each square foot of grass that was replaced by water-efficient landscaping. Similarly, a strict limit of 2.1 million gallons of water per acre annually was imposed for irrigating all golf courses to encourage, where possible, desert landscaping to replace grass.
Modern wastewater treatment plant
Image: Getty Images
New water technologies offer solutions to help residential, municipal and industrial customers address water quality, infrastructure inefficiencies and water shortages. Given the scale and scope of global water issues and the impact water has on human health and social and economic development, we see a long runway for growth for these businesses that are addressing such a large and essential need.