The Water Business

I am utterly convinced that one of the more interesting growth areas for employment of water professionals is in corporate risk management. Almost every manufacturing and agricultural process requires water, and any firm in the business of making or selling things will find water inputs at some stage of their supply chain. Since most power stations are massive water users, any business that uses power also has a water risk profile. Water risks are both quantitative and qualitative, temporal and spatial.

In a recently published report the Pacific Institute listed a number of approaches corporates should take to water risk management.

• Measure the company’s water footprint (i.e., water use and wastewater discharge) throughout its entire value chain, including suppliers and product use.
• Assess physical, regulatory and reputational risks associated with its water footprint, and seek to align the evaluation with the company’s energy and climate risk assessments.
• Engage key stakeholders (e.g., local communities, non-governmental organizations, government bodies, suppliers, and employees) as a part of water risk assessment, long-term planning and implementation activities.
• Integrate water issues into strategic business planning and governance structures.
• Disclose and communicate water performance and associated risks.

If I had any kind of manufacturing in China in my supply chain, I would be looking very carefully at my water risk, given the impending water crisis there.

In my view, the biggest winner from climate change and water scarcity will be the pipe industry.

It is no secret that there is a global crises in agricultural water supplies which could threaten world food supplies in the not so distant future. The good news is that agricultural water use is so inefficient that the shortfall should be easily made up with efficiency gains. The main way to improve irrigation efficiency? Replace open channels with pipelines to reduce evaporation.

Pipelines are also a way to manage climate uncertainty for urban populations. We have seen already in Australia that the impacts of climate change are highly localised, a town dam in one area may have unprecedented low levels of inflow, while 100 kilometres away rainfall has increased in the catchment of the neighboring town. Pipelines linking dams throughout a region is one way to guarantee urban water supply.

Meanwhile in China, the same principle is operating on a much larger scale, with the South-North Diversion Project connecting all of China’s major rivers to supply the water-short North.

Of course, where you find pipes, you also find pumps. Norit Nijhuis is supplying the pumps for the Eastern section of China’s  pipeline.

Keep an eye out for growth in the pipes and pumps sector!

Well, Melbourne desal has been awarded to the Thiess-Degremont-Mac Bank consortium. Compared to Veolia-John Holland-ABN, the winning team is coming off a relatively low base of work. Veolia and John Holland are now in an unenviable sitution of coming off a massive 08/09 and facing a very quiet 09/10.

This was the outcome that would cause maximum impact on the labour market; let the adjustment begin.