ABB sat down to speak with Peter White, WBCSD’s Vice President and Chief Operating Officer, to give his views on the challenges and oppurtunities in the water industry today. Below is their conversation:
What are the main challenges facing water companies today and over the next few years?
Peter White: On the global level, the water challenges are well known. According to the World Bank, within the next 30 years the world food system will require 40-50 percent more water; communities, cities and industry will need 50-70 percent more; and energy production will use 85 percent more water. By 2030- only 12 years from now- the world will have a 40 percent gap between supply and demand if current levels of use continue.
But water is very much a local issue. It is context-specific. Some places have enough, others too little. So we need to take a local approach to water. There are three main challenges in my opinion.
First, many of the solutions that companies provide are high-cost and high-tech, which their customers are not always willing to invest in. We therefore need more low-cost solutions for those countries and regions where affordability is a key issue.
Second, often there is insufficient information for companies to make good decisions on which solutions to implement. For instance, they often lack data on the complexity and variability of the effluent their facilities produce and how a change in product mix impacts the effluent. This limits the companies ability to select the best solution.
And third, underpinning both points is a lack of appreciation of the value of water by stakeholders, including governments, industry and communities. Getting these stakeholders to understand the true cost of water and the risks that arise from its depletion is the key issue going forward, both locally and globally.
WBCSD runs many programs and projects to help realize the UN Sustainable Development Goals (SDGs). Can you tell us briefly about these programs and your initiatives to improve water management and achieve the UN SDG for water?
Peter White: We run five programs to help realize the UN SDGs. These programs are Food, Land and Water; Energy and the Circular Economy; Sustainable Cities and Mobility; People; and Redefining Value.
Water plays a key role in all these programs. By 2050 there will be 2.2 billion more people on the planet, all of whom will need health, nutritious food produced in a sustainable and water-efficient way. Reusing water to save the world's finite supplies of fresh water is part of our circular economy program. And, making cities smart and sustainable in areas like mobility, water and waste management is crucial, as two-thirds of the world will in cities by 2050.
Our main objective is to help make businesses more sustainable and sustainable businesses more successful. We underscore the role that water plays in sustainability and business success. We do that in three ways. The first is raising CEO awareness of the importance of water and the risks that water scarcity poses for business operations. Second, we bring companies together so that they can deliver practical solutions to water problems. And third we represent business in various policy and advocacy platforms at a global and regional level.
Water is under priced or subsidized in many countries, failing to reflect its true cost and value. Yet price hikes could lead to civil unrest in countries with subsidized prices, as has happened with petrol and bread. How can governments and water companies square this circle?
Peter White: The water sector knows that water is undervalued. Consumers, however, want their water as cheaply as possible or even at no cost. But effective pricing is the key to efficiency. And pricing should reflect the scarcity of the resource. Water companies should, therefore, charge a price that reflects the true cost of supply and production.
"Governments and municipalities should already understand the need to recycle used water."
Peter White: But raising prices does not necessarily lead to civil unrest. There are many ways to increase prices in a socially acceptable way. For instance, by volume consumed in which large-scale users like industry pay higher tariffs than small household users. Another example is for water companies to charge different rates according to the time of day or season, with higher rates for peak periods or dry season when water is scarce. A good example of successful pricing is Singapore, where the rate is based on the size of the home and all consumers pay a water conservation tax. Thanks to both policies Singaporeans know that water is a precious resource.
Eighty percent of municipal wastewater is discharged untreated, according to the UN. Reusing treated wastewater would significantly ease water scarcity. What should water companies do to increase water reuse?
Peter White: Governments and municipalities should already understand the need to recycle and invest in reclaiming used water. Again, Singapore is a good example of what can be done. The city's Public Utilities Board started producing high-grade reclaimed water called NEWater that supplies up to 0 percent of Singapore's needs.
Another example is the Dan wastewater treatment plant in water-stressed Israel, which treats municipal wastewater on a large scale to irrigate
crops in the Negev Desert. This project not only stopped raw sewage from being pumped into the Mediterranean, it helped transform an arid desert into fertile farmland for fruit and vegetables.
It seems the world is already in, or almost in, a global water crisis. How can water companies turn this crisis into business opportunities?
