The Business and Economics of Water
Water is part of our every day lives. It is embedded in everything we do. And yet – more than 1.1 billion people in the world lack access to clean water – that’s one in every six people. Every 20 seconds, a child dies from water-borne illnesses. And, only a little more than half of the population in Sub-Saharan Africa has access to safe drinking water. Canada has the third-largest water supply and is one of the highest water users per capita in the world. But water pollution is a persisting problem here, and while it may seem like we have an endless supply, accessible and clean water is limited.
These statistics are alarming. Or, as described by GOOD in this incredible infographic on access to clean water, they are downright embarrassing.
Toronto for Acumen’s recent event, “Drop-by-Drop: How Market-Based Solutions are Increasing Access to Clean Water”, challenged people to learn more about market solutions being explored by local and international organizations. Karen Kun, Co-Founder of Waterlution, moderated a fantastic panel discussion with Nicholas Parker – Chairman of Cleantech Group, and Peter Macintosh – Global Director for Water Business Development at Hatch Associates. They sparked an interesting discussion on how access to water and sanitation is intrinsically linked to the market.
Supply and demand curves meet to determine price – in which case, how do we charge for water? There are practical and ethical deliberations to consider. As one person in the audience pointed out – should we charge for water? Creating access to water requires pipes – how do we charge for pipes in a way that is affordable? How can waste-water treatment plants pay for themselves? If water is embedded in goods and services that we rely on, how can we manufacture and deliver products and services in ways that reduce our energy and water footprint? In the absence of adequate government provision of water and sanitation, what role can the private sector play? As businesses start to understand the economic value of water, their relationship with it begins to change as they create a market – as in the case of GE, Pepsi and IBM. But if customers don’t understand the cost of their water, will they be willing to pay a price for it? And if not, how can this market grow?
The fact of the matter is, the market is growing, albeit slowly. A number of organizations around the world are exploring demand-driven models to answer these questions, recognizing the inherent economic value of water, and that market-solutions can only be effective through cross-sector collaboration. For example, Acumen Fund’s water portfolio makes investments in local enterprises in developing countries – such as WaterHealth International and Pharmagen HealthCare Limited – that spur innovations in water access and quality. Engineers Without Borders harnesses the creativity of engineers, entrepreneurs and technicians to explore how we can use technology and design-based approaches to configure effective solutions. The Canada Water Summit , which was held on June 14th, brought together a range of public and private stakeholders to design solutions based on business innovation, technology development and municipal treatment and distribution. And public-private partnerships such as ACCESS Development Services and Hindustan Unilever Limited are exploring microfinancing of household solutions.
These are just to name a few. If we want to change the embarrassing statistics on water and sanitation, we need to give more serious thought to not just the issue, but also to sustainable solutions.
We were left with three big takeaways:
- While statistics can inspire us to take the issue seriously, we often lack the knowledge of how to change them. We need to delve deeper into the dialogue , engage in conversations with diverse stakeholders and understand the issue through holistic lens. Use of water, and therefore access, extends well beyond a pump, well or tap. It is part of production cycles, industrial ecology and agriculture, and is linked to livelihoods and the health and well-being of individuals.
- We need to challenge the solutions, understand the economics and ask the difficult questions. Are the solutions effective, affordable and accessible to those it is meant to benefit? How can we do better? Social media is an excellent platform to share knowledge and drive change, and organizations such as Acumen Fund and Waterlution are providing rich conversations on the topic.
- Continue looking for opportunities. While many of market-based solutions can be leading edge, it is hard to get capital for early stage ideas. We need to listen to the market, and understand the solutions it has to offer.
Note: A version of this post was originally publised on Toronto4Acumen. Pictures of the event can be found here.
