This year, the 24th World Water Week took place in Stockholm from 30 August – 5 September 2014. It was the largest edition of the event with over 3,600 delegates from over 140 countries. The theme this year, ‘Water & Energy’ is something we have been exploring since “Elephants in the Room (Apr 2012)”. We also wrote two reports on the nexus: “No Water, No Power (HSBC Sep 2012)” and “Water for Coal: Thirsty Miners Will Share The Pain (CLSA May 2013)”.
China Water Risk co-convened/delivered keynotes at three seminars in Stockholm:
- Water Linkages to Coal Fired Energy Production: Shaping the Water and Energy Future: This half-day seminar was co-convened with ADB, BGR, HSBC & WRI and covered coal-fired power & water from South Africa, China and Mongolia from scientific, academic, financial and company perspectives (watch the entire seminar here);
- Stockholm Water Prize Seminar: CWR was invited to deliver a keynote and participate in panel discussion on the “Power of Water” along with the 2014 Stockholm Water Prize Laureate, the General Director of IEA and head of IWMI (watch the entire seminar here); and
- Closing Plenary: CWR was selected to present the key findings of the week for the theme “Equitably Balancing Competing Demands” (watch the entire closing plenary here).
Here are 5 key takeaways from World Water Week:
1. Asia under-represented but needs to add most water & power
Globally, water demand is expected to increase by 55% between 2000 & 2050 whereas electricity demand is expected to increase by 50% by 2030. Asia clearly needs more power and more water but with limited water resources can it meet these growing needs?
Adding more coal could accelerate glacial melt but adding more hydropower could lead to water wars …
Surely it’s in Asia’s best interest to drive the water-energy nexus
Nowhere is the water-energy-nexus more pronounced than in Asia and yet the region was under-represented in this year’s conference. Moreover, India and China (where the lion’s share of this demand will come from) are not only the most populous countries but are the #1 and #2 most water stressed countries respectively.
Added to this is the melting of the Third Pole brought about by climate change which brings about the question of balancing the future of coal & hydropower expansion in Asia. Adding more coal could accelerate glacial melt whereas more hydropower on transboundary waters could potentially lead to water wars. Since the region relies on this Third Pole watershed, surely it is in Asia’s best interests to drive the water-energy nexus.
To be clear though, there were sessions on Asia including Asian presenters but these were definitely in the minority. On the other hand, Europe, the US and Africa were well represented, with South America a little less so. Asia’s under representation was acutely felt in the closing plenary, where a show of hands revealed that half of the audience was from Africa. Clearly Africa is up for the challenge. Asia, are we?
2. Globally, cohesive action still lacking at the nexus
Water is needed to extract and create energy and energy is required to treat and transport water. This close relationship between water and energy was widely acknowledged during the week and in the opening plenary Dr. Kandeh Yumkella, United Nations Under-Secretary-General and the Special Representative of the Secretary-General for Sustainable Energy for All, described the relationship between water and energy as “being two sides of the same coin”.
Yet despite this acknowledgement to resolve interlinked issues between water & energy, cohesive action at the nexus is lacking across the world. Some delegates believe that is in part because of (i) systemic issues embedded in the way we view the water and energy sectors (see point 4 below), (ii) the water and energy sectors are not un-siloing enough and (iii) the lack of political will to push cohesive action.
For cohesive un-siloing across the water & energy sectors actors from each need to sit around a table and have a dialogue. As South Africa’s Dr. John Briscoe, the 2014 Stockholm Water Prize Laureate advises, “what we have got to do, as it seems to me as the water community, is find out what [the energy] problem is and say to them how can we solve this problem… not say we want you to come to a seminar on water and energy”.
lack of political will may be because developed nations, who have historically set global agenda, are not facing the same urgency & pressures …
…this means developing nations need to take the lead
Some good news is that getting these actors around a table may be becoming easier as the results of a survey of CEOs by the Global Electricity Initiative, released during World Water Week, showed that 60% of energy industry leaders now consider water availability as their number one challenge.
So why is there a lack of political will?
Perhaps this is because global agenda has historically been driven by developed nations which do not face the pressures brought about by the water-energy nexus as urgently as developing nations. Developed countries neither have urgent water issues nor do they have to add significant power to industrialise & urbanise. So, it appears that it is down to developing countries to take the lead in cohesive action at the nexus.
3. Urgently required: “same-but-different” corporate water strategies
As stressed multiple times during the week, water is a local issue and therefore has to be addressed locally. Therefore those operating in water stressed/scarce countries need to mitigate water risks. Given this, one would think Asian corporates would have comprehensive corporate water strategies but this is not the case.
“Asian based corporates do not have the luxury of waiting as their business operations are generally more exposed to the region than MNCs”
Perhaps Asia is waiting for MNCs to lead the way. However, Asian based corporates do not have the luxury of waiting as their business operations are generally more exposed to the region than MNCs
Moreover, Asian corporates shouldn’t adopt a wait-and-see approach as there is no ‘one-size fits all’ solution – a strategy for a MNC may not work for an Asian corporate. Whilst the water strategies of the MNC’s Asian arms are business orientated (maximise operational efficiency, mitigate risks and ensure business continuity), which is suited to Asia’s operational landscape, this is not the case for Europe & the US. Comparatively, a corporate water strategy in Europe & the US is more of a ‘good to have’ and fits into corporate’s Corporate Social Responsibility programmes. These strategies usually have more of a balance between business and social focuses.
