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Report Finds Water Stress Rapidly Becoming Key Strategic Risk to Commerce; Impending Water/Energy Collision

17 March 2009

by Jack Rosebro

Dhi
Water consumption or withdrawals per unit of energy produced, by energy type, in the United States. Source: DHI Group. Click to enlarge.

A Pacific Institute report commissioned by Ceres, whose Investor Network on Climate Risk advises investors with more than US$7 trillion in assets, concludes that impacts of declining water quality and availability will be “far-reaching” for business and industry in the developed as well as the developing world, and that companies which address water stress as a key strategic risk will be better positioned to adjust to negative effects such as reduced water allotments, rising water costs, community opposition, and increased public scrutiny of corporate water practices.

Among the increasing challenges is that while the sourcing, processing, and delivery of clean water is becoming more energy-intensive, the extraction and refining of fossil fuels and their substitutes is trending towards increasing water requirements per unit of fuel produced as energy companies work with progressively lower grade resources.

Processes such as oil extraction from sources such as tar sands and deep-water offshore oil wells, as well as the expansion of first-generation biofuels such as corn-based ethanol are setting the stage for a “water/energy collision” of resource management policies. “With increasing frequency,” write the Pacific Institute researchers, “we value energy production over water production.

Citing a study by Danish water consultancy DHI Group as well as one from the University of Texas (earlier link), the researchers point out that the water footprint of renewable energy sources varies widely, and is particularly intense for first-generation biofuels made from sugar, starch, vegetable oils, animal fats, or other food-source feedstocks, rather than non-food sources such as cellulose.

Climate change. The report “Water Scarcity and Climate Change: Growing Risks for Businesses and Investors” notes that drought conditions are currently causing water shortages in Australia, Asia, Africa, and the United States, and that drought patterns are in many cases mirroring previously predicted effects of climate change. While climate change is projected to increase precipitation in some areas, it is also likely to destabilize freshwater supply in other areas by compressing precipitation and snowmelt into shorter and more intense periods, overwhelming existing catchment infrastructure and creating longer periods of drought.

The percentage of the world’s population living in water-stressed regions—currently one out of every three—is expected to double to two of every three by 2025 as declining water supplies are further stressed by increased water demand for irrigation, hydration, and industrial cooling in warming regions. Although desalination has the potential to reduce freshwater demand in relatively affluent coastal urban areas by providing an alternative source for drinking water, it remains the most expensive demand-management option due to its energy-intensive processes, and is particularly vulnerable to rising energy prices.

Last year, a special report by the Intergovernmental Panel on Climate Change (IPCC) forecast that the effects of rising temperatures would lead to “changes in all components of the [global] freshwater system” in the 21st century. The IPCC’s Fourth Assessment Report, released in 2007, had also forecast that “climate change will challenge the traditional assumption that past hydrological experience provides a good guide to future conditions.

However, the authors of the Ceres report note that “businesses and investors are largely unaware of water-related risks or how climate change will likely exacerbate them.” Industries which face the greatest risks include the agriculture, beverage, electronics, energy, apparel, pharmaceutical, forest products, and mining sectors.

Sectoral Water Risks

Ceres
20th century world water withdrawals by sector, in cubic kilometers. Source: UNESCO. Click to enlarge.

Apparel. Cotton production, which requires 25 cubic meters of water for every 250 grams of finished product—the approximate weight of a T-shirt—is both water-intensive and highly vulnerable to risk. Cotton is typically grown in arid regions converted to farmland; in Uzbekistan, for example, which is one of the world’s largest exporters of cotton, the extraction of water from rivers that supply the Aral Sea is a key contributor to its deterioration and desertification. Wastewater from cotton production degrades local water supplies, but many countries which export cotton have relatively weak wastewater regulations

Electronics. Semiconductor wafer production is extremely water-intensive: in 2007, Intel and Texas Instruments used a total of 11 billion gallons of ultra-pure water (UPW), which requires significant amounts of energy to purify. Eleven of the world’s fourteen largest semiconductor factories are located in Pacific Rim regions which are already water-stressed.

Food Production. The largest and fastest-growing use of water is embedded in modern food production. Although livestock production requires many times the amount of water per calorie of plant-based food production, agricultural water requirements have also intensified as a result of the conversion over the past century of many naturally arid regions, such as California’s San Joaquin Valley, Texas, and parts of Egypt and Pakistan, to high-volume farming regions.