Peter White: There are several ways to turn water scarcity into business opportunities and many companies have demonstrated this. The main criteria are 1) make local solutions for local needs by understanding what the supply issues are and by using the right technologies to address them; 2)develop solutions that are efficient in terms of energy and materials and are, therefore, economically viable; and 3) make sure they are affordable for local users.
A good example is one of our member companies, Jain Irrigation, which has developed a range of low-cost micro-irrigation systems for smallholder farmers in India. One of Jain's innovations is a drip irrigation system for rice, which is a water-intensive crop grown in flooded fields. Jain's system is affordable for smallholders and produces a higher yield than conventional growing methods, from minimal amounts of water. It also has a high market potential worldwide.
What can water companies do to improve water use and reuse by industrial and agricultural businesses?
Peter White: We covered this in earlier questions. One thing I would like to add is the need for cross-sectoral approaches that connect users in different sectors. For instance, municipal wastewater can be treated and reused in agriculture and industry, and industrial wastewater can be treated and reused to grow food. One sector can use another sector’s wastewater, creating a win-win situation for both parties.
Companies within a sector can also exchange treated wastewater. Two of our members, ENGIE and BP in Western Australia, were faced with dwindling supplies of water and higher tariffs. Along with others they started a water reclamation program where unwanted wastewater from one company was treated and used as industrial water by another company. In one plant alone, this saved $1.5 million in costs and reduced the use of a scarce resource in a water-stressed area.
The idea of smart, resilient cities is taking hold, especially among water utilities, which provide the fundamental services of any community- supplying and distributing clean water and removing used water. How can water companies help make their towns and cities smart and resilient?
Peter White: Cities are under increasing pressure. They face many challenges- in water supply, sewage treatment, waste collection and disposal, climate change and severe weather, greenhouse gas emissions, and transportation. Two WBCSD programs- Energy and the circular Economy, and Sustainable Cities and Mobility- are directed at increasing the resilience of cities and in bringing companies together to develop smart solutions to these challenges.
Water companies are also under pressure from growing demand, fluctuating energy prices and aging infrastructure.
One way for water companies to deal with these pressures is with solutions that link suppliers with consumers. Smart metering is one example. Another is interactive websites through which consumers can track their water usage and learn conservation tips. These last two methods are effective if water is correctly priced, as consumers usually want to save money whenever possible.
Another way to increase city resilience is through technologies that reduce the use of fresh water, either by reusing wastewater, encouraging conservation or identifying leaks in aging distribution networks.
How can ABB help its water industry customers live up to the UN SDGs, especially those on water and sanitation?
Peter White: Through innovation, new technologies and integrated solutions. And by making water supply, treatment and management more efficient. All of these will contribute to SDG attainment in some way. To me this is a huge market opportunity for a company like ABB.
Whereas the business of some companies is to deliver on the SDGs- by supplying clean water, food, sanitation, etc., ABB is clearly an enabler. It helps other companies contribute to the SDGs by making their operations more efficient. ABB does this across a broad range of applications, such as optimizing production, reducing pipeline leakage, cutting energy consumption and greenhouse gas emissions, predicting maintenance needs, and so on. Solutions like these enable others to provide clean water and effective water management.
If you had to write a 3-point plan on what water companies should do to improve water use and reuse, what would those 3 points be?
Peter White: First, is constant innovation, offering context-related low-cost solutions.
Second, working with customers- municipalities, industry, agriculture and domestic consumers- to increase their understanding of the value of water and to address water scarcity.
Third, reduce reliance on fresh water by using circular water management and technologies like desalination, because freshwater is limited and will not meet growing demand.
"There are several ways to turn water scarcity into business opportunities and many companies have demonstrated this."
The World Business Council for Sustainable Development is a global, CEO-led for organization of over 200 leading businesses working together to accelerate the transition to a sustainable world.
Its member companies come from all business sectors and all major economies, representing a combined revenue of more than US$8.5 trillion and with 19 million employees.
WBCSD's mission is to accelerate the transition to a sustainable world by making more sustainable businesses more successful.
Its vision is to create a world where more than 9 billion people are all living well and within the boundaries of our planet, by 2050.
WBCSD was formed in 1992 and is based in Geneva, Switzerland, with offices in New York and New Delhi.
ABB is a founding member of WBCSD.
Read the WBCSD's 2018 CEO Guide to Water: Building resilient business, available at www.wbcsd.org