Paper: Global Water Shortage in 2030 = Excellent Business Opportunities

Several days ago, a link came around on Twitter directing me to a Flickr site where the graphic shown below appeared. There was neither an explanation nor a citation. My curiosity had been piqued.

Fortunately, what with the Internet, I found the source right away. I was led to TIMnovate, the blog of Professor Shlomo Maital, the academic director of Israel's Technion Institute of Management (TIM). Maital had posted about the report whence this graphic was derived: a recent paper  from McKinsey Quarterly titled,"The business opportunity in water conservation", by Giulio Boccaletti, Merle Grobbel, and Martin R. Stuchtey.

Download Mckinsey-the-business-of-water-dec-09

 
As you can see from the graphic, the authors forecast quite a shortfall in supply by 2030 due to increasing demand. The figures are in billion cubic meters, or cubic kilometers.  

The paper is not a rigorous hydrlogic analysis of the global water balance in 2030, although the authors do account for groundwater.  What the authors are trying to illustrate is that there will be a lot of money to be made by increasing efficiency, developing technology, improving infrastructure etc., so that the gap between supply and demand can be decreased.

Maital published this summary of the paper on his blog:

    1.  Global annual demand for water, based on estimates from 154 water basins or regions,  for the year 2005   is 4,208 billion cubic meters.  Of that, 512 b. m³  is for home use, 693  b. m³  for industry, and by far the largest proportion, 3,003 b. m³ , is for agriculture.  In other words,  71 per cent of water use goes for producing food.

    2.  Assuming 2 per cent compound annual growth (a conservative assumption),  water demand will grow to 6,906 b. m³   by 2030 assuming no improvement in technology or water efficiency, or a rise of 65 per cent between 2005 and 2030.   The fastest growth will be in water demand by industry, but  agriculture (where demand will rise by 50 %, to support hungry growing populations) will still capture two-thirds of water demand.

    3.  Without a technological breakthrough, the world’s water supply will remain essentially constant in 2005-2030, at 4,222 b. m³ . This will be the world’s existing reliable water supply in 2030. The shortfall in the year 2030 will be huge:  almost 2,700 b.  m³.  

   4.   If we project improvements in technology and infrastructure, up to 2030, world water supply will be 4,866 b. m³ . This still leaves an enormous shortfall, or excess demand, in the year 2030 of some 40 per cent of 2030  water supply, or 2,040  b. m³.

  5.  Conclusion: Either the price of water will rise dramatically, all over the world, to ‘ration’ the short supply,  or major technological advances arising out of massive R&D projects will reduce demand and increase supply.  Of course, both will occur. Higher water prices will make large R&D investments in water technology profitable.  

The world water shortage, like the world supply of oil and gas, will be inherently and massively unfair. Some countries like Canada will greatly benefit, if they have large supplies of fresh water relative to their population.  Some countries which lack water (India) and where agriculture is important, will greatly suffer. 

Every country should calculate its own water balance in 2030 and build a strategic plan now.  And innovators should begin to work on the key question:  How can the world save water?

Companies are already looking ahead and hard at work turning water into money; IBM is a great example and Big Blue is not the only one.

Good reading about what awaits us.

"Trouble is only opportunity in work clothes." -- Henry J. Kaiser

Comments

[PFS Water]

It's crucial to keep in mind that the specific challenges and responses to the water crisis in 2030 would depend on regional and local circumstances, making it necessary for stakeholders to tailor their approaches accordingly.

[Praveen Tiwari]

The day is not that far when big and rich organizations will play like GOD and make huge amounts of money in the name of the water crisis.

[PAUL F MILLER]

Respectfully I recognize the dangers and pitfalls one encounters when painting with a BROAD BRUSH.

Though I do not claim expertize in water equity or water efficiency ... to date all those CORPORATE formed markets have proven to be highly lucrative but hardly models of honorable equity or efficiency ... perhaps the author might provide us with names and locates where this equity and efficiency is clearly visible.

Respectfully,

[David Zetland]

McKinsey is just trolling for business...

@Paul -- don't demonize markets. They are often better than bureaucrats (and politicians!) at delivering equity and efficiency...

[PAUL F MILLER]

Paper: Global Water Shortage in 2030 = Excellent Business Opportunities ... perhaps I misread the intent of this writing and it is meant to be a form of parody and if so I stand corrected before I begin.

It strikes me that as long as “we” (that’s you and me) choose to see WATER as a commodity for sale to the highest bidder the author is correct and there are now and will continue to be excellent bu$$ine$$ opportunities for a select few in the coming years.

How the vast majority will fare under such an elitist arrangement is a matter of appreciable speculation, however, I doubt the “defined” average American will be living as luxuriously as he is today. And doubtless as a result of this increase privatization of WATER the divisions and polarization between people based on any number factors, colors, creed, language, education, locale will be heightened by WATER owners to further enlist fear “they” are out to get you water.

Promoting increased privatization of WATER is, in my estimation, a dangerous path to encourage and a slippery slope to follow.