I wonder how many of our business leaders will be discussing water today (March 22), which the UN has designated as World Water Day. Probably not as many as should be. Because water is a business issue.

The world is getting thirstier and so is India. Many causes of increased demand are common at both the global and national level; increasing population, rapid industrialisation, higher standards of living to name a few. The only thing not increasing commensurately is the amount of water available.

The UN Water Conference held in January this year delved into the water-energy nexus and portended that world water demand could exceed 44 per cent of the available annual resources by 2050. So how do these global trends look through the prism of the Indian experience?

At the national level the challenges are acknowledged. Writing about the Twelfth Plan’s water strategy, Planning Commission member Mihir Shah commented, “India faces a major crisis of water ... The demands of a rapidly industrialising economy and urbanising society come at a time when the potential for augmenting supply is limited, water tables are falling and water quality issues have increasingly come to the fore.”

On the table One consequence, here and elsewhere, is that water is moving up the boardroom agenda. The CDP Global Water Report 2014, authored by Deloitte, presents results of analysis based on the water disclosures of 184 Global 500 corporations. Participants included four major Indian companies. Almost three-quarters of respondents identified water as a substantive business risk. Challenges included business interruption due to inadequate public infrastructure, supply chain disruption due to water scarcity, and reputational damage.

Water risk was seen as immediate. Two-thirds of the risks expected to impact direct operations and supply chains were anticipated to occur within the next five years. To give this local perspective, it is estimated that India has seen a 60 per cent decline in per capita availability of water in the last 50 years; while Ernst & Young predicts industry’s demand for water will grow from 40.86 billion cubic metres (Bm3) in 2010 to 91.63Bm3 in 2030.

The interdependent relationship between water and energy means that any business that requires power — meaning virtually every business —faces a potential water-related risk. Energy generation is water-intensive and water services are energy-intensive. Reduce the availability of one and you risk the supply of the other. It is estimated that the coal and power sectors consume as much as one-fifth of India’s water.

Most of the energy consumed by water utilities is used for treating wastewater and transferring clean and wastewater. One study we undertook showed that, on an average, water services account for 1 to 3 per cent of national energy consumption in Europe and 3 to 4 per cent in the US.

Highly competitive Competition between power and other water users is growing. Greenpeace India, for example, has sought a review of the way the Maharashtra government allocates water to power plants in drought affected parts of the State.

What can businesses do to mitigate water risk? At one level there is technology. Water treatment technologies mean virtually any industry with a liquid waste stream has the potential to treat and reuse water. Recycled water can be produced cost effectively, and to rigorous quality standards. Industrial players, including power producers, can consider closed loop applications, where systems retain and reuse water or steam.

The other level is strategic. Successful businesses will be those with a comprehensive knowledge of water use across their value chain, and who are cognizant of the impact water-related issues have on their operations. Importantly, they will have appropriate mitigation plans which, as the CDP report notes, “give adequate consideration to priorities of the local water basin in which they operate”.

The first step along this journey is recognising water’s value. This process needs to begin now. Otherwise, to paraphrase the 18th century polymath Benjamin Franklin: Only when the well is dry will we know the worth of water.

(The writer is the managing director of Black & Veatch, India)

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