Page 62 - European Energy Innovation - Spring 2017 publication
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62  Spring 2017 European Energy Innovation


Water security is about
learning to live with an
“acceptable level of risk”

The water outlook is grim.                  By determining levels of water risks      No risk assessment would be
            According to OECD               that are deemed acceptable by all (civil  complete without removing public
            projections, under business as  society, business and government),        misperceptions about the risks
            usual, global water demand is   a risk-based approach to water            involved. This is crucial to raise public
projected to increase by some 55% to        management points the way forward.        awareness about water risks and, in the
2050. By the middle of the next century,    This is the thesis advanced in Water      end, willingness to share risks. Such
over 40% of the world population -          Security for Better lives (OECD, 2013)    “concern assessment” may well come
3.9 billion people - could be living in     which proposes two key preliminary        fist in the process (« inverted » risk
areas under severe water stress. River      steps to manage the four water risks      appraisal).
discharges of nitrogen into the Atlantic,   (shortage, pollution, flood, disrupting
Pacific and Indian Oceans is projected      hydrological systems): know the risk      The second step, target the risk, is
to increase. At the same time, storms,      and target the risk.                      tantamount to managing tradeoffs
floods and droughts have become                                                       between (often) competing interests.
more frequent over the last three           As with other risks, water risk           Once the risk has been technically
decades, affecting on average between       assessment means appraising (i)           assessed and public misperceptions
100 million and 200 million people and      likelihood (probability); (ii) the        removed, consensus is required on
causing USD50-100 billion per year in       presence of populations, ecosystems       what could be a level of risk acceptable
economic losses. Over the past decade       or activities in places that could        to all parties. Such consensus building
water crises have consistently featured     be adversely affected; and, (iii) the     should result in a formal (binding)
among the World Economic Forum top-         propensity or predisposition to be        agreement on risk sharing, the best way
ranked global risks.                        adversely affected (e.g. structural       to prevent conflicts. Many consensus
                                            deficiencies in buildings, vulnerable
Unsurprisingly, water risks are of          groups, such as women, children
emerging concern for the business           and the elderly). Likelihood is mostly
sector. Yet much remains to be done         local: hydrology commands us to
when it comes to managing corporate         manage water resources (and risks)
water risks. Back in 2005, at its annual    at the river basin (or groundwater
meeting held in Kobe in Japan,              watershed) scale. Climatic conditions
the World Conference for Disaster           also matter as long as there are not too
Reduction made an urgent call to better     unpredictable (the tyranny of climate).
“know” risks (referring to most extreme     When estimating the impact, we need
risks such as major floods or droughts).    to think more globally because local
A decade later, the consideration of        water insecurity can have impacts on
water risks remains the exception rather    commodity markets and global supply
than the rule. In the United States, for    chains. A major drought in a food
example, a survey in 2015 by not-for-       exporting country drives up food prices
profit organization Ceres revealed          worldwide. The 2011 Thai floods led to
that two-third of major food sector         the closure of multinational electronics
companies did not consider water risks      and vehicle industries, with impacts
in their supply chain.                      cascading through the global economy.

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