The Incredible Business of Water
April 14, 2011 Leave a comment
I read a really interesting article yesterday in Fast Company, one of my favorite publications, about the world’s use (and misuse) of our most precious commodity – water. There are two aspects of this story that I find really compelling. First, some of the statistics on water use are truly staggering. Second, there are enormous business opportunities not yet fully exploited around the data analysis and management of water, which I’ll explain further.
First, some data. Most of us arguably take water for granted, but there are some statistics that are shocking to me –
- 4 out of every 10: People in the world that have no access to clean water or must walk to retrieve it.
- The U.S. uses more water in a day than it uses in oil in a year.
- The U.S. uses more water in 3 days than the world uses oil in a year.
- 5,000: Children who die from lack of water or from waterborne disease each day.
- 528 Gallons: Amount of water required to raise and process food for 1 American’s diet for 1 day.
- 250 Gallons: Amount of water necessary to generate 1 American’s electricity for 1 day.
- Intel and Coca-Cola include water use and the risk water scarcity represents to their businesses in their Annual Financial Reporting. Intel addresses water issues on its website.
According to the article, despite these statistics, there has been little focus by big business on the economic value of water, meaning the value of things we can do with water – brew coffee, grow wheat, process microchips. Because the price of water itself, especially in the developed world, is so low, we act as if clean, on-demand water has zero economic value – it has indispensable usefulness, but rarely has a significant price – at least, so far.
This leads to the second compelling issue for me – there might be real opportunity to develop systems, software, analytics, etc. to help businesses measure, track and ultimately reduce water dependence and cost, particularly if water is not the core business, but rather an input that is likely getting ignored. In my experience, what you don’t measure and track is likely inefficient, costly and lacks innovation.
Take the case of Coca Cola, a business where water IS a focus, is diligently measured and teams are created to focus on minimizing water use. It actually takes 5 liters of water to produce each 2 liter bottle of Coke, which is a 9% improvement over just 5 years ago, or 8 billion gallons of water per year saved. Still seems like a lot of water use for the end product to me, but goes to show the opportunity.
And the article discusses how “water is not smart”, meaning a water network moves water, but very little information about it. And water is typically not measured in a way that allows you to manage or optimize its use. IBM estimates that of the $400B industry water represents, the “smart-water” information technology sector could be worth up to $20B annually, and there’s currently very little innovation in this sector.
Sounds like a great new startup opportunity! What do you think?