Deflecting the scarcity trajectory Innovation at the water, energy, and food nexus

 

Shortfalls of water, energy, and food can sabotage economic and business growth as well as compromise social well-being. Host Tanya Ott talks to Will Sarni, director of Deloitte Consulting LLP's Enterprise Water Strategy practice, about signs that the public sector, private sector, and NGOs are beginning to work together to take us off the scarcity trajectory.

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TANYA OTT: This is The Press Room, Deloitte University Press’s podcast on the issues and ideas that matter to your business today. I’m Tanya Ott.

They say music is the universal language. But maybe it’s something else…

WILL SARNI: “One could argue it’s the glue that binds humanity. We all need it. We all have some emotional tie to it whether you’re interested in recreation or whether it’s your life blood if you’re in the agricultural sector. And it has a spiritual dimension to it. “

TANYA OTT: About 71% of the earth’s surface is covered by water. (source: http://water.usgs.gov/edu/earthhowmuch.html) It is everywhere. And most of the time we don’t give it much thought. Just consider your morning routine.

(sound of toilet flushing)

(sound of shower starting)

TANYA OTT (voiced while brushing teeth): We use lots of water. We may take small steps to conserve – (sound of turning off sink) – like turning off the faucet while we’re brushing our teeth. (spit) But unless you live in a California – where there’s a serious drought right now — you probably don’t give too much thought to what goes down the drain. (spit)

WILL SARNI: We are on a trajectory to have about a 40% shortfall between supply and demand globally. Some parts of the world are projected to have an even greater gap between supply and demand and others less. But that number does sharpen the mind and it gets you to think about how much we need water and what might happen if we don’t get that.

TANYA OTT: Will Sarni leads the water strategy practice at Deloitte Consulting LLP. He’s been in the water business for more than 30 years, first as a hydrogeologist working for multinational companies on water supply projects, and then as owner of a consulting firm focused on sustainability strategy. He says the biggest things driving this global water shortage – is people. You and me. Right now there are about 7 billion people on the earth, but in the next 35 years that’s projected to go up dramatically.

WILL SARNI: We’re headed towards roughly about 9 billion people and those additional two billion people need food, they need energy, they need products. All of which require water for manufacturing and production.

TANYA OTT: And there are other changes going on. There’s the rise of the middle class globally. That new middle class eats differently ….

WILL SARNI: As people hopefully move into the middle class their diets change. They move towards more higher forms of protein: beef, chicken, pork. And those proteins require a larger amount of water for production as opposed to grains.

TANYA OTT: And they live differently… congregating in large urban areas. Which means more buildings and less green space. Some places in the world are seeing these trends at a much faster clip than others right now…

WILL SARNI: You know China has really a significant challenge with respect to water availability. They have 20% of the world’s population and 7% of the world’s fresh water. And that’s a pretty significant disconnect and impacting agriculture production and power production – you know they primarily run on coal and you need water for cooling coal fired plants in addition to other power plants.

TANYA OTT: China could learn some lessons from its neighbor 2,000 miles to the south – Singapore. Right now they’re in the middle of the Southwest Monsoon season. It’s one of two Monsoon seasons in Singapore that dump lots of rain on the small island. Still, Singapore has a water shortage problem.

WILL SARNI: The population is roughly 5 million or so and they have a very small area where they can capture rainfall and store water. Their population is growing. So you’ve got that tension between a finite supply and increasing demand on that finite supply and what Singapore has done is really innovative and there are some terrific lessons from Singapore that are being applied globally. Which is increased water efficiency, which is how to do more with less water. There is a move toward reusing water as much as possible. Water, in many ways, is the ultimate renewable resource in that you can keep treating it and using it over and over again. And so they treat wastewater and put that back in for potable use. And they have built a export business around innovative water technologies so what they’re doing is taking the lessons learned from their own nation and building a business around exporting those innovative technologies. So Singapore is an interesting example of how to take a risk and a liability and turn it into an asset.

TANYA OTT: You mention taking wastewater, treating it and making it into potable water and of course one of the first reactions that many people, particularly in the United States and other Western countries might say, is like, EWW! I mean there’s a huge EWW factor that you have to get over on some of this, right?