These “same-but-different” approaches to corporate water strategies (business & social) highlight the local aspect of water, clearly demonstrating that Asia needs local strategies for Asia. That said, both approaches have merit and are allowing for the crucial step of identification and quantification of internal water use and assessment of water risks to become more normal practice ie. how much one is using and how much one has, before determining the most effective way to use water. In water stressed countries like China, water resource quotas & allocation between different industries also comes into play, adding complexity to effective water management.
4. Systemic views of the water and energy holds back action
The way we fundamentally view water and energy is very different. Water is viewed as a public good and is priced as thus. Conversely, energy is viewed as a commodity and priced at market value. This ‘misalignment’ of views means that water is viewed and treated as a less valuable resource then energy, which of course it is not.
Water is viewed as a public good and is priced as thus…
…energy is viewed as a commodity and priced at market value
Indeed, Li Junfeng, Director General of the National Centre of Climate Change Strategy Research believes that water security is more important than energy policy and that China’s future energy mix will depend on regional water availability. Read our in-depth interview with him here.
Moreover, the value of water to produce energy is not accurately incorporated into energy prices exacerbating the gap. The correct pricing of both water & energy should encourage more efficient use of both. The way we view water and energy clearly needs to change.
“Maybe one needs to ‘hit a wall’ or to be in a situation like in China, where water security becomes more important that energy security, for these systemic views to change”
Understanding the water-energy nexus and the economic implications of it are necessary for both public and private decision-makers. It is good to see some governments are starting to do just that. The Chinese government in December 2013 released the Water-For-Coal Plan stating that water availability will dictate future coal base development.
Maybe one needs to ‘hit a wall’ or to be in a situation like in China, where water security becomes more important that energy security, for these systemic views to change.
5. To walk-the-talk, “un-siloing” needs to go beyond water & energy into finance & politics
Presentations and discussions at World Water Week on the need for un-siloing between water & energy were abundant. However, for cohesive action un-siloing needs to move beyond these two sectors. Academics from the water & energy sectors should engage with insurers & corporates, who in turn should engage with policy makers as well as financiers and so on. In fact, all these stakeholders should be engaging in multiple dialogues.
“given the scale & urgency, surely we should be moving faster… there is much at stake economically, socially & politically. Asia, are we up for challenge?”
This will allow for theoretical developments to move into the real world space, resulting in useable applications. Unfortunately, there were very few delegates from the energy sector at the conference and even less from finance and politics.
Given the enormous challenge of meeting rising water & energy demand in Asia over the next few decades, it is not surprising that we have started to take the lead in this un-siloing process. However, given the scale & urgency, surely we should be moving faster. We have no choice but to do so – there is much at stake economically, socially & politically. Asia, are we up for challenge?
If you are working on water-energy nexus issues or are interested in developing work streams with China Water Risk on this then let us know! Email: [email protected]
- Water Over Energy Security - In-depth interview with Li Junfeng, the Director General of China’s National Center of Climate Change Strategy Research on the future of coal, gas, nuclear, hydro & renewable energy given limited water and why China has to “walk on two legs” towards energy security
- Water Drives Coal Reform - To ensure energy security, China needs to protect its No 1 fuel source against water scarcity. Feng Hu takes a closer look at what the new water-for-coal plan and other related policies mean for coal and coal-related industries
- Water: Shaping China’s Food & Energy Choices - Debra talks about key issues & new trends surfacing from the Fortune Global Forum roundtable and why she thinks the 12FYP Strategic Emerging Industries are the real Magnificent Seven
- Water for Coal: Thirsty Miners? - With up to 83% of China’s coal reserves in water stressed & scarce regions, the recent CLSA report asks if there is enough water to grow coal production. If not, what are our options? Debra Tan expands
- China: No Water, No Power – HSBC asks if China has enough water to fuel its power expansion as China plans to add more than the total installed power capacity of the US, UK & Australia by 2030
- Elephants in the Room - With coal-fired power plants and hydropower doubling by 2020, Debra Tan discusses coal, financing the power build out and dams. Is a fundamental shift required to work round these elephants?
- Big Picture – Water-Energy Nexus
Corporate water strategies
- China Water Risk’s 5 Trends for 2014 - With environmental risk cited as one of the top risks most likely to derail economic growth along with the banking crisis and housing bubble, check out our top 5 trends in water for the year of the Green Horse
- Corporate Conscience: Beyond Charity - Why are so few companies effectively mitigating water risk? Is it time for the conscientious corporate to transition water from purely charity and compliance to a core business activity?
- Water Savings: Dollar Earnings - Energenz’s Lennox-King shows us how a water audit & savings action plan with a payback period of less than a year could result in 39% cost savings
- Dirty Thirsty Wars – Fashion Blindsided - CLSA report titled “Dirty Thirsty Fashion: Blindsided by China’s water wars”, examines how China’s water risks could blindside the US$1.7 trillion global fashion industry. Is this the end of fast fashion? Debra Tan expands
Moving out of silos
- Water: Moving Out of Silos - As part of CLSA’s latest ESG in China report: “Mopping-up”, China Water Risk’s Debra Tan was interviewed on all things water: from water & coal to textiles, food & government policies
- AIDF Water Summit: 5 Takeaways - Dawn McGregor gives us her 5 takeaways from AIDF’s Asia Water Security Summit ranging from exposure of GDP to water risk to the crucial need for un-siloed approaches and key areas of improvement in the water sector
- Bridging Gaps to Water Innovation -Water scarcity & pollution will drive innovation in partnerships and technology but the road to commercialisation remains long. Will Sarni, Partner at Deloittes discusses the barriers to innovation in the water sector