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| World Marketplace |
Illiquid Assets
Peter H. Gleick and Jason Morrison
09/01/2005
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Businesses
operating in developing countries face a broader set of perils than those in
developed nations. In many of these locales, governments have simply failed to
meet basic human needs for clean water and sanitation services and to mitigate
widespread water-related diseases. Even worse, they often lack the knowledge,
institutional capacity and capital necessary to deal with these problems. Where
the public sector is unable or unwilling to provide basic access to water for
all citizens, businesses are increasingly finding themselves competing for basic
resources in regions where people lack access to them. With as many as 5 million
people dying every year from water-related diseases, this raises the question:
What are corporate responsibilities in such circumstances?
A small but
growing number of companies worldwide are taking steps to strategically address
water risks in ways that protect long-term value. Most companies, however, are
ignorant of these issues and address them in an ad hoc fashion. Although
companies’ water risks vary depending on business sector and areas of
operations, many businesses would benefit from a strategic assessment of their
current water-related risks and a plan to mitigate them. This is particularly
true for companies dependent on reliable supplies of high-quality water or on
large volumes of water, companies with vital operations in areas with scarcity
problems, and companies that rely on inputs that are themselves highly water
dependent.
Water scarcity already poses serious challenges to many companies
and will dramatically affect many more if current trends continue. The good news
is that businesses have a wide range of tools, technologies and techniques to
reduce water use and improve efficiency. There are many examples of businesses
that have been able to save money and improve reliability while reducing water
use—even in water-intensive sectors. Taking water-related risks seriously is the
first step.Fluid Tactics
By implementing a comprehensive water strategy, global businesses can address
risks in ways that protect long-term value. An effective water-risk management
approach includes the following components:
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