by Tytti Kaasinen, Senior Engagement Manager at GES
When I wrote a post about water 15 months ago, Sustainable Development Goals (SDGs) were about to be adopted and I was wondering when would the talk about water stress turn to action. Since then, some things have changed. And a lot has stayed the same. Most importantly, however, as I promised, SDG 6 cemented the global commitment to ensuring availability and sustainable management of water and sanitation for all, and now we have eight underlying targets mapping out the path to achieving this.
Last week, I attended the Budapest Water Summit, where the three-day programme was built around the SDG 6 targets and the high-level interest in water issues was clear: apart from ordinary practitioners like me, the VIP participants ranged from presidents and ministers to UN officers and executives from multilateral financial institutions – even Ban Ki-moon sent a video message! But many shared my concerns about the lack of action; since the SDGs were adopted not much appears to have been achieved in terms of implementation and progress. This was recently confirmed by the Guardian to be the case on the corporate side: businesses are simply ignoring their role in the 2030 Agenda and it seems like other actors are not in the position to brag either. At the conference, where most participants represented public sector and civil society organisations and collectively came from 117 countries, the sense of urgency was obvious. It is no longer good enough to describe problems, we need to identify solutions. The window does not last forever.
Water is paramount for sustainable development and effectively underpins all other SDGs. Without water and sanitation, it is hard to achieve economic growth (SDG 8) or make progress on the alleviation of poverty and hunger (SDGs 1 and 2), people will not enjoy good health (SDG 3), and the cities and communities cannot be sustainable (SDG 11); not to mention its interlinkages with energy production (SDG 7), equality (SDGs 5 and 10) and industrialisation (SDG 9). Climate change (SDG 13) will hit us through water-related impacts first. Simply put, water connects. Likewise, the Budapest conference repeatedly underlined the need to move from silo-thinking to a holistic approach: in order to succeed, water-related governance and solutions must involve transboundary, cross-sector and multi-stakeholder cooperation.
Another aspect featuring strongly in the summit discussions was the financial logic for water stewardship. On the one hand, prevention is cheaper than the cure, as always: an interesting example from Colombia showed that the cost of bad quality water is 1 per cent of GDP per year, whereas only 0.3 per cent of GDP would need to be invested annually to achieve full coverage of water infrastructure. On the other hand, pricing is a big problem and opportunity. While tricky to implement due to ‘water as a human right’ considerations, several countries have used tariffs as an effective demand management tool. When water is free or cheap, people do not value it, and when something is not valued, it gets wasted – consumers are simply reacting to the message from the market. The title to this post quotes Benjamin Franklin but the sentiment is as valid today as it was in his time. Water users, including corporate ones, need to be educated about its value and incentivised to manage the resources accordingly before it is too late. Cheap water is expensive in the long run, and often hits the poorest the hardest. It does not generally lead to attractive investment opportunities either, and the vicious cycle is complete.
On the flipside, investment in water projects and infrastructure can be a catalyst for agreement, action and political will by providing an incentive for partners to come together. Multilateral development banks (MDBs) have recognised the need and opportunities for finance in this area, and their representatives at the water summit saw MDBs’ role as being partly the first-movers de-risking and stabilising the market (not only the financial aspects but also contributing to a more predictable political and regulatory environment) to make it more attractive for other investors and private sector parties to come in. I hope we will see a proliferation of blue bonds in the coming years, giving green bonds a run for their money (pun intended). The situation currently is that in the time when USD 23-25bn went to climate investments, water only drew around USD 1bn. This imbalance is in fact very counterproductive and has to change.
From the plethora of other interesting and investor-relevant issues discussed at the conference, I want to highlight one particularly close to my heart; the link between water and security. A week earlier, the UN Security Council had held a session dedicated to water, peace and security, emphasising the role of water in promoting peace and preventing conflict. While water can also be a source for tensions and used to harm others in the shared river basin, many encouraging examples of hydro-diplomacy and transboundary water cooperation were conveyed in Budapest. This is equally useful for the private sector to bear in mind, and companies should look at the hydrological rather than administrative borders when assessing impacts and opportunities. Stakeholder dialogue with other users very rarely does any harm, rather creating goodwill, improving the operating environment and strengthening the social license to operate. Again: the connecting power of water cannot be underestimated and in the words of President John F. Kennedy, “Anyone who can solve the problems of water will be worthy of two Nobel prizes—one for peace and one for science”.
It is slightly disheartening that powerful people were calling for solutions to water problems already in 1962 and yet we are still battling with much of the same issues, but that is not a reason to give up. The transformative agenda is in place, mindsets are shifting, and water scarcity creates fertile ground for innovation. There are indications that Germany will have water usage in agriculture – a crucial factor in sustainable water future – high on its agenda during its G20 presidency in 2017. And we at GES are doing our part: in September, we commenced a three-year thematic engagement on corporate water risks and opportunities, closely linked to SDG 6. Our focus is on mining, food, beverage and garment sectors, and the project combines comprehensive sector level analysis with deep-dive engagement. Apart from pushing companies to improve their strategic thinking around water and contribute to the fulfilment of SDG 6, a key part of our project is collaboration with actors within and outside the investor silo. We are very excited about the project and look forward to seeing results at different levels. Who knows; perhaps in another 15 months I will be compelled to write a blog post celebrating the great strides in global water management and revelling in the successes of our thematic engagement!