Article courtesy of Dominic Waughray | January 27, 2013 | Mongolian Economy | Shared as educational material only
Five years ago, the UN secretary general Ban Ki-moon warned business, NGO and government leaders gathered in Davos about the impending water crisis in many developing countries.
“Economic growth is a thirsty business,” he said, before challenging his audience to form new cross-sector partnerships to enable more food to be grown, more energy to be created and for greater industrial and manufacturing output – all with less water.
Often, such speeches don’t lead to practical action. But this one did. Listening were the chief executives of several large water-using companies including Coca-Cola, Nestlé, PepsiCo and SABMiller; the presidents of international partner organizations such as the International Finance Corporation (IFC) and the Intra-American Development Bank; the heads of German, Swiss and US development organizations among others; and the heads of key NGOs such as WWF. Government representatives from many fast growing countries that facing water security challenges – India, Mexico, Mongolia, Jordan and South Africa – also nodded in agreement.
A new partnership model
In collaboration with the IFC, company chief executives went on to develop a unique set of new analytics that could identify “choke points” to national growth that water shortages would create by 2030, if no change in current inefficient uses of water were to take place.
The analysis – prepared by McKinsey & Company – underpinned the emergence of the Water Resources Group (WRG), a new water partnership that created some compelling statistics: by 2030, under the current system, there would likely be an average 40% gap between required demand and safe global supply of freshwater. This figure ranged from 17% in South Africa and 23% in Mexico to 50% in India. It was a stark warning of the scale of the economic and environmental challenge.
Senior decision-makers at various World Economic Forum events have taken notice. In Mexico, for example, the analysis indicated that $5.3bn (£3.4bn) of irrigated crops could be affected from water stress by 2030. For the first time, a clear economic value of the risk was pinpointed. It ran like a thread through countries’ national economic plans for agriculture, energy, industry and urbanization.
The idea of the food, energy, water nexus emerged from these discussions, and later in 2010 the World Economic Forum published the Water Nexus book, featuring insights from academic, business, NGO and government leaders.
When the threat of climate change was added into the mix, the future water forecasts went from bad to worse. Analysis from the WRG partnership in 2010 showed that the projected gap between Mexico’s demand and supply of safe freshwater rose to more than 36% by 2030 (a 60% increase on a no climate change scenario). And this was for a world with just a 1C rise in temperature.
Since then, the governments of Jordan, Mexico, Mongolia and the state of Karnataka in India have asked WRG to help them develop further economic analyses; to convene stakeholders from across business, NGOs and government to discuss these economic implications in a neutral manner; and to help co-develop action plans to implement ideas that these discussions identified, as part of new or enhanced national water transformation plans.
In Jordan – one of the most water-stressed countries in the world – a key WRG recommendation was to establish a cross-ministerial council to become a forum for debates and strategic advice, to help ensure water security for Jordan’s continued economic growth, social development and environmental protection. This body, called Jordan’s National Water Council, has now been set up and endorsed by the King of Jordan.
In the state of Karnataka in India (whose capital is Bangalore, the hub of India’s hi tech industry), the WRG estimated that future water requirements were set to grow at more than 7% per year, along with options and costs for dealing with the anticipated supply-demand gap. The analysis was buttressed by field observations and stakeholder meetings with farmers, state and federal officials, and private companies. WRG is now a member of the state’s Advanced Centre for Integrated Water Resources Management, a semi-governmental think-tank that advises various ministries, conducts policy research and analysis and is helping the water resources department to implement its new water vision 2030.
In South Africa, under the leadership of Edna Molewa, the minister of water and environmental affairs, the partnership launched the Strategic Water Partners Network of South Africa (SWPN). The leadership group represents a unique and progressive multi-stakeholder platform for water resources management chaired by the South African Department of Water Affairs and co-chaired by South African Breweries, representing the private sector. This diverse public-private collaboration includes the Coca-Cola Company, Anglo American, Nestlé, the Development Bank of South Africa, the South African Water Research Commission, WWF, and the South African Local Government Association. The network provides practical ideas to help deliver sustainable water supplies and to date, the network has identified seven national projects on water conservation and efficiency and on effluent partnerships, now under development.
In Mongolia a similar national partnership to South Africa is underway. Under the leadership of the country’s president, it will focus on two key issues: mining in the south Gobi desert, and water supply in the capital, Ulaanbaatar. In early 2012, the World Economic Forum showed that such a partnership could provide tangible outcomes and the partners involved agreed to formalize its status. More than $12m was raised from public and private sources to finance this next phase and an official governing council created.
Gathering in Davos this week, WRG leaders will regroup to discuss their progress and assess next steps, looked on with interest by the governments of Ethiopia, Peru and Tanzania. Ban Ki-moon will also be joining in the water discussions. WRG represents the kind of new, large-scale partnership involving business that he seeks to encourage in 2013.
For many others at this year’s Davos meeting, the WRG is a concrete illustration that discussions at Davos can also help get things done, even in the most complex issues such as water security.
Dominic Waughray is senior director for environmental initiatives, World Economic Forum.