WILL SARNI: Well, I’m glad you brought that up. It’s certainly not a technical term but it is the Yuck Factor and has been branded unfortunately as Toilet to Tap. But the reality is we’re really down stream from everybody else so really what we’re doing here is taking waste water and treating it to potable standards just like we would in any other case, even if we were taking it out of a stream or whatever, and treating it and putting it back into productive use. And it’s either for potable use or non-potable use, but the reality is that in many ways that wastewater represents a more reliable source of water that can be treated and used for other purposes as opposed to just treating it and discharging it out into a stream or whatever. It’s logical in so many ways and it really makes perfect sense and some parts of the world do that at a greater frequency than we do here in the US.

TANYA OTT: Several cities in the US do treat wastewater for reuse. There’s the town of Big Springs in West Texas. Their spring dried up decades ago. There’s also Wichita Falls, near the Oklahoma border. And in drought-stricken California, Orange County, San Diego, and the Silicon Valley are all expanding their wastewater recycling programs.

WILL SARNI: So you’re diluting it – not that it actually has to be diluted – but to get over that psychological yuck factor. You’re essentially mixing it back into a more traditional water supply like a reservoir for example. You can use it for industrial purposes. You can use it for cooling thermoelectric power plants. Look at the US and elsewhere in the world, we use water for cooling coal fired plants, nuclear plants and so on, so you can take that water and put it back into the supply and use it for those purposes so you don’t have to deal with the yuck factor, but you’re not wasting that water.

TANYA OTT: Remember those stress factors we talked about earlier? Growing population … urbanization? Sarni says the latter is a big issue in many cities, here in the US and beyond.

WILL SARNI: You know we’re paving more. Rainfall doesn’t have anywhere to go. So it runs off as opposed to seeping into the ground or recharging aquifers, which we then use for water supply. So, water management in urban settings is now becoming more and more of a challenge and what you’re seeing is cities are now moving towards more green infrastructure as opposed to more traditional capitol intensive projects where they’re capturing the water, treating the water and discharging it… they’re looking toward constructed wetlands, for example as a way to capture water, store it for a period of time, allow some of that water to recharge back into the ground and also treat it through natural filtering mechanisms. There are a number of cities, smaller cities, mid-size cities that are dabbling in that. New York, as part of their long-term vision, is really planning on increased investment in green infrastructure. And so New York as a green city — it’s a radical notion, but it’s an interesting thought.

TANYA OTT: Why is water so important – besides the obvious, that we need it to survive? I’m probably stating the obvious here, but… Without water, you can’t grow crops or raise cattle or chickens. You can’t cool the power plants that provide electricity to homes. It’s all interconnected. Will Sarni calls it the Water-Food-Energy Nexus. And he says companies, large and small, need to pay close attention even if agriculture or energy aren’t their bread and butter.

WILL SARNI: You know we typically think and develop solutions in silos. You know, there’s a water person. They’re going to be thinking about what’s going on in the world of water and not necessarily what’s going on in agriculture and power production. You know same for energy and ag. That’s changing. It certainly has changed over the past couple of years. But my thesis is that we really need to focus in on that energy-water-food nexus to develop innovative technologies and innovative partnerships to drive solutions that will benefit all three areas. You know, I will say one thing though. It’s relatively easy to talk about scarcity and essentially the sky is falling, but all of this does drive innovation and that’s the exciting part of the story here. In that, when you have resource scarcity, for example water, it does drive innovation and technologies.

TANYA OTT: Technologies like desalination plants that turn seawater and brackish water – that’s sort of halfway in-between salt and freshwater – into usable water for humans or agriculture. Innovations like precision agriculture.

WILL SARNI: The way to look at ag is that when supply exceeds demand you don’t have to be as precise, you don’t have to be as efficient in the way you use water. And there’s a move toward drip irrigation, for example. Where you are using just the right amount of water as opposed to flood irrigation where you would flood a field and deliver water that way. Again, when water is cheap or free and supply exceeds demand you can do things like that. You can get quite a bit of evaporation and infiltration and so on. Or the move right now is towards, where appropriate, drip irrigation, delivering water when the crops needs it and where they need it and underpinning all of this really is data acquisition and analytics and the ability to really understand what is required with respect to water needs in the field and delivering that through technology.

