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| World Marketplace |
Illiquid Assets
Peter H. Gleick and Jason Morrison
09/01/2005
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In the spring of 2003, Coca-Cola and Pepsi bottling plants in India had their
licenses revoked by local authorities over allegations that they were depleting
groundwater stores and causing shortages. The companies lost tens of millions of
dollars, plus substantial goodwill in Indian beverage markets. In 2004,
authorities in Beijing announced restrictions on new water-intensive businesses
to avoid severe water shortages. Their plan places limits on the siting of
textile, leather, metal smelting and chemical industries and sets water
conservation rules for makers of beverages, plastics and pharmaceuticals. In
July 2004, government officials in Bangalore, India, announced that the city was
losing information technology firms because of concerns over water scarcity and
reliability. One month later, the government of Victoria, Australia, considered
plant closures to help eliminate the discharge of untreated industrial
wastewater from pulp and paper industries.
Climate change will only further complicate water scarcity, posing
formidable challenges to water systems
in the future. |
Global companies that assume
incidents like these are rare may soon find themselves in trouble. All business
sectors—even individual industrial facilities—need to assess the specific
water-related risks they face. Reliable access to clean water has emerged as a
critical issue affecting the environment, human development and, increasingly,
commerce around the world. With a few exceptions, corporations (and their
investors) are unfamiliar with freshwater-related risks and are unprepared to
respond to crises or take actions to head them off.
The most fundamental
water challenge arises from simple scarcity. Already limited supplies of
freshwater around the world are under mounting pressure from growing populations
and the increasing needs of agricultural and industrial users. Growing demand is
increasing competition for a fixed resource, fostering greater levels of public
concern and participation in local control and management. Ultimately,
organizations that fail to think strategically about water may find themselves
embroiled in highly public and emotionally charged disputes over a resource
considered by many to be a basic human right.
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