WHY IS FRESHWATER AN ISSUE FOR BUSINESS J W OATRIDGE SEVERN TRENT PLC Introduction Water has not been seen as significant an issue as global warming. However water is the key issue. Without enough water or with reducing amounts of water availability economic development is not possible. We all need water for life and water is the resource which drives food production, health, the environment and industry. Water is an issue for business but it is also an issue for all sectors of society. The goal must be to build a sustainable water future and to do so in an inclusive way which avoids competition and conflict between sectors. Business has to play its part in this inclusive approach to sustain water resources. But the overriding need is for all participants in society to recognise that water is the key issue. This paper seeks to identify the issues business perceives as important and to contribute some views on possible solutions, recognising that acceptable solutions can only flow from an improved understanding of what is to be tackled. Background The planet seems to be awash with water but the availability of usable fresh water is small. Only 2% of water resources is fresh water, of that 70% is in ice caps and 29% is not accessible for a whole range of reasons. Only around 1% is available for human use. That is broadly the present perspective. The demand for fresh water is growing but in almost all cases the availability of fresh water per person is declining. As populations grow there are parts of the world where fresh water per person is reaching a point of criticality. Increasing demands for water are occurring in four key areas which in aggregate are exerting unsustainable pressure both in developed and developing countries:- * Human needs for safe drinking water and proper sanitation * Agriculture needs for expanding production to meet population growth * Environmental needs to protect endangered species, biodiversity and unique areas of special interest * Industrial needs to provide more goods and services for a growing population. Human Needs - World population is growing and will do so over the next 30 years. Estimates suggest upwards of 8 billion people will be on this planet by the year 2025. The World Health Organisation estimates that more than 20% of the world population - around 1.3 billion people - have no safe drinking water and that more than 40% of all population lacks adequate sanitation. But it is not just the growth in population and the need to feed people that is causing water stress. The situation is compounded by the relentless drift from rural to urban areas. Shifting patterns of population suggests that the number of cities with more than one million inhabitants will more than double over the next 30 years. This will place even greater demands on water and sanitation infrastructures - where they exist that is. Relentless urbanisation suggests that during the 50 years from 1970 the proportion of people living in urban areas will increase from about a third to around two-thirds. So the issue of population and urbanisation, the move from rural to urban areas, the growth in large cities all compound the already stressed water positions in many parts of the world. Fresh water and health are intrinsically linked. 4 million children die each year of diseases linked to the lack of potable water. Half the people in developing countries suffer from water or food associated diseases, suggesting water supplies is the single most important step to improving health in the developing world. This is one reason why water is the key issue Agricultural Needs - Agriculture is the largest water using sector at around 70% of resources. It can be the largest polluter of water in both developed and developing countries. As a result of poor land management practices and over fertilisation water use in agriculture is frequently inefficient. All too often there are no price signals that encourage more efficient and effective use. Agriculture is the largest user of water and has the potential to be the largest "saver" of water that could be redirected into uses having a higher economic/welfare potential. Environmental Needs - The allocation of water for environmental needs is a growing area of investigation and policy development. The environment requires water of sufficient quality and quantity to maintain a diverse array of eco-systems and biodiversity. Moreover it is becoming increasingly obvious that the environment is not just a sectoral user of water but provides a fundamental role in maintaining the quality and supply of the world's water resources for use by the other sectors. There is a need to give full recognition of the environmental use of water and to establish the appropriate levels to be used in this way. Industry accounts for around 20% of global fresh water consumption and industrial use of water is growing. Trends suggest by the year 2025 industrial water use will double and industrial pollution may quadruple if no action is taken. Industry can play a much larger part in protecting access to water, bringing technological capability to move, treat and manage water supplies more effectively. Industry has the opportunity to participate in providing sustainable solutions for water management and there is the opportunity to learn from case studies showing good water management practice. There is the need to drive change to have appropriate "best practice" care for water and waste water management. Climate Change - There is no doubt that there is increasing variability in the climate. Estimates vary about the speed with which climate change will take effect and the consequences for water supplies. Water is at the forefront of resources having to adapt, although so far water has not been seen as a significant issue affected by climate change. Higher temperatures and