TANYA OTT: Water is such a political issue, in many ways. If you look at water rights and tradition, there’s just so much wrapped up in it when it comes to agriculture in particular.

WILL SARNI: Again, you bring up a really important point. We typically talk about the price of water – but there are values associated with water. And everyone relates to water. One could argue it’s the glue that binds humanity. We all need it. We all have some emotional tie to it whether you’re interested in recreation or whether it’s your lifeblood if you’re in the agricultural sector. And it has a spiritual dimension to it. So, unlike other resources there is this very strong tie to humanity and it can become very contentious at times, but it can also provide an opportunity to collaborate. And there really are good examples where this scarce resource is managed very creatively through agreements across borders both in the US and internationally. I think it comes down to a recognition beyond geo-political borders that water is a shared resource and we have to ensure that we all have water for our public and private sector and ecosystem needs. So it’s that aha moment that really has driven legal agreements that allocate water that is essentially scarce.

TANYA OTT: So I am talking to you right now from a studio in midtown Atlanta and before that I was here based in Birmingham, Alabama. And before I was there I was in Orlando and Gainesville, Florida. You know where I’m going with this. The Tri-State Water Wars between Alabama, Florida, and Georgia … certainly not simple.

WILL SARNI: No, it absolutely is not easy but there really is no alternative in terms of recognizing that we need to solve this together. When you look at water like that there’s a couple of choices in my mind. We can litigate solutions and go to battle for an extended period of time like you’ve seen in the Southeast or we can recognize that we need to come together creatively and solve this issue. And that creative solution really needs to recognize that there will be increased demands. There may not be increased supply and we need to do more with less or do without. And if we can get to that point then I think what we do is essentially harness that entrepreneurship, that innovation that we rely on quite often. So my view is, again, we can argue or we can come together and one of the things I talk about is aligned action or collective action where diverse stakeholders come together including competitors on the business side – in a pre-competitive space – to develop solutions. You know I don’t want to sound idealistic or naïve, but I do believe that’s the only viable path going forward.

TANYA OTT: What should companies be thinking about? Particularly companies considering working in emerging markets? Sarni says for one – it’s important to align water strategy with your business growth plan.

WILL SARNI: Having those companies think well beyond their operating footprint. Think about stakeholders in the watersheds in which they’re operating in and think about their entire value chain. Which means their upstream supply chain and how their customers or consumers are using water as part of their product that they’re selling. For example if they’re selling soap can you design a soap that uses less water, for example. Or can you sell shampoos, innovate shampoos that don’t use water. And there are personal care companies that are doing that. So think more broadly. Don’t’ define innovation only as a technology play and really driving that is valuing water for your business. So don’t think about just the price, the cost, but really what is the value? Both tangible value and intangible value, which means brand value.

What else can companies do to think holistically about water? You heard some ideas in today’s podcast, but there’s plenty more in Will Sarni’s article “Economic and business growth in the century of the energy – water – food nexus”. It’s coming up on www.dupress.com. Oh… and Sarni has this final thought.

WILL SARNI: I would really like for us to stop talking about the drought because the longer we call it a drought the more we embrace hope as a strategy where, well, if it rains then I can go back to my old ways. And we really need abandon that. It might rain. I hope it does. But we can’t support 9 billion people under business-as-usual conditions and that is really a re-think of our value of water and that relationship and driving innovation.

TANYA OTT: I’m Tanya Ott for The PressRoom, a production of Deloitte University Press. Be sure to subscribe so you won’t miss an episode. And we’d love to know what you think about the issues we’re covering. Leave us a comment on the podcast page, email us at podcasts@dupress.com or tweet us @du_press.

This podcast is provided by Deloitte LLP and its subsidiaries and is intended to provide general information only. This podcast is not intended to constitute professional advice or services of any kind. For additional information about Deloitte LLP and its subsidiaries, go to Deloitte.com/about.