Drought is expected to become more common in many of these areas, as well as higher surface temperatures, which dry out soils, evaporate snowmelt, and require accelerated water inflows. Beverage manufacturers also face direct competition with local communities for affordable drinking water, and bottled water sales are beginning to decline in some developed countries because of environmental concerns.

Biotechnology. Chemicals and microorganisms in biotech wastewater present a particular threat to local ecosystems. Synthetic chemicals are typically developed for persistence, and do not readily break down in nature when discharged by pharmaceutical manufacturers.

Forestry. Pulp and paper manufacturing is the third largest consumer of water as well as fossil-based energy in the United States. While the sector is at particular risk from climate change, forests are also key components of watersheds, influencing water availability, transport, and quality.

Metals and Mining. The mining sector is restricted by the location of ore, and water must be imported to support mining operations. Development of new sites may also face local opposition; Canadian mining company Barrick Gold, for example, plans to mine gold from beneath glaciers in Chile; Andean farming communities which rely on the glaciers for their water supply oppose the project.

Electric Power. The electric power industry accounts for more than a third of all freshwater withdrawals in the United States, with nuclear power plants requiring about 40% more water per kilowatt-hour produced than fossil-fuel power plants. Declining levels and/or warmer temperatures of cooling water supplies during periods of extreme heat and/or drought have triggered nuclear plant shutdowns in the US and Europe in the past five years. Hydropower-based generation is also at risk, particularly in the Western United States, due to drought.

The Ceres report poses five primary questions as discussion points for exploring the level of risk that a company’s water policy might pose to its own long-term economic health:

  • Does the company know and measure its water footprint, including wastewater discharges, and understand the relationship between its energy and water use?

  • Has the company assessed business risks associated with its water footprint, including both direct and indirect risks (e.g. supply chain), and developed contingency plans for potential future risks such as those associated with climate change?

  • Is the company engaged with key stakeholders, including consultation and collaboration with affected communities, government entities, and NGOs?

  • Has the company integrated ongoing assessments of water risk into its business planning, governance, and risk management structures?

  • Does the company disclose and communicate its water performance and associated risks, using comprehensible and broadly accepted metrics?

The report concludes by pointing out several cross-sectoral trends in water risk for businesses:

  • Typically, water risk is embedded more in the value chain, especially of raw material production, than in operations or assembly of final product. This risk is rarely reflected in corporate sustainability reports or security filings.

  • Industries that require large amounts of water withdrawals, ultra-pure water, or both face increased risk of competing directly with local populations for water access. Fallout ranges from reputational damage to shutdown or relocation of facilities.

  • Wastewater discharges for industries with large gray water footprints are an increasing problem as developing countries adopt environmental regulations.

  • Fragmented information about corporate water risk as well as underlying supply conditions often make it extremely difficult for investors to assess the true magnitude of the risk.

  • As water supply declines, the quality of available water also typically declines, requiring more treatment and increasing the amount of energy embedded in the delivery of adequate water supplies.

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March 17, 2009 in Sustainability, Water | Permalink | Comments (14) | TrackBack (1)

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Ethanol Production

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(1) Feedstock other than corn;
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(4) Hydrous ethanol.

"Field-to-Pump" is a unique strategy created by Renergie, Inc. to locally produce and market advanced biofuel (“non-corn ethanol”) via a network of small advanced biofuel manufacturing facilities. The purpose of “field-to-pump” is to maximize rural development and job creation while minimizing feedstock supply risk and the burden on local water supplies.

For more information, please feel free to visit: http://en.wikipedia.org/wiki/Field-to-Pump

A fascinating look at water use and its (unequal and typically poorly planned) distribution.

The issue with water is that it cannot be 'practically' made or destroyed, it just becomes either location-scarce or temporarily unusable due to pollution, etc. As with wealth, the key is not about hoarding it or quantifying its fixed volume but by increasing its flow of potable supply, optimizing its use, and smartly expanding its planned distribution.

It will be interesting to see how the 'scarcity blowback' will manifest itself: perhaps demonizing/taxing/regulating tubs and lawns and swimming pools; perhaps a technological renaissance on water-saving features, water infrastructure, perhaps a strategic look at water wealth and its defence; perhaps water smart-meters where water use will be peak-demand optimized and where some precipitation can be re-fed from property into a local community retention pond.