decreased precipitation lead to increased water demands and decreased water supplies. Deterioration in the quality of fresh water is also likely. Together these factors put strain on the already fragile balance between supply and demand in many countries. Some countries will have positive impacts but most will be negatively effected. The Management of Water Supplies - Apart from the issues of population growth, health, agriculture, industrial use of water and climate change, there are also issues concerned with the management of water supplies. It has been estimated that 40% of the world depends on water supplies from a neighbouring country and about 300 major river basins and many underground aquifers cross national boundaries. Many of the management problems in water supply are of a local and regional nature, but some require national co-operation. As Dr Chitale, the 1993 Stockholm Water Prize winner has said "in the natural order of things we are really citizens of river basin catchments rather than of politically demarcated territories". Nevertheless the issue of water has to do with both the reality of geography and the reality of politics. These then are the issues around which the fresh water debate has to take place. Fresh water is the key issue because it is the common strand that links population growth, health, agriculture, eco systems, industry, climate change, urbanisation, to say nothing of social responsibility. Water is the key issue and it is the life blood in all respects. It is against this background that the remainder of the paper will discuss why fresh water is an issue for business. Impact of Future Resources on Industry As has been said, without enough water or with reducing amounts of water economic development is not possible. Demand for water is growing in all sectors including the industrial sector. But industry can also play a large part in protecting water supplies and reducing pollution loads. The business view is that all sectors must play a part and increasingly business will seek to be part of the solution rather than part of the problem. Fresh water could become a limiting factor in future development; sustainable development demands that we use our finite fresh water resources more intelligently and efficiently. Best practice in the use of water is important and there is a need to spread the message more widely. There is rarely an issue of inadequate technology to cope with water issues or to prevent pollution. R&D is not the issue. There is enough scientific knowledge to understand the problems and sufficient technical skills to solve them. Not all water issues are related to quantity, quality is important too. The most sensitive water issue for many industrial sectors is water quality. While the limitations of the future water supply for industry is a growing concern, industry is still sometimes perceived by the public as the worst polluter of water. Although there are many serious examples of point source industrial pollution in the world, pollution control regulations and water charges have generally ensured the trend towards industrial compliance with increasingly stringent limitations on discharge to public waters. The reality is that pollution from agriculture and urban waste water are by far the larger problems - in terms of absolute levels of pollution, the geographical extent of the pollution problem and in the relative difficulty of controlling these non-industrial sources of pollution. Increasingly business people have learned that pollution prevention, especially when building new facilities, is eminently more cost effective than cleaning up dirty water after the fact. The paper will address later some of the ways in which industry has adjusted to change in its use of water. Clean Water and Sanitation Management Problems There are many parts of the world where the management of water supplies and sanitation issues create their own specific problems. Trans-boundary water resources and their use are of great importance to many States. As water scarcities increase there will be the risk of greater conflicts over water. As has been mentioned about 300 major river basins and many underground aquifers cross national boundaries. Many of the management problems are of a local and regional nature, but some do require national co-operation. There is a huge wastage of water from inefficient practices. Decades of under-investment mean that water supply systems all over the world are in a poor state. Leakage from pipes of 50% or more is not unusual. Sanitation pipework is no better. Cracked sewage pipes means pollutants can enter pipes carrying household water for drinking purposes and pollute that water. The World Bank estimates that about 600 billion dollars is needed to be invested worldwide to repair and improve water delivery systems. In addition to pollutants from cracked sewers, the amount of polluted water being returned to the watercourses has tripled since 1950. In many places around the world investment in sanitation is at a standstill. Even in those places where investment has taken place, it has lagged behind that of drinking water. The issue of sanitation is a vast challenge and without grim determination to succeed, is a problem that will never be solved. Aiming for 100% sanitation by 2025 is a "pipe" dream. By that time it is estimated that more than 5 billion people will have to be served by sanitation systems that are currently not there. Universal safe sanitation by 2025 requires 450,000 individuals every day to be provided with safe sanitation for the next 30 years. A truly massive task. Another water management problem is to do with water sharing. This manifests itself not only in terms of the allocation between the competing sectors of agriculture, industry, the environment and supplies to homes, but also of upstream and downstream