Water Water Everywhere, Not a Drop to Drink

Water tables in emerging markets are dropping at alarming rates. What will corporations do about it?

What’s the first thing you think of when addressing climate change? For many, that answer is energy, weather, emissions, etc. One area that often goes unnoticed, however, is water. When China has a water table that has dropped by 1 meter per year since 1974, with rising global temperatures adding stress to already arid parts of the world, we have a problem.

Air Products and Chemicals is an industrial gases company that is reliant on water, natural gas, and other forms of energy to maintain their operations. In a nutshell:
“Air Products serves customers in industrial, energy, technology and healthcare markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services. Founded in 1940, Air Products has built leading positions in key growth markets such as semiconductor materials, refinery hydrogen, home healthcare services, natural gas liquefaction, and advanced coatings and adhesives.”

The impacts of water scarcity on manufacturing and industrial production facilities is not insignificant. In fact, two-thirds of the global population is likely to be affected by severe water shortages. Half of the four billion people who will experience water scarcity for at least one month of the year reside in India or China. With these critical emerging markets so acutely affected, the importance of large corporations addressing water consumption in these areas in particular is paramount.

Because of this understanding, Air Products has been keenly aware of their water consumption and the way in which scarcity affects their direct operations. One of Air Products’ three sustainability goals is captured in the following statement:

“Our sustainability focus is to conserve resources and reduce environmental footprints through cost-effective improvements.”

Clear and quantitative goals have been set in order to move towards achieving such reductions. For water, Air Products committed to a 10% reduction in global water usage by 2015 from a 2009 baseline. I called up Julie O’Brien, the Corporate Sustainability Manager for Air Products and Chemicals, to get the lowdown on where they stood as far as reaching those goals and to gain some further insight into how water scarcity has affected operations at APCI.

She filled me in on the fact that with just a little more attention to water usage in cooling water systems, in particular, Air Products managed to meet their water reduction goal with a whopping 23% improvement. In California, some initiatives have been put in place to use recycled grey water from the city. In addition, while they have not had to shut down operations at any plants just yet, they have had water scarcity and flooding related costs incurred. Julie explained that during times and in locations with water shortages the water will have more solids in it and require more pre-treatment. In areas where the plant was not designed with this in mind, they have had to bring in expensive water treatment equipment on both a temporary and a permanent basis to plants in China, the southwest US and India. In any case this hits the bottom line.

After reflecting on my conversation with Julie, I thought further about some deeper impacts scarcity could have on Air Products and companies like them as we move into the future. Humans, who can live for 30 days without food, can only live for 3 days without water. India, China and Africa all have populations and economies on the rise with water tables dropping at an unsustainable rate. Eventually, a decision will need to be made as to who gets the water, and governments may be forced to ration safe water between corporations and citizens. An extreme hike in the price of water to corporations or forced stop of manufacturing facilities is not far from the realm of possibility. Air Products will need to plan for this by looking to build new plants in areas with greater water access, equipping plants with desalination technology, and incorporating robust water treatment tech at operating facilities.

When do you think the price of water will finally match its true value?

701 Words

Works Cited
Frankel, Todd. “New NASA Data Show How the World Is Running out of Water.” Washington Post 16 June 2015: n. pag. Print.
“Managing Sustainability.” Managing Sustainability. N.p., 2015. Web. 04 Nov. 2016. .
O’Brien, Julie. “Water Usage at Air Products.” Telephone interview. 04 Nov. 2016.
St. Fleur, Nicholas. “Two-Thirds of the World Faces Severe Water Shortages.” New York Times 12 Feb. 2016: n. pag. Print.

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Student comments on Water Water Everywhere, Not a Drop to Drink

  1. Alison,

    Great post. You did a great job identifying a less-commonly-discussed issue that is extremely important nevertheless.

    A couple questions the post left me contemplating:

    1) What are the key steps Air Products has taken to reduce their water consumption? Was it largely the water usage in cooling water systems that you mention? Or were there additional steps they took to meet these goals?

    2) Do you think other companies are also working towards reducing their water consumption? If not, do you think it’s an awareness issue or a willingness issue? In either case, what role do you think consumers, corporations like Air Products, regulators and governments have in prodding more companies to action?

