Scarce freshwater is a growing problem.
The source of life may cover 70% of our planet, but freshwater only accounts for 3% – and two-thirds of that is locked up in glaciers.
Severe water stress affects approximately three billion people worldwide, two-thirds of whom happen to reside in Brazil, Russia, India, and China (BRIC) – nations that are transitioning to developed economies.
But we don’t want to have a Waterworld situation on our hands (that didn’t work out well for anyone).
Instead, investors should look for companies that are being smart with their water usage.
Freshwater Drying Up
In many of the BRIC countries, people are rapidly depleting groundwater aquifers, which accounts for that one-third of the freshwater used globally. This is putting in excess of two billion people at risk of losing their water supply.
Such aquifers are critical to agriculture around the globe, too, since they provide half of the irrigation water used.
The United States isn’t immune to this scarcity either, as evidenced by California’s severe drought.
Jay Famiglietti used satellite data to show that Sacramento and San Joaquin river basins have seen losses of about 15 cubic kilometers of water annually, reported the Financial Times. Groundwater pumping in the state’s agriculturally important Central Valley has been responsible for more than half of the losses.
If the trend continues, the consequences could be dire.
But it’s not just people or the agriculture industry that’s affected by water’s growing scarcity. It’s becoming a problem for many corporations, as well. Thus many have worked to improve their water efficiency
According to a report in the Financial Times, since 2011 alone corporations have spent in excess of $84 billion to improve the way they obtain, manage, and use water.
For example, Coca-Cola (NYSE:KO)) and its bottlers have spent nearly $2 billion since 2003 on reducing water use and improving water quality wherever the company has operations.
The mining giants, Rio Tinto PLC (RIO) and BHP Billiton (BHP) have unveiled a $3-billion plan for a desalination plant in Chile that’ll pump treated seawater 10,000 feet high to their jointly owned Escondida copper mine. This way, the two companies can avoid draining scarce local supplies of water.
This year, the mining industry alone will spend more than $12 billion on water, says Global Water Intelligence.
The budgets are impressive, but the money must be spent wisely to make a real difference.
Smart in the Face of Scarcity
Leading the way in wise-penny water game is the world’s largest food company, Swiss-based Nestle SA (OTC:NSRGY). Since 2005, it has reduced its water consumption globally by a third.
In October, it unveiled a first-of-its-kind milk plant in Mexico that runs on no external water! The company recycles the waste fluid extracted from milk when it’s powdered and reuses it. To do this, Nestle is using technology developed by the German engineering firm GEA Group (GEAGF) and French water giant Veolia Environnement SA (VE).
The Lagos de Moreno plant has been running this way since June and produces 60,000 metric tons per month of Nido infant formula, one of the company’s top-selling brands.
Nestle says this plant alone will allow it to cut its total water consumption from its 13 Mexican plants by 15% this year. Already, Nestle has cut its water usage in Mexico by 50% since 2005.
Nestle says it plans to rollout this technology worldwide, starting with a dairy factory in South Africa.
This is the kind of thinking we need if the planet is to avoid a global water crisis.
And “the chase” continues,
BY Tim Maverick