sharing, where the "downstreamers" are the victims of the "upstreamers". In reality water that moves down a river basin has to be used for several purposes. The more water is cleaned up by users before it is returned into river systems the less is the environmental liability passed on to those downstream who abstract water for their use. The upstream-downstream issue becomes greater where rivers cross national boundaries. The Danube basin for example is the second largest river basin in Europe. It serves a catchment are of over 800,000 square kilometres in which about 75 million people live. The River Danube or its attributaries flows through some 17 countries. Industry has a need for water including those river systems crossing national boundaries. Industry has to find a way to be involved in processes which affect the future basis upon which water is shared. Possible Actions by Industry Industry does have an opportunity and the ability to participate in providing solutions to water management and reduce pollution at source. The lack of adequate water resources may be a limiting factor in the development of some countries. In turn this may limit the ability of some businesses to operate in such countries. The domestic and particularly the agricultural sectors are significant users of water resources. The answer cannot be for business to compete with these two sectors for that resource which is available. Business needs to align its strategies to solve problems and not make them worse. The following possible actions by business give some indication as to where business may be able to play its part in contributing to a sustainable future:- * Sustainable business practice * Exchange good ideas * Reduce water use * Increase conservation * Reduce pollution * R&D improvements for water efficient production * Create wealth (jobs, foreign earnings) to provide resource to improve water and sanitation infrastructures * Import best practice * Foster partnerships in communities The following two case studies provide some real experiences of some of these actions taken by business. In particular they demonstrate ways in which companies have reduced water consumption, reduced effluents, prevented pollution, improved water handling and actively played a part in the community being served. Case 1 Millar Western - A Zero-Effluent Pulp Mill - CANADA The most challenging environmental problem for pulp mills involves polluted effluent discharged into natural water systems. When Millar Western decided to build a new pulp mill at Meadow Lake, Saskatchewan in western Canada, the company faced an unusually difficult situation. The area was blessed with high quality aspen pulpwood, access to power, good transportation and a quality work force. But one piece of the puzzle needed to be found. The Beaver River, the only water source available, had an extremely low flow and in winter the entire river froze. The river was virtually a pristine water body which it was judged could not accept effluents from a pulp factory no matter how clean. So the company made a strategic decision to try to close the loop and go for zero effluent discharge. Water recycling is extensively practised in the pulp and paper industry. But the degree to which water systems can be closed is always limited by the build-up of contaminants in the system. The bleached chemi-thermomechanical pulp (BCTMP) used by Millar Western allowed organic extractives and inorganic salts to enter the wastewater at the rate of 200 kilograms per ton of pulp. In order to recycle wastewater, the residues must be removed. The company chose the evaporation process. Every drop of wastewater is collected and solids removed by sedimentation and floatation. The clarified liquid is then evaporated to produce clean distillate which can be recycled back into mill processes. The solid residue is then concentrated and burned in a recovery boiler. The inorganic fraction, 84% sodium carbonate, is solidified into ingots and stored at a secure land fill. The company is currently working with research organisations to find ways to convert the salt into caustic soda or peroxide which could then be recycled back into the mill. Millar Western and its consultant, NLK Consultants Inc, chose the evaporative process in 1992. Just 24 months later the plant came on line and within budget. Four months later the plant was producing high quality pulp at an average rate of 710 tons per day, in excess of design capacity of 680 tons per day. Now five years later, production and quality have never been affected by the zero effluent treatment system. Company officials say that reliability of their treatment system exceeds that of biological control systems and that operating costs are competitive with conventional treatment. The Company takes pride in never having to worry about upgrading their effluent control systems to meet new legislative requirements. As Peter Knorr, Executive Vice President and Chief Operating Officer, says "It's kind of hard to beat a zero effluent discharge rate!" Now NLK and Millar Western are exploring modifications to the process to permit its use in kraft pulping and other non-pulp industrial applications. Lessons Learned: i Dedicated management, supported by competent consultants and outstanding staff enabled one company to make a breakthrough and reduce effluents to zero. ii Such innovation may give the company a competitive advantage or even create new market opportunities. iii The low flow Beaver River remains pristine despite the siting of a major industrial facility. Case 2 Danfoss A/S - Managing an Underground Aquifer - DENMARK Danfoss, a manufacturer of hermetic compressors, pumps, valves, motors and other electrical control units has a major manufacturing facility located on a small island, Als, in the Baltic Sea. In 1983 the company was routinely