Tag Archives: Sri Lanka water protest

How to Find the True Cost of Water

At current rates of consumption, the demand for water worldwide will be 40% greater than its supply by 2030, according to the UN. Portfolio managers are realizing that physical, reputational and regulatory water risk could hurt their investments, particularly in thirsty industries such as food, mining, textiles and utilities.

One worry is that shocks to supply could drown or dry out a company’s assets. In recent years Coca-Cola has been forced to close plants in India because of drought. In 2019 floods in America’s Midwest caused disruptions at the facilities of two food giants, Cargill and Tyson Foods. A survey by CDP, a non-profit firm, found that 783 big listed companies had faced a total of $40bn of water-related losses in 2018.

Another concern is that the price a company pays for water could rocket. The market price of water does not reflect the environmental and social costs of using it. Government subsidies also mean that companies often do not pay for its true cost. As aquifers are depleted, though, subsidies could become more costly and unpopular, forcing governments to retract them. S&P Global Trucost, a data provider, reckons that if Fortune 500 companies paid the true cost of water, based on estimates of scarcity, rather than current prices, their profit margins would shrink by a tenth. Margins for food, drink and tobacco firms would fall by three-quarters.

Disclosures of water risk are even patchier than those of greenhouse-gas emissions…Established names like Bloomberg and S&P Global are plugging the gap, as are startups. The result is that investors can approach management armed with data rather than questions. “We are getting rid of the black box that companies hide in.” 

Ceres, a non-profit firm, scores businesses on everything from direct water management to risks in the supply chain. Those seeking more detail can use visual tools, such as Bloomberg’s “maps” function, which plots a company’s facilities over a heat map based on water stress. (California is the same color as swathes of sub-Saharan Africa; far-eastern Russia looks a lot like western Europe.) Firms like Aquantix go further, and try to predict the financial cost of water risk.

The accuracy of such forecasts is not yet proven. For Andrew Mason of Aberdeen Standard Investments, though, they are still useful. They show companies that investors care about water risk and encourage them to share data. “This is where carbon was ten or 15 years ago,” he says.

Excerpt from An expanding pool: Investors start to pay attention to water risk, Economist, Jan. 9, 2021

Price for Clean Drinking Water – Death

A second Sri Lankan protester died from wounds suffered when troops fired on villagers demonstrating against contaminated water supplies, police said as tensions remained high in the area.  Heavily armed police and Special Task Force commandos were still in the the village of Weliweriya following Thursday’s [Aug. 1, 2013] shooting and locals reported people were fearful of leaving their houses.  Criticism of the army’s use of force has mounted since the shootings.  The independent Lawyers Collective condemned the crackdown against the peaceful protest by villagers who were demanding clean drinking water for thousands of residents of Weliweriya.  One man died from the shooting while another man who was injured died overnight in hospital, police said, raising the death toll to two.  Dozens more protesters were wounded when police opened fire on hundreds of demonstrators. Local television footage showed troops with automatic weapons, some clad in body armour, firing into crowds.

Locals in Weliweriya, 20 kilometres (12 miles) northeast of Colombo, were protesting against runoff from a rubber glove-making plant that they say has polluted their groundwater supply…Dipped Products Ltd, a publicly quoted company that maintains the manufacturing plant, said Friday it was confident the water issue was unrelated to their operations but were cooperating with authorities “for an early settlement of the matter”.

Excerpt, Second protester dies in Sri Lanka water dispute, Agence France Presse, Aug. 4, 2013