Four Critical Trends in the Future of Water

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A broad-ranging review and assessment of the world water situation reveals four key and underlying themes which seem to appear repeatedly – and which are likely to influence and drive many of the more specific trends and developments that we’re likely to see in the water industry in the future. 

First, it seems likely that water will increasingly become more recognized as a key “factor of production” in industry – as well as a key criterion in the development of public policy and both economic and personal decision-making.  Economists have traditionally pointed to labor, capital and energy as primary criteria or factors of production in economic decision-making.  We will see the availability of water begin to be regarded as a more critical criterion – and it will become increasingly challenging to balance the appropriate and efficient use of water, with our efficient use of energy, labor and capital.

Second, in the future we’ll see much more emphasis given to the concept of our “water footprint,” or the total contained water impact of all the products and service which we buy and use, and everything we do.  Direct consumption of water is fairly easy to measure and manage, but our indirect total consumption of “contained” water is a much more critical consideration.  The total amount of water required over a full life-cycle to produce a given product or service is referred to as virtual water content.  Only by understanding the full water impact of what we do – the total amount of water that goes into a product, or that we utilize in a given behavior – can we move towards wiser consumption decisions and more efficiently allocate scarce water resources.

Third, although most of us still tend to talk about different kinds of water – drinking water, wastewater, rainwater, storm water, source water, groundwater, seawater, and so on – in reality, all these different “types” will increasingly be viewed as, simply, water.  We must realize that, from a planetary perspective, there is really just “one water.”  We’ll see more recognition of this in the future, and a gradual breaking down of the silos and the policy and legal boundaries between, for example, drinking water and wastewater.  Before we can solve our myriad water challenges, we need to begin to think more holistically about water.

Finally, perhaps the most critical and recurring theme which manifests itself in any review of the world water situation is the importance of moving towards the full-cost pricing of water.  In many regions of the world, water prices bear little relationship to the true costs of delivering that water – and even less relationship to the real value of that water.  We are all going to be paying much more for water in the future, and this will in turn dramatically change our priorities and our behavior in the future.  If we continue to assume that water is free, or almost free, we will tend to waste it, and not pay much attention to how we use or conserve it.  Once water prices rise high enough to impact our wallets, our attitudes and behavior will start to change, and we will be forced to become better stewards of this scarce resource.  Higher water prices are coming towards us in the near future, regardless of whether we live in a free market or a centrally planned economy.

About Steve Maxwell
Steve Maxwell is Managing Director of TechKNOWLEDGEy Strategic Group, a Boulder, Colorado-based management consultancy specializing in merger and acquisition advisory services, and strategic planning for the water industry.   Mr. Maxwell is the author of a new book entitled The Future of Water.  He has advised dozens of water firms on strategy and transactional issues, and can be reached in Boulder at (303) 442-4800 or via e-mail at maxwell@tech-strategy.com