Water Scarcity Forces Business Leaders to Legislate
John Briscoe l McKinsey Quarterly l February 2010
Increasing water scarcity worldwide is quickly becoming one of the major challenges of the 21st century, which policymakers and business leaders will have to tackle together. Policymakers need to realize that certain technologies developed by leading businesses can decisively contribute to preserving scarce water supplies. Environmentally-friendly technologies need to be helped along by effective environmental policies. Technology and politics need to complement one another. For far too long ineffective environmental policies have slowed down or even hindered the introduction of new, innovative green technologies. The public sector and non-governmental organizations have long led the debate on water management. But within the past five years, private-sector firms have begun to make their voice heard in the discussion on water management.
Beverage manufacturers and mining and utility firms regard increasing water scarcity as a threat to their business models. In order to avoid criticism, many of these companies support activists and environmentalists and adhere to self-imposed restrictions on their use of water. Other firms emphasize the need to improve the ratio of water consumption to final product in order to manufacture more final product per drop. This approach is a particularly promising one in agriculture since farming accounts for more than 80% of water use in developing countries. Another strategy to cut water usage consists of the development of new genetically-engineered grains that require less water to grow. A number of firms promote recycling waste water and desalinization projects for the same purpose, but these companies are not merely interested in cutting their own water use. They also wish to participate in the formulation of new water laws. Indeed, sustainable and environmentally-friendly business practices should find proper consideration in legislative proposals. Measures that include providing timely information to consumers, in order to allow them to use water resources more efficiently, will prove particularly helpful in this context. Business leaders realize that water management is heavily dependent on an efficient linkage between technological innovation and environmental policy. In many cases, environmental laws that are too narrowly framed actually hindered implementation of existing, efficient technologies. In order to achieve progress in this area, more firms should try to exert influence on legislative processes, such as the passage of environmental laws. They need to be more active in trying to find solutions to the problems posed by water scarcity. Policymakers on the other hand need to realize how crucial private-sector firms have become to the struggle in preserve water resources.
This summary was prepared by the Atlantic Community Editorial Team from "Next-generation Water Policy for Businesses and Government" published here by McKinsey Quarterly.