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Financial Times: The politics: A matter of supply rather than shortage

EXTRACT: Shell’s global solutions division has developed a water purification technology based on a membrane filter system, in collaboration with Auxill, a specialist Dutch company. This is designed to offer safe, continuous and affordable drinking water to small, remote communities often left out of large-scale water projects.


By Alison Maitland
Published: March 21 2007 02:17 | Last updated: March 21 2007 02:17

In a world where more than 1bn people live without safe drinking water and more than 2bn lack basic sanitation, business is often seen as part of the problem rather than part of the solution.

From the chemical disaster that polluted drinking supplies to the Chinese city of Harbin in 2005 to the water-guzzling flower farms blamed for depleting Kenya’s Lake Naivasha and the dams that threaten to flood a swathe of Chile’s Patagonian wilderness, the intertwining of commerce and rapid development is frequently associated with a high human and environmental cost.

The water privatisations in the developing world in the 1990s were a case in point, often generating a backlash against the companies involved. Faced with significant political and economic risks, multinationals such as Suez, Thames Water and Veolia have pulled back from big investments in Asia, Africa and Latin America in recent years, as the UN notes in its 2nd World Water Development Report.

With global warming likely to bring even more severe water shortages, will business be able to shake off these negative connotations and play a constructive role in finding solutions to the water crises ahead?

That will partly depend on the nature of these crises. For years, there have been predictions that increasing scarcity will lead to “water wars”. In 1995, Ismail Serageldin, World Bank vice-president, said: “The wars of the next century will be about water”. Last year, John Reid, the UK’s defence secretary, underlined the risk of violent conflict between nations resulting from the impact of climate change on scarce water and agricultural land.

Some experts, however, suggest worries about trans-border conflicts are overdone. Research shows that most conflicts over water have happened within countries, not between them, says the World Business Council for Sustainable Development in Business in the world of water, a set of global scenarios for the next 20 years. In the past half century, the research indicates that only 37 disputes involved violence, and 30 of those were between Israel and one of its neighbours.

Conflicts are more likely to be small-scale, affecting groups with competing interests, says Stephen Turner, policy director at WaterAid, the UK charity. An example would be a tannery that is polluting a watercourse. Domestic users suffer, but they come up against local farmers, who have clout through their agricultural association and support the tannery because it buys their cattle. Local villagers are also divided, since some work for the tannery.

“The issue becomes one of equity,” says Mr Turner. “How do the less organised groups of people get a reasonable stake at the decision-making table?”

Governments have the key role in ensuring that water and sanitation receive priority. One way to do this is for them to recognise the human right to water, pushing it up the political agenda, says Mr Turner. “It’s a progressive right that countries should be working towards as their resources allow. Though it is grouped as an economic and social right, and not a political right, it shouldn’t mean that governments treat it as less important.”

Only a few countries have made a formal legal commitment to acknowledge a right to water, and even fewer have matched that with actual implementation, one of these being South Africa, according to the UN report.

But recognising it as a right still leaves many questions unanswered, as the report points out. How can it be implemented if there are no water resources? Who pays? Should the responsibility be borne by governments alone, or shared by individuals, communities and the private sector?

While these issues are debated, global warming and the Millennium Development Goals – which include halving the proportion of people without water and sanitation by 2015 – have encouraged the private sector to seek new solutions, says Robert Davies, chief executive of the International Business Leaders Forum.

Until recently, water was seen as a pollution issue or a concern of water companies alone, he says. Now companies in a wide range of sectors – from food and drink to oil and gas and heavy manufacturing industry – are realising they must become involved in water resource management. “There’s been an overwhelming increase in recognition that water is a critical issue,” he says.

The first, most obvious, way that business can contribute is by using and recycling water more efficiently in its own production processes and supply chain, and encouraging its customers to do likewise.

Such measures can be boosted by the development of innovative technology. Unilever, for example, has sought to address water scarcity in India with a reformulated version of Surf Excel, designed to save two buckets of water per wash.

Shell’s global solutions division has developed a water purification technology based on a membrane filter system, in collaboration with Auxill, a specialist Dutch company. This is designed to offer safe, continuous and affordable drinking water to small, remote communities often left out of large-scale water projects.

Sometimes commercial models prove less immediately effective than the not-for-profit route, as Procter & Gamble found with PUR, its powdered water purifier.

“We provided 3m sachets over three years with a purely commercial approach and over the last three years have provided 60m sachets, enough to treat 600m litres of safe drinking water, using a not-for-profit approach,” says Greg Allgood, director of the Children’s Safe Drinking Water programme at P&G. “Our obstacles in the commercial approach were the lack of infrastructure to reach those who needed the product the most, and a need for positive return on a short time-scale that did not allow for time to nurture sustained, credible communication to lead to significant habit change.”

The UN points out that water insufficiency is primarily caused by inefficient supply – resulting from mismanagement, corruption, lack of institutions, bureaucratic inertia or low investment – rather than actual shortages.

Multinational companies can play an important part in pressing governments to adopt better water management systems and to consider alternative solutions, such as rainwater harvesting, says Mr Davies of the IBLF. “A lot of the water projects that governments support tend to be the big schemes, with large public contractors. These are much more controversial and much more open to corruption.”

Big companies can help bring greater efficiency to public provision, not only as contractors, but also by contributing their expertise to local solutions. Urban water schemes often do not extend to the poorest and most needy, living in shantytowns on the edges of cities. Grass-roots entrepreneurs often find solutions, such as the operator who runs a small truck that can navigate the narrow lanes of Dhaka’s shantytowns to muck out the pit latrines that would otherwise remain inaccessible to the municipal suction trucks. Some multinationals are now working in partnerships, such as Water & Sanitation for the Urban Poor, with the public sector and NGOs, to nurture this kind of local service provision.

Copyright The Financial Times Limited 2007 and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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