In recent years, the impact that the scarcity of key raw materials — such as oil, lithium or corn — can have on economies, companies and people has become evident.
Gillian Tett of the Financial Times argues that much more attention needs to be paid to water. She says the ongoing fights between the seven states that use the Colorado River for water – Arizona, California, Colorado, Nevada, New Mexico, Utah and Wyoming – over a plan to reduce their water use is a warning to all.
Following the region’s two driest decades in the past 1,200 years, the states failed to reach agreement on the plan before this week’s deadline.
“Water stress”, as the UN calls it, is also fueling conflicts within countries, not least because many of them have very outdated water governance frameworks, if they exist at all.
The Colorado River is a good example. The main regulation on water use comes from a treaty created in 1922. However, it was developed at a time when farmers were the main consumers of water, and it does not contemplate suburban expansion at all.
Furthermore, since local land ownership is often accompanied by unlimited rights to use water, the current system is prone to arbitrage and abuse.
“The Colorado River conflict demonstrates that a struggle is looming over who should control this precious and vital asset. Should it be private investors, the federal government or the states? And what happens if they don’t agree? Right now the answers are alarmingly confusing,” writes Gillian.
The lack of attention also reflects the Western assumption that water will always be available. So while the business world has been striving for years to create accounting systems for carbon use (through the Climate-Related Financial Disclosure Task Force), it has only recently begun to develop ways to put a price on water. in company accounts. However, this must change.