Not a Drop to Drink

Amid the crush of post-election news about the pending economic stimulus package, it’s incredible that the media has missed covering a recent presidential keynote. Fortunately, we were there and took notes. An excerpt: “Water is the essence of life. It is the very origin of our species; it is the substance of our make-up; it is the heart of our existence. If we are to win the global battle between freedom and tyranny, we must solve this most fundamental of issues—water.”Alright, we apologize. We weren’t there. In fact, President Obama has not delivered this speech, nor made any sweeping statements about water.Not yet, we should add.Sometime in the not-too-distant future, water will be part of the national consciousness the way oil is today. And, as is the case with oil today, water’s validity to the international dialogue goes beyond the auspices of the environmental; its responsible stewardship is at the core of global business.The chances are, most people’s awareness of water (beyond using it to drink and wash the car) consists of only factoids. It covers over three-quarters of the earth’s surface; only 1% of it is fresh water available to humans, etc. If the populous were better informed, however, there’d be considerable concern—as there should be. The cold, hard reality is that we are using up water at a rate faster than it can be replenished, and there isn’t enough water in the places we need it.Right now, we must look for ways to materially increase the availability of fresh water in both developed and developing nations. This can only be achieved through ingenuity and concerted effort, attributes that are, fortunately, embedded in the American psyche. In order to develop water resources, there needs to be economic incentive to get it done. This will take the combined effort and cooperation of scientific, political, business and consumer constituencies.Geopolitical common sense has, however, given us the incentive already.Why should we worry about a water shortage in another country thousands of miles from our borders? Because the parts of the world without it—and many more about to be without it—are the same ones whose political and economic stability are intertwined with our own, places such as India, Africa and, of course, the Middle East.Meanwhile, water availability is quickly becoming part of the economic pulse check that business applies to our own cities. In the near future, urban centers with ready access to water like Detroit, Chicago and Cleveland may well be considered more attractive to business for the fact. Likewise, cities that have been growth engines in the past 30 years—Atlanta, Dallas, Los Angeles and Phoenix—will be hamstrung because constrained water resources inhibit growth. Even now, we’re witnessing the restriction of housing growth in the west as developers come into conflict with food growers who supply CPG producers; there’s simply not enough water for everyone.To develop economically sound water infrastructure requires processes and standards that don’t exist today. Developing standards requires focus, and that focus must come from the government as well as the private sector.Critical as these standards are, we cannot afford to wait for them. If long-term water development is the right issue, conservation is the right-now issue, and it’s one that CPG companies must face in the next five years. Most every product uses water in some way in the manufacturing process, if not in the product itself. Simply put, water conservation is the ultimate green subject.We’ve already seen the assembly of organizations like the Global Environmental Management Initiative and International Private Water Assn. that are working on the conservation issue. But these groups fight a difficult battle for share of mind. Water needs to progress from being one of many issues to the issue. In this month’s issue of the Economist, Nestle chairman Peter Brabeck-Letmathe argues that the water shortage is even more urgent than climate change. I find his views to be highly encouraging—but we need more corporate voices like his.Finally, aside from long-term policy and short-term conservation, there’s a third aspect of this issue that will affect us in the near future. This is the emerging “business” of water. Given the state of the economy, as companies look to diversify their holdings, water is becoming a logical investment.And a difficult one. Whether it’s a CPG company looking to invest money in some sort of dedicated water resource or even a water fund for a 401K program, investing in water is a complicated prospect. At least in the U.S. market, water rights and the movement of water from one place to another is politically charged and culturally messy. It also crosses—literally—local, state and federal jurisdictions. Finding an opportunity is not enough. To make money in the development of water requires a long- term view and plenty of patience.From the lofty aspirations of finding ways to create and develop supplies of water, to the need to conserve it now, to discovering ways to invest and make money in it, water is a subject that’s important, exciting and daunting. But at the very least, the awareness of all aspects of water needs to be raised in the psyche of consumer packaged goods companies as they deal with every aspect of their business. It is essential. It is good policy. And those companies that are not working on this issue today will see a real threat to their business in the future. Don’t wait for the president to say something about the issue; take our word for it.Ken Harris is a managing director at Cannondale Associates, a sales and marketing management consulting and software solutions firm with offices in Wilton, Conn., and Evanston, Ill. Cannondale is part of Kantar and WPP. Contact Harris by visiting www.cannondaleassoc.com. David Ladensohn is a principal with Strategic Water Group. He can be reached at www.stratwater.com.

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Not a Drop to Drink

Ken Harris

David Ladensohn

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Ken Harris

David Ladensohn