Climate change has the potential to decrease our drinking water supply, increase demand for clean water, and drive up the price for that water. According to a recent UN report, “Climate change exacerbates multiple threats to water availability… There is high agreement among scientists that climate change will alter stream flow regimes, deteriorate water quality, and change spatial and temporal patterns of precipitation and water availability.”[i] This figure, from the same UN report, shows the currently water scarcity, which will only be exacerbated by global warming.
Specifically, the Intergovernmental Panel on Climate Change’s (IPCC) projects that “for each degree of global warming, approximately 7% of the global population is projected to be exposed to a decrease of renewable water resources of at least 20%”[ii]. This translates to about a 1.4% decrease in the world’s global renewable water resources for each degree of global warming.
Per the US EPA, “Increases in average global temperatures are expected to be within the range of 0.5°F to 8.6°F by 2100.”[iii] Putting these two studies together, we can estimate that the world’s global renewable water resources will decline between 1% and 12% in the next 85 years.
This presents a huge business opportunity for those companies that are in the business of providing clean water. SUEZ WATER is one such company. SUEZ provides solutions that include clean drinking water and wastewater management, typically partnering with municipalities such as Portage, MI and Jersey City, NJ. The company also offers wastewater treatment services to safely return treated water to rivers, lakes and streams, such as their treatment plant in El Segundo, CA, which recycles wastewater for irrigation and industrial use.[iv] It’s highly likely that demand for these services will increase significantly as water becomes scarcer.
However, the scarcity of water will also present a threat to SUEZ’s business because other, previously cost-prohibitive ways of obtaining clean water may now be cost effective (assuming that the price of water increases as the fresh water supply decreases). I think the key technology here will be desalination. We’ve already seen examples of desalination plants that provide billions of liters of freshwater. One such example is the Victorian Desalination Project in Melbourne. This seawater desalination plant was built from 2007 to 2012, by a partnership between the Australian government and private company AquaSure. The plant is staffed by 52 people and is capable of supplying up to 150 billion liters of high quality drinking water annually.[v] However, even after costing $3.5 billion to build, the plant still often sits idle because it is very expensive to run. Australia is a rich country, and can afford to build an expensive plant just in case they need it. For most countries, though, given the price of water now, desalination isn’t very financially viable. However, if either the price of water increases (which it likely will as demand increases) or the cost of desalination decreases (which it may with technological innovation), then desalination may become extremely profitable, and it could provide clean drinking water to everyone in the world that needs it.
SUEZ should invest in Research and Development to improve the desalination technology, and then build a portable (floating) desalination plant, so it can be moved to wherever in the world there is the greatest need for water. The portable nature of this technology will help SUEZ to respond to the difficulty in determining where in the world the water shortage will most acutely manifest.
It should be noted that there is a public relations risk to this. It would be very expensive to build this plant, and as such, SUEZ would need to charge a high price for water. Because many of those in need of water live in developing countries, there is a risk that SUEZ could look like it is exploiting poor people in developing countries who are dying of thirst.
In Pope Francis’s latest encyclical letter: LAUDATO SI’ (ON CARE FOR OUR COMMON HOME), the pope wrote that “access to safe drinkable water is a basic and universal human right, since it is essential to human survival… The environmental repercussions could affect billions of people; it is also conceivable that the control of water by large multinational businesses may become a major source of conflict in this century.”[vi] If the Pope, and other world leaders condemn the floating desalination plant as exploitive, there could be negative backlash against the company. Even though SUEZ would have invested heavily in R&D to produce this desalination plant, and may only be recovering its investment, the negative perception may hurt other parts of its business. Even with this risk, in my opinion, the desalination technology is still worth the investment. (word count: 779)
[i] WWAP (United Nations World Water Assessment Programme). 2016. The United Nations
World Water Development Report 2016: Water and Jobs. Paris, UNESCO
[ii] Future of Climate Change | Climate Change Science | US EPA. 2016. Future of Climate Change | Climate Change Science | US EPA. [ONLINE] Available at: https://www.epa.gov/climate-change-science/future-climate-change. [Accessed 04 November 2016].
[iii] Future of Climate Change | Climate Change Science | US EPA. 2016. Future of Climate Change | Climate Change Science | US EPA. [ONLINE] Available at: https://www.epa.gov/climate-change-science/future-climate-change. [Accessed 04 November 2016]
[iv] Water Services | SUEZ Water. 2016. Water Services | SUEZ Water. [ONLINE] Available at: http://www.mysuezwater.com/about-us/water-services. [Accessed 04 November 2016].
[vi] Laudato si’ (24 May 2015) | Francis. 2016. Laudato si’ (24 May 2015) | Francis. [ONLINE] Available at: http://w2.vatican.va/content/francesco/en/encyclicals/documents/papa-francesco_20150524_enciclica-laudato-si.html. [Accessed 04 November 2016].