Is the World Approaching 'Peak Water'?

At the Clean-Tech Investor Summit in Indian Wells, Calif., this week, Peter Gleick, co-founder and president of the Pacific Institute and one of Wired magazine’s 15 people President Obama should listen to, compared the global water situation to that of oil and said that a time of “peak water” might be coming. It’s not that the world will actually run out of water. After all, water is mostly a renewable resource. “[B]ut we may run out of the ecological value that the water provides,” Gleick said in a keynote speech Wednesday.

Water already has reached or exceeded peak ecological limits in many places around the world, he said, noting that 200 million people die of water-related diseases every year. And that is a risk, not only to people and to the environment, but also to industry. The risks to companies are “both real and growing,” he said, adding that very few companies don’t depend on water for something. Companies that use water to make everything from clothing or semiconductors face growing competition, especially from agriculture, which uses 80 percent of the water used by humans, he said.

That’s leading to higher costs and limits on water use in some markets, such as water-constrained Beijing, which stopped permitting new water-intensive businesses to set up around the city, he said. “If water is dirty, you need to pay to treat it up front, not to mention [cleaning it again] afterward to meet standards,” he said. “In the past, water has typically been thought of as a low-cost input to production – and it’s still low-cost in some areas – but that’s changing.”

These challenges translate into opportunity for water companies, and the water market’s huge size – an estimated $400 billion to $500 billion per year, Gleick said – adds to the attraction. But while opportunities and solutions exist, sometimes they’re hard to find, Gleick said.

For one thing, the water industry is very complicated, with many moving pieces. “People who understand water technology often don’t understand economics, and a corollary is people who understand economics don’t always understand water economics,” he said. “Water is a weird thing.”

For example, water may be an economic good, it’s also a human right. While the cost of water is far lower than the actual cost of extracting that water, raising prices would doom the poor. It’s difficult to find solutions to the water crisis that can generate enough money to be economically sustainable. “It’s entirely possible to create brilliant water technology that the places that need it the most can’t afford,” he said.

The low price of water also keeps it from being economically viable to transport very far. “If you think about a tanker full of oil, it has a far higher value than a tanker full of water,” he said. “So you can only transport [water] so far before it becomes cheaper to do something else, like desalination.”

Gleick ended by saying that solving the water crisis is a difficult but tremendously important task, requiring efficiency and conservation, advanced economics, smart technology and better governance. “Water is already constricting industrial production and growth in some regions, leading companies to think about their water and ecological footprint in ways didn’t use to have to,” he said.