To help provide some much-needed clarity around water “complexity”, Anna Poberezhna links the past to the present and looks back to her childhood in Ukraine.
Going back to Ukraine
For many, peace, economic and water security are taken for granted. For me, this perspective was ingrained in my DNA from a young age. When I was six years old, I was exposed to extreme poverty in my dad's native village in central Ukraine.
Despite being the richest natural resources country in Europe, the village lacked access to proper roads and basic infrastructure. I was tasked with fetching water in 20-litre cans for my grandparents.
In the -20C winters, we used sleighs and during hot summers, 4-wheelers. I remember trawling through the mud and being up to my ears in mud in some of the most fertile soil in the world! For locals, it was normal.
As well as fetching water provisions, I later learned to solve complex problems by dealing with multiple stakeholders, from construction to farmers, agribusiness and land management. Together with my father, we built the strategy for what was considered the first-ever sustainable flagship developments in Ukraine.
To value water, we need clarity
Fast forward to today, the experience as a child helped direct me towards a career of pushing water and economic innovation, while connecting the financial and sustainability industries.
While I have witnessed a lot of progress since my childhood in Ukraine, we still desperately lack clarity around water “complexity” and the need to go beyond mainstream definitions such as “water is life”.
“Clean water is an increasingly scarce resource due to inconsistent or irresponsible governance.”
Clean water is an increasingly scarce resource due to inconsistent or irresponsible governance, overconsumption and pollution. This puts every stakeholder at economic risk, far greater than reported, financial water risks of $39 billion (CDP) in the private sector.
In fact, the total cost of water is US$1.9 trillion per year, when including the full economic, social and environmental costs of water pollution, flooding and drought (Trucost). With an estimated US$670bn of required annual spending by 2030 to meet the Sustainable Goals related to water.
Furthermore, a total of at least 30 countries suffer from serious chronic water stress, with skyrocketing economic costs and trade-offs for both private and public sectors. Locally, social communities and ecosystems will feel it most.
Underpriced Vs. overpriced
We often hear that “water is underpriced”. This makes it difficult for actors to invest in water efficiency and resilience. Yet, we see the opposite happening in certain financial markets. According to some recent conversations, the cost of water in California trading can vary from $3 to almost $3k.
This raises the question: what is the true cost of water? If water is life, how much do you put a price on life?
“Water is a systemic risk, which is often poorly understood and disregarded until there's a disaster."
Another cost to consider is that water is a systemic risk, which is often poorly understood, estimated and managed. Water is often disregarded until there's a disaster. For example, many global operations have had to stop production because of ad-hoc water management challenges.
For instance, water management costs in oil gas can reach 15 per cent of the total cost of drilling and maintaining oil and gas wells. Also, companies face water-related challenges often related to environmental and social impacts, and associated costs – usually not incorporated in the initial project planning.
The food & beverage sector is another example where water resilience is needed. Take French multinational, Danone. The organisation’s supply chain's external cost for water use increased by a much larger 72 per cent to €2.4 billion in less than 10 years between 2009-2018 (Trucost/S&P data).
Add to that intensifying climate, water access competition, water availability and affordability, ecosystems failure and many more parameters and indicators. And we will see exponential growth.
Seeing the bigger picture
The water crisis is dynamic and local, but the problem and action can be addressed globally. Communities, entrepreneurs, new business models and investors need to step up show the sustainable way forward. To make better decisions, you need to see a bigger picture.
“Instead of trying to overcomplicate calculations of the probability of black swans, let’s focus on strengthening weak links to protect assets and ecosystems.”
Instead of looking at the objective, we are looking at a process to ensure sustainability and stewardship efforts become “automatic outcomes” of better decision-making. There needs to be a collaboration between the actors instead of a budget burden or purely charitable efforts for all stakeholders. It is a joint effort, not single-solution sales exercise.
Four actions for change
To ensure we deliver value-driven goals and commitment, I recommend the following four principles:
Listen and hear a goal for each stakeholder and to ensure it is achieved in the win-win (value-added) and most efficient way in the long run.
To equally ensure ecosystems function: where public, private, nature and society function well and projects are sustainably de-risked and investable.
Connect the disconnected, yet respect the history and the old. Incorporate adequate rules and processes that have been around for a long time.
Empower sustainable value systems and investable portfolios, moving from robust-just to antifragile setups where benefits outweigh the costs in the short and long run for each stakeholder.
In conclusion, let’s continue to build bridges locally and globally. Let our actions speak louder than our words – there is nothing more valuable than creating a real positive impact while celebrating life.
To be continued...
- Anna Poberezhna: Water risk is a business risk
- Anna Poberezhna: From water security crisis to security