Water is more essential than oil

Socially responsible investing - 10/3/2016

In 2016, California and Southern Africa suffered record droughts while more than 600 million people had no access to drinking water(1). Water is increasingly sought after and needs to be protected. Blue gold is facing such significant challenges that the World Economic Forum has described water shortage as the biggest risk facing the planet(2).

Water is a rare resource. It is estimated that only 1% of the water on the earth is usable. According to the USGS3, salt water represents 97% of total reserves while 2% of freshwater is frozen in ice caps and glaciers. Liquid freshwater reserves, meanwhile, are unequally spread between countries with large supplies and an increasing number of countries which are suffering from water stress4.

At the same time, global warming, along with population growth and rising per capita water footprints5 are putting increasing pressure on resources and exacerbating competition between water users and usage.

Water is more essential than oil

Water is central to most of our activities, whether agriculture, industry, and domestic and even recreational needs. People talk about the “virtual water” needed to make a product or deliver a service. For example, an estimated 10,000 litres of water on average are used to make a kilo of cotton while a kilo of beef requires close to 15,0006. This means 2,500 litres of water are used to irrigate the cotton needed for just one T-shirt and 3,500-4,500 to put a steak on our plates.

At the OECD Forum in 2012, Peter Brabeck-Letmathe, who was then chairman of Nestlé, said: "We are going to run out of water much faster than oil". This underlines the growing value of water even if some still view it as a commodity. However, unlike oil, water is a renewable source. Technological progress is opening up a significant array of potential solutions like using big data to model rainfall for more intelligent watering of crops or
biochemical advances which make sea water desalination by reverse osmosis more accessible7. If we are to preserve blue gold, we will have to change our consumption habits and production methods.

1. UN Water, 2016 United Nations report on Water, p.21.
2. World Economic Forum, Global Risks 2015 10th Edition, p17.
3. United States Geological Survey.
4. Severe water shortage due to demand outstripping available resources.
5. An indicator used to assess and compare consumption patterns.
6. Source: Water Footprint Network, product gallery
7. Water purification using a micro filter which only lets water molecules through.