Water is the new oil
GENEVA: Water is the new oil. That's a refrain that many global CEOs and thinkers have reiterated at times, but the water bubble, like the credit bubble, is still to burst. Like toxic subprime assets, half the world isn't even aware the world may be facing a water problem. And if ground water depletion is one of those discussions that sends you yawning out for a coffee, consider this. Dominic Waughray, senior director at the Forum in charge of Environmental Initiatives warns that even as oil and energy have become critical financial resources, water will be next on the agenda. There's a market for water out there, and people are beginning to realise it.
"We never thought we'd have to manage water. But if you consider that a lot of financial institutions are looking for long term investment opportunities, financing water resources may well become the next big thing. We need to make sure that the politics of water does not lead to a conflict agenda, but a development agenda," he says. The world has already seen signs of a food crisis. An energy crisis. And next
could be a water crisis, warn experts. The current economic situation provides a financing opportunity for investments in water and wastewater infrastructure, and water rights. Like the landgrabs of the last few centuries, water is up for grabs now, and there are enough savvy investors out there with the financial and political muscle to grab the market for water.
"Like asset bubbles, there is a water bubble, as the world has been using water unsustainably – policy changes in energy, climate, andfood have very large impacts on water security," finds a group of global water experts, who met in Dubai earlier this month as part of the WEF's summit on the global agenda council.
And India is particularly vulnerable if ever we have to end up with a commercial water market, with water derivatives, water producing cartels, and water credits. According to a Columbia University study, by 2025, water scarcity could become a "binding constraint on India's progress." India supports 1/6th of the world's population, 1/25th of the world's water resources and 1/50th of the world's land.
The Columbia study finds that by 2025, more than a quarter of India's harvest could be at risk from groundwater depletion, and availability of cultivable land per capita will fall by 50%a as many groundwater tables are expected to deplete to an extend beyond recovery. According to a UN FAO study, by 2025, the per capital water supply is likely to be less than half the supply in 1975.
Dominic Waughray, says, "It is clear that there is a growing awareness of the water problem in India. Like an analogue to the sub prime financial crisis which burst in the US, people feel that India has over leveraged its groundwater for many years to help sustain economic growth. The hydro-debt is now so large in many areas that this bubble is coming dangerously close to bursting. We hope to raise awareness of this risk to India's economy and to convene stakeholders across all sections of society in discussions on how to undertake equitable and effective water reform strategies to avoid the worst happening."
The worst would be running low on water, and then facing an international market where water may be as tightly controlled and expensive as capital is today, or oil has been for a while. The good news, is that there's still time to do something about it, and ensure that all stakeholders get a chance to solve the problem. The challenge
will be to ensure food security under limited land and water availability conditions.