withdrawing 2 million cubic metres of fresh water from the sole aquifer supplying the entire island which is home to 50,000 residents. This was well within the limit of 3 million cubic metres authorised by local officials. In 1983, Danfoss discovered a crack in a settling tank in its wastewater treatment system. The company was concerned that polluted water might permeate down into the fresh water supply. The company repaired the leak immediately but began an extensive investigation of the groundwater and the aquifer. The good news was that the leak had not polluted the aquifer; the bad news was that the level of the aquifer had dropped dangerously low. So low in fact that the danger of salt water intrusion had become a real possibility. Danfoss management recognised that they were the major fresh water user on the entire island and as such they had a responsibility to the 50,000 private citizens who used this common resource. The company initiated a series of water savings programs and completely revised their wastewater treatment system. All pipes were placed above ground so even the smallest leak could be detected immediately. In 1989 the local authorities reduced the permissible water extraction rate from Danfoss down to 2 million cubic metres. Danfoss, however, had already reduced their use rate to below 1 million cubic metres. Despite increasing production levels, Danfoss continued to find ways to reduce water consumption even further. By 1994, Danfoss had reduced its water consumption to 0.4 million cubic metres, a reduction of over 80% compared with 1983 levels. During this same period the level of the aquifer rose by 1.7 metres and the threat of salt water intrusion virtually disappeared. The substantial improved fresh water reserves indicates a consumption level that can be sustained indefinitely. Fresh water supply was assured both for the company, its 7,000 employees and their 50,000 neighbours on the island of Als. The actions taken by Danfoss to reduce fresh water consumption were: * The company's top management gave priority attention to the water situation - including supply, quality, consumption and reuse * Top management developed a sustainable water policy * Management sought to motivate and involve all employees in good household practices for water * Reviewed all technical installations and processes using fresh water * Modernised the control systems making it possible to save water and reduce effluents * Assured quality of recirculation cooling water to enhance co-operation between technical personnel using water and company environmental specialists Lessons Learned: i Companies can continue to expand production and remain profitable while reducing fresh water consumption. ii Reducing fresh water consumption involves basic housekeeping, management attention, technology innovation and commitment from all employees. iii This company reduced water consumption by 80%. There is one other issue that perhaps should be mentioned and that is in connection with food production. One of the more contentious and politically sensitive options for regions with major water stress is to import more food. Where water resources are limited it is suggested that it may be more profitable to invest in producing goods that can be exported to buy food rather than to try to grow food at home. Frequent opportunities exist where the economics of this philosophy might point this way but it is understandable that the natural political reluctance for countries who are well off is to increase their dependency on food imports. However attracting inward investment can produce wealth in terms of creating jobs and foreign earnings from exports and the wealth creation can be used to improve basic water and sanitation facilities at home. Possible Actions from Water Suppliers Many actions can be taken in the management of water suppliers and sanitation services that can contribute towards improving the overall availability or quality of water and sanitation services. These include: * Facilitating sharing arrangements * Institutional/regulatory advice * Promoting best management practice * Demand management * Leakage remediation * Awareness raising * Schools programmes * New investment/proven technologies * Tariffs and metering Water suppliers are able to act in two fundamental ways to increase the availability of water. These two ways are:- i) Action on the supply side of water management by creating more capacity. ii) Action on the demand side of water management in order to lower overall demands for water. The following case study demonstrates a number of the actions that can be taken to enhance water supplies. Case Study 3 - Trinidad and Tobago Severn Trent Plc, UK, was invited to help in the management of Trinidad and Tobago's Water and Sewerage Authority from April 1996. A three year interim operating agreement was initially established. The parties involved in the process include:- * The Islands' Water and Sewerage Authority * The Government of Trinidad and Tobago * Trinidad and Tobago Water Services (a JV Company between Severn Trent Water International and Tarmac Plc) * Funding arrangements by Citycorp Merchant Bank * World Bank funding The Water and Sewerage Authority is a statutory body under the Ministry of Public Utilities. It was recognised that the regulatory structure on the island could be strengthened. The charging structures were regulated by the Public Utilities Commission and quality by the Trinidad and Tobago Bureau of Standards (adopting WHO parameters). Historical funding shortfalls had led to a lack of motivation and incentive and World Bank investment was dependent upon a degree of private sector involvement and some initial achievements being realised. The interim operating agreement has achieved a number of objectives:- * TTWS (the JV Company) has provided a team of