    3) Do you think the goals Air Products has set for itself (and their results against those goals) are enough? Or do you think more needs to be done in order to avoid the negative consequences of water shortage which you describe?

    Overall, nicely done, and thanks for bringing this issue to everyone’s attention!

  2. Interesting post, Ali– I had not before considered climate change’s impact on water.

    In your post you primarily focus on what industrial corporations will do to decrease their water consumption in order to ensure all have access to potable fluids. But, I cannot help but think of the agricultural responsibility involved as well.

    According to the World Water Council, agriculture is the largest consumer of water by a long shot when compared to industry and municipalities (everyday citizens). Thus, agriculture must be part of, if not the leader in, the world’s water solution. Perhaps agriculture contributes through innovation in genetically modified or biome-treated seeds that can flourish on less water or through designing new sprinkler systems that deliver water to plants with less evaporation. Major industry water users do need to remain in the equation, but agriculture’s role in water usage solutions should be significant as well.

    (Original World Water Council article can be found here: http://www.worldwatercouncil.org/fileadmin/wwc/Library/WWVision/Chapter2.pdf, page 8)

    1. I think you’re absolutely right, Elise. Agriculture is a serious offender on many fronts with respect to climate change. Sonja also wrote a great post on water usage in the California’s almond industry – you should give it a look if you haven’t yet!

  3. I love your article, as I believe that water scarcity is one of the biggest issues facing our planet. I remember reading that by 2030, water supplies will satisfy only 60% of global demand on average! [1]

    In the energy industry, companies have met climate change with two ‘types’ of initiatives:

    1. Reducing overall energy usage through increased energy efficiency, leveraging increased digitalisation, big data, and new technologies
    2. Providing alternative energy sources through renewables (solar, wind, biofuels etc).

    It seems like water could fall in to two similar categories:
    1. Reducing overall water usage through increased efficiency (which it seems is Air Products focus)
    2. Using treatment and distribution technologies to increase availability of clean water.

    The questions this brings to my mind are:
    – How much are companies utilising digitalisation and big data to increase efficiency? Can there be lessons learnt from energy efficiency projects, and how easy is it to apply those lessons to water efficiency?
    – Should we be focussing more on treatment and distribution? What are the growing technologies in this area, and what can companies like Air Products do to help increase public attention and funding for this critical issue?

    [1] http://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/the-business-opportunity-in-water-conservation

    1. Great questions – I’d love to learn more about big data as it applies to water usage as well. I know there are some software companies working on this problem. One I’ve heard of is WaterSmart – helping CA water utilities apply big data in to help improve upon those inefficiencies. It’s interesting stuff if you wanted to check them out!

      http://www.watersmart.com/

  4. This post had addressed a significant and often overlooked issue – water scarcity. In fact, it is projected that 52% of the world’s population will be living in a water-stressed and water-scarce area by 2050.[1] Not a great outlook for developing economies across the globe. However, companies like Air Products and Chemicals are taking much-needed steps to reduce water consumption among industrial companies worldwide, especially in BRIICS.[2] Much of global water demand stems from these countries where high levels of water wastage are prevalent, and attention must be given to curb excessive water use.[3] However, all blame cannot be given to emerging markets. If you look at the United States, the Ogallala Aquifer, which lies under eight states from South Dakota to Texas and sustains America’s “breadbasket,” may run dry in the next 50 years, a significant loss that would have costly consequences across the country.[4] Across the globe, we must look for more efficient ways to use water (e.g., vertical agriculture, a transition away from water-intensive energy sources, etc.) and prevent a looming crisis that could drive massive instability.

