Nature’s silent currency

March 20th, 2013

Giulio Boccaletti, Managing Director, Global Freshwater, The Nature Conservancy

Water is the silent currency that runs through the global economy. In a world of seven billion people – with three billion new consumers coming on stage by 2030 – and seventy trillion dollars of global production, vast amounts of water are needed to irrigate our crops, cool our power plants, supply our manufacturing, and support our cities.

Even though less than one percent of the world’s water is available freshwater, that is still, in principle, enough. However, it is only accessible for human use, if delivered where and when it is needed, at the right quality. Traditionally, we create access by relying only on hard infrastructure. We take water from nature – rivers, lakes, below ground – and store it in large basins, which capture floods and carry us through droughts, often delivering electricity in the process. We then transfer it via canals to fields, treat it and distribute it to homes, before collecting and sending it back again into nature.

Today, the global bill for this system is over half a trillion dollars a year.

Unfortunately – as we stare down a future that may require as much as 40 percent more water than today’s accessible supply – our traditional process is proving increasingly unsustainable. In many places, growing demands for water are running into the limitations of what nature can easily yield to us, and the cost of delivering an additional liter of water is increasing. Public sector institutions, which have historically provided the finance and borne the brunt of the cost, are finding it harder and harder to cope.

Finding a more effective model for water will require a suite of solutions, from managing demand to more effective design of infrastructure. But amongst these, a group of solutions are emerging that hold an important promise for dramatically improving water sustainability. And nature is the common thread.

Indeed, nature is not just the provider of raw water, but also an asset that can help us manage it for our specific needs. For example, we have known for some time that protected watersheds, like those in the Catskills outside New York City, can reduce the need for water treatment. But to integrate these measures systematically in the water sector, we need different ways of thinking about water projects.

One such innovation is occurring in Latin America where we have established a number of “water funds.” These are financial vehicles through which large water users pay for conservation activities upstream. Each user brings a specific need: a municipal utility may want to reduce cost of treatment by lowering agricultural pollution, while a hydroelectric plant may need lower levels of sedimentation in the reservoir. The conservation required to satisfy these needs is a sophisticated and tailored portfolio of interventions.

In Quito, Ecuador, for example, a water fund financed by the largest water users, such as large brewers, invests in conservation to protect the forests and grasslands upstream that are beginning to help, naturally and cost-effectively, maintain a higher standard of water quality.

Managers of the great working rivers of the world are also integrating nature in new ways. The Yangtze, the Mississippi, the Magdalena, are all arteries for the economies they serve – providing transportation, water for irrigation and people, and electric power.

On the Mississippi for example, we are working with the U.S. Army Corp of Engineers and other stakeholders to use floodplains to provide critical flood protection services for inland communities, while also supporting the health of coastal wetlands that help protect Louisiana from tropical storms.

Given the promise of these opportunities, the real challenge we face is one of scale. In the next two decades, replacement of ageing infrastructure, demand for water services in emerging economies, and growing demand for agriculture, shale gas extraction and other economic activities will require massive investments in water infrastructure. Water associated costs are likely to rise to more than a trillion dollars per year. If we are to bend a significant portion of that expenditure towards solutions that incorporate nature, we must provide a robust economic case for those solutions, and create unprecedented capacity to facilitate negotiation – for second best solutions where necessary – across the world.

In many ways, this is a new frontier for conservation work. We have the opportunity to embed a different role for nature in supporting the currency that runs through all of our societies and economies globally. What we have are ideas, and some project successes on the ground. Few have scaled. To succeed, we must apply the rigor these opportunities deserve, and find ways of leveraging all stakeholders who have an interest in the long-term sustainability of the water sector to help us drive what will be nothing short of a global transformation.

References:

1. Dobbs, R., Oppenheim, J., Thompson, F., Brinkman, M. and M. Zornes (2011), ‘Resource revolution: Meeting the world’s energy, materials, food, and water needs’, McKinsey Global Institute, available at: http://www.mckinsey.com/insights/energy_resources_materials/resource_revolution

2. United Nations Water (2013), UN Water Statistics, available here: http://www.unwater.org/statistics_res.html

3. 2030 Water Resources Group (2009), ‘Charting Our Water Future: Economic frameworks to inform decision-making’, available at: http://www.mckinsey.com/App_Media/Reports/Water/Charting_Our_Water_Future_Exec%20Summary_001.pdf

Giulio Boccaletti is Managing Director of Global Freshwater at The Nature Conservancy.

© 2013 The Nature Conservancy. This article is subject to the copyright of The Nature Conservancy. This article or any of its contents may not be reprinted or adapted without the permission of the Nature Conservancy and the Global Water Forum. Any queries should be directed to editor@globalwaterforum.org:8888.

The views expressed in this article belong to the individual authors and do not represent the views of the Global Water Forum, the UNESCO Chair in Water Economics and Transboundary Water Governance, UNESCO, the Australian National University, or any of the institutions to which the authors are associated. Please see the Global Water Forum terms and conditions here.