It will be interesting to see how authorities attempt to regulate/ inform/ promote effective water use. Unlike energy which can be made anywhere by some form or another, water is a basic commodity that exists in definable quantities. I think that water will be the next big source of conflict - not as easy to technologically overcome as with energy - you either are in an area where it is easy to access or you are not.

Ah I see they made the same mistake alot do. There is a big difference between say needing to flush a toilet into a septic system or cooling a nuke plant and dumping the hotter water back where it came from then there is in say growing cotton or biofuel.

The first just borrows the water the latter comsumes it.

The book Resource Wars outlines the worldwide need for water resources. Concentrated solar thermal power generation could provide electricity AND clean water for much of the world. We just have to do it and stop talking about it.

Seems to me the best way to avoid increased water demand is to stop population growth (.....??????) To do this we need to reform our economies and central banks so that we are not dependent on eternal growth for the economy to function.

No real problem realy im sure a war or three will fix that right up.

Fix what the water problem or the population issue?
It may be difficult to do both at once as most conventional IE chemical biological or nuclear options would likely leave the water sources or infrastructure compromised and govt sponsored cleansing can leave cholera and other disease vectors unmanageable.

Global warming on the other hand can achieve all this with high precipitation alongside high evaporation rates.

As the global warming solution only requires peoples to do nothing, it would seem that the war or three may be a little bit overkill.

In this age of political correctness death by drowning should be by far the most humane and politically palatable option?
Maybe not as glamorous or exciting but then "life wasn't meant to be all beer and skittles"?

On a more serious note this japanese city (Suwa)is reclaiming 2.2KG per day? tonne of fly ash? from its city sewage.

Japan’s golden sewers Video on AOL Video - The town of finds hundreds of thousands of dollars worth of gold in its city

http://video.aol.com/video-detail/japans-golden-sewers/3580980863/?icid=VIDLRVNWS07


Plenty of similar possibiloties.


Some important sources of information about precipitation patterns;

- US Drought Monitor

- Global Drought Monitor

Golly. I've told so many lies I can't keep them straight now!

"The frequency of heavy precipitation events has increased over most land areas". Indeed, global warming theory has long predicted an increase in heavy precipitation events. As the climate warms, evaporation of moisture from the oceans increases, resulting in more water vapor in the air. According to the 2007 IPCC report, water vapor in the global atmosphere has increased by about 5% over the 20th century, and 4% since 1970. Satellite measurements (Trenberth et al., 2005) have shown a 1.3% per decade increase in water vapor over the global oceans since 1988. Santer et al. (2007) used a climate model to study the relative contribution of natural and human-caused effects on increasing water vapor, and concluded that this increase was "primarily due to human-caused increases in greenhouse gases". This was also the conclusion of Willet et al. (2007)
United Nations' Intergovernmental Panel on Climate Change (IPCC) 2007 report.

Never the less - it's always time to run in circles and scream in abject fear!

There's only one thing that makes me "run in circles and scream in abject fear" [rolling eyes] and that's the sheer stupidity of some people.

If they would only stop denying there is a problem, and get out of the way, we could fix it and then move on to other things.

Well, ai_vin - let's start with your explanation of just who "we could fix it..." refers to. Ever hear the old adage: "If it ain't broke - don't fix it."

There IS an energy crisis - separate from global warming and with electrification and alternative fuels and resources we ARE fixing it. Thanks.

It is a misconception that the more it rains the more water we have to consume. The stress on water supplies is (in many cases) a result of the ability of the existing infrastructures to deliver water to increasing populations. I have discussed water conservation issues with water suppliers from India to Dubai. Whether water is derived from the sky or the ocean the story is the same. The ability to deliver water to the point-of-use is the most significant issue no matter how high the water is in the pond.

If infrastructure (water and electricity) is poorly maintained, then like "dear Henry's" bucket with a hole, we will always be paddling upstream.

An exception may hold (as reported Murray / Murrumbidgee river system Aus) that irrigation water leakage will allow greater return to the environment.
The argument suggests that as the river flow is so compromised by extraction, if any finds it's way back to the river, is a good thing.
Over allocation over many years plus increasing evaporation rates in an unreliable rainfall sees the taxpayer now buying back water allocations, Irrigators going broke and walking off. Salinity, the environment on the brink and wetlands and forests collapsing.

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