    [1] Rabih Abouchakra, Mona Hammami Hijazi, and Ibrahim Al Mannaee, “Looking Ahead: The 50 Trends that Matter,” (Bloomington, Indiana: Xlibris, 2016), p. 252.
    [2] Brazil, Russia, India, Indonesia, China, and South Africa.
    [3] Rabih Abouchakra, Mona Hammami Hijazi, and Ibrahim Al Mannaee, “Looking Ahead: The 50 Trends that Matter,” (Bloomington, Indiana: Xlibris, 2016), p. 253.
    [4] Alan Bejerga, “The Great Plains’ Looming Water Crisis,” Bloomberg Businessweek, July 2, 2015, [http://www.bloomberg.com/news/articles/2015-07-02/great-plains-water-crisis-aquifer-s-depletion-threatens-farmland], accessed November 6, 2016.

  5. Thank you for the post. It’s great to see companies act responsibly to mitigate externalities caused by their business. It’s also great to see progress towards a reduction in water usage.

    However, did you get any sense of the financial strain (if any) that the initiative is putting on the company? I ask because in order to be truly sustainable, good intentions need to flow to the bottom line.

  6. Very interesting post Ali – I agree that water scarcity is often viewed as a less prominent issue than some of the other “sexier”climate change talking points. As some of the above comments indicate, there is a very real danger that is posed by a lack of available water resources, particularly in the developing world, and I agree the issue should be highlighted.

    I think a key issue with regards to water scarcity is that demand for water will continue to rise as industrialization and urbanization in emerging markets accelerates.  Rising global temperatures may constrict the supply of water, and a less predictable climate means there could be greater uncertainty and volatility in future supply. [1]

    Many manufacturing businesses have plants located in these developing countries, and face potentially huge impacts to their operations if they are not able to access an adequate, dependable supply of water. I wrote about how water scarcity is affecting coca cola (https://digital.hbs.edu/platform-rctom/submission/always-coca-cola/) – they have experienced first-hand the perils of (perceived) misuse of scarce water resources. The Coca Cola company was forced to close a manufacturing and bottling plant in India in 2004, when it was accused of exceeding its permitted use of water during at time of drought. There was great public backlash against the company from the local community (many of whom depended on agriculture – and availability of water – for their livelihoods). In addition to the plant closure the company lost customers and suffered severe negative brand impact.

    I think the above example serves as a salutary tale for other water-intensive businesses as to the potential effects of mismanaging the most necessary of natural resources. As other posters agree, more needs to be done to highlight and mitigate the issue.

    ___

    [1] Giulio Boccaletti, Sudeep Maitra, and Martin Stuchtey, “Transforming Water Economies,” McKinsey & Company, 2012, p. 1, accessible at https://www.mckinsey.com/~/media/McKinsey/dotcom/client_service/Sustainability/PDFs/McK%20on%20SRP/SRP_09_Water.ashx

    1. Absolutely – thanks for sharing. And that was way back in ’04! Have to believe these sorts of incidents will only become more common if we keep moving in this direction.

  7. The blog raises interesting points around how corporations are reacting to water scarcity. But my worry is that the measures employed by Air Products and Chemicals are not tackling the real issue – how can we raise water table? There is some on-going research that aims to solve this problem by artificial replenishment [1] or by using the natural ecosystem to raise water table [2]. Organizations like Air Products and Chemicals can help sponsor some such research to help solve the problem.

    [1] http://www.emag.suez-environnement.com/en/we-can-now-raise-the-groundwater-level-13343
    [2] http://blog.concord.org/raising-the-water-table-the-natural-way

    1. Great point – how to fix the damage that’s been done. So much of our freshwater has been used and then dumped in the ocean. Do you think de-salination is a potential solution here?

  8. Ali – This post really brings out one of the key issues that emerging markets and the companies involved with them are facing. One of the primary causes of water shortage in emerging markets is the rapidly depleting water table and the high dependence of the economy on ground water. In India for example, 60% of irrigated agriculture ad 85% of drinking water is dependent on groundwater. One approach to water conservation that Air Products & Chemicals could potentially adopt is partnering with or funding local communities to aid in their conservation efforts. In the state of Andhra Pradesh in India, for example, a community-based farm-pond, water- harvesting model has proved immensely successfully where at the cost of ~$ 2,200 per village per year farmers have succeeded in doubling their incomes and restoring groundwater to sustainable levels. As natural resource scarcity becomes more acute, it calls for more creative partnerships between local communities and large industrial players to alleviate the shortage.

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