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The Bottom Line: Companies Begin Reporting Their Water Use?

As the economy begins to rebound, businesses are again focused on commodities that may be in short supply when manufacturing shifts back into high gear. Oil, refined fuels, steel, and electricity are among many things that may be harder to get or just harder to afford. But what about the one commodity that is needed by almost every part of the supply chain, including the workforce — water?

Sink with faucet running
Sink with faucet running

According to the World Health Organization, more than one billion people live without a reliable water supply and at least another billion drink from unsanitary water resources that result in catastrophic illnesses and deaths. China and India tripled their industrial water use in the last decade, literally draining lakes, underground aquifers, and vast river systems, while states like California and Georgia have stopped urban growth projects because developers can’t find enough water to supply new communities. Entergy was recently denied a permit for its New York nuclear power plant because it uses too much water for cooling the massive reactors.

Against this backdrop, the non-profit Carbon Disclosure Project is calling on companies to measure and publicly report their “water footprint.” Already 137 financial institutions, representing over $16 trillion worth of assets, have joined this march towards water use transparency, including the Allianz Group , HSBC and ING . Of course water and carbon are inextricably linked, because we use dramatically increasing amounts of fossil-fueled energy to obtain H2O, either by pumping from greater depths/distances or by “manufacturing” water with desalination plants, which increases carbon footprints at a time when countries and companies are scrambling to lower them.

Presumably, if the world knows how and where water is being consumed, perhaps we can find ways to conserve it and distribute it more equitably. We already know that agriculture and electricity generation account for about 90 percent of reported water use globally, but a recent study of over 400 industries revealed that 60 percent of the water used for things like packaging and shipping comes from sources that are not measured and reported. In other words, as fast as we’re depleting known reserves, we’re probably depleting groundwater and other “hidden” assets even faster.

But the news is not all bad. Twenty years ago, Los Angeles County responded to droughts with simple measures, such as requiring that when homes and commercial buildings are sold, they must install water-saving showers, toilets, and other plumbing. The result? Despite a 15 percent increase in the population, water use has remained unchanged. The message? There are great investment opportunities in the smarter use of water.

For example, 40 percent of water used in most US homes is still flushed down the drain — some 55 billion gallons of potable water — but about 80 percent of that could be saved with European-style dual flush toilets (you know, the ones with two buttons that allow you to use a few ounces per flush for the times when that’s all you need). A privately held San Francisco based company — Brondell — has introduced a kit that retrofits on most toilets to add this feature, saving the cost of replacing the entire fixture. Another innovative company, Watersaver Technologies of Louisville, Ky., has introduced a kit that captures shower water to flush the toilet, saving even more of precious clean drinking water. US plumbing giant Sloan Valve Company now distributes these systems and green building designers around the country are asking city councils to allow this obvious use of “gray water” that would otherwise wash into the sewer contaminated with nothing more than your favorite shampoo.

The point is that we need to get serious about water resources and of course saving it in American bathrooms won’t solve this global challenge by itself. But whether you are prospecting for good investments in water or carbon, it might pay to look first at the “bottom” line.

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Terry Tamminen, former Secretary of the California Environmental Protection Agency, is a partner at Pegasus Sustainable Century Merchant Bank and the Cullman Senior Fellow at the New America Foundation. (Cracking The Carbon Code is a registered trademark of Terry Tamminen).