managers seconded to the authority plus some short term specialists. * The Company arranged a loan of 75 million US dollars with Citicorp to fund operating shortfalls and to improve the operations of the Authority. * Areas of the Islands had faced limited or very poor water supply services; a number of actions had been taken providing an immediate improvement to customers. * Leakage was high. Under the operating agreement the number of leaks repaired was increased more than 50%. * When the Company arrived, 20% of electrical and mechanical equipment was missing. Downtime was 59 days on average. Equipment has been purchased and new working practices introduced. Average downtime has been reduced to 3 days. * This has had a big impact on the continuity of supplies (although investment has still to be made to improve treatment plants). * Supplies to nearly a quarter of the population have been improved before any significant capital investment has been undertaken. * Supplies are now getting to areas that have not received them for maybe 20 years. * There is a general increase in continuity of supplies. * Around 60% of the population said they thought the water supply was "definitely getting better". In the longer term major investment projects are needed; there is an agreement in principle to a $60 million refurbishment programmes from the World Bank. The investment programme will include:- * The design and replacement of over 100 kilometres of pipes in the water distribution system. * Rehabilitation of 11 services reservoirs. * Drilling new water wells. * Installation of 60,000 water meters throughout the country. The Company's performance will be judged during the three year life of the agreement. Performance indicators include aspects of service improvements, income generation and a need to match income and expenditure within a three year period. Part of the contract has a performance related payment built in, where payments are only released when targets are achieved. Lessons Learned:- i) There is a need for a willingness on all parties to work together. ii) A regulatory/standards framework has to be in place or strengthened as part of the initial agreement. iii) Progress can be achieved at least initially without necessarily recourse to major capital investment. iv) There is always scope for improving current operational arrangements. v) The income issue is important; metering/tariffs have to be addressed. vi) Financing arrangements can be put in place, particularly where the funder has confidence in:- * The operator. * The framework conditions under which the operator will operate. * If the income issue is addressed. vii) Government's can produce contracts with performance criteria built in that are acceptable to an operator. Successful outcome can be achieved with each of the parties, the government, the company, the World Bank, the customers, gaining from the process thus creating a potential win-win-win-win-situation. The contract demonstrates many aspects of managing water supplies and sewerage facilities as well as linking together a whole range of parties and interested participants. Essentially it displays the range of possible actions identified at the beginning of this section of the report. Clearly success depends on a desire and will on all parties to achieve a programme of activity they are all committed to. It also demonstrates that a mixture of good operational experience together with sound investment can deliver real customer improvements. In the case of operational improvements, the customer improvements can be delivered very fast - well ahead of the normal timescale envisaged for major capital investment. Blockers to Progress The case studies that have been included in this paper do demonstrate many of the actions that are possible either by business or water suppliers working to improve business use of fresh water or basic services. The case studies demonstrate that actions are possible and delivery can be achieved. But there are a number of conditions that have to be satisfied in order for achievements to be made. These are:- * There needs to be a willingness on all parties involved to make progress and to share a common view of what objectives should be achieved. * There needs to exist a government framework capable of introducing, maintaining and enforcing a strong regulatory framework within which water resources are provided. * The quantity and quality of fresh water use and sanitation have to be regulated and not open to manipulation. * An appropriate legal system has to in place for a variety of issues including trans-boundary water rights, water abstraction rights and land access. * The charge/tariff/income issue must be addressed in order to attract investment. Investment will not take place unless this issue is addressed either through government (tax) or through direct customer payments (eg metering) or a mixture of both. This may include transferring responsibility from government to customers on a taper basis over a period of years. Water is the key issue - solutions have to be found. Footnote I am grateful to Millar Western of Canada, Danfoss in Denmark, Severn Trent Plc of the UK and WBCSD for helping make information available for use in the case studies. The way in which the report is pulled together and the words that are used are entirely my responsibility. Jim W Oatridge Director of Environmental and Corporate Controls Severn Trent Plc, UK Tel: +44 121 722 4903 Fax: +44 121 722 4892 e:mail: email@example.com
This document has been posted online by the United Nations Department of Economic and Social Affairs (DESA). Reproduction and dissemination of the document - in electronic and/or printed format - is encouraged, provided acknowledgement is made of the role of the United Nations in making it available.
Date last posted: 8 December 1999 15:15:30