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Water Stress- Global Concern for Businesses

03 Nov

Did you know that the average pair of blue jeans uses up 919 gallons of water during its lifetime?

Levi Strauss & Company is all too aware. Water is an increasingly scarce commodity in the world, and Levi’s and other major companies are worried about the potential impact on their bottom line.

Clothing manufacturers are not the only industry concerned with the effects of global water shortages.  Food & beverages, clothing, tobacco and metals & mining conglomerates are all heavy water consumers who have long been accustomed to cheap, easy and reliable water access.  As water demand increases and climate change effects take hold, that may all change.

Water is a crucial for nearly every part of the manufacturing cycle, no matter if the end product is a bottle of soda or a pair of jeans.  Water shortages present significant risks to these businesses and may even jeopardize their business model in the coming decades.  Water savings and conservation efforts are becoming a top priority.  This is particularly true in the developing world, where many manufacturing plants and cotton fields are located.

In the clothing world, growing cotton requires access to lots of water for irrigation purposes.  Water is also needed for the processing, dying and stitching of the garment.  However, much of the irrigation practices utilized by small scale farmers in India, Pakistan, Brazil and West and Central Africa (where much of the world’s cotton is grown) are outdated and inefficient.

Last year, flooding in Pakistan and droughts in China destroyed much of the cotton crop, resulting in skyrocketing prices.  Levis, for example, felt this impact directly, because nearly 2 pounds of cotton are needed for every pair of jeans the company produces.  Over the coming years, climate change may accelerate such extreme weather events and thereby increase risks for cotton-dependent industries and companies.

The clothing industry is taking action to reduce these threats.  In 2005, the international nonprofit Better Cotton Initiative was established to promote water conservation, reduce the use of pesticides and strengthen child-labor restrictions in the garment industry.  Large companies and industry groups have signed on, including Levis, IKEA, the Gap and Adidas.

Use of drip irrigation, rather than conventional field flooding, is highly encouraged.  Drip irrigation saves time, money, energy and reduces the amount of water farmers need to properly water their fields.  The Better Cotton Initiative has passed this and other knowledge on to many cotton farmers in India, resulting in a 32% reduction in water and pesticide usage on farms over a three year period.

Global businesses must adapt to a new water reality – what was once cheap and consistent may no longer be true.  As business models change and new practices and innovations take hold, we expect to see a new range of opportunities for profitable investment in the water sector.

Click here for more information on investing in water, agriculture and natural resources

Read our other blog posts on water

Read the full article from the NYT

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Posted by on November 3, 2011 in Water

 

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