Wednesday, April 23, 2014

Water is going to be seen as a strategic resource

The Pacific Institute and Vox Global have teamed up to produce a fascinating report Bridging Concern with Action: Are U.S. Companies Prepared for Looming Water Challenges?  The report surveys 50+ companies listed in Appendix - ranging from AT&T to DuPont to Merck to Unilever.  The report details several eye opening statistics - three in four companies said they were already facing water-related challenges, 60% are predicting that water challenges would have an impact on business growth and profitability in the next five years, and nearly 85% said that in five years' time, water issues would influence decisions on where they located facilities.

Water scarcity shows up in may different places on the balance sheet of firms.  From the report on the impact of drought conditions on railroad giant Union Pacific:

"Soil with high clay content underlying railroad tracks - like that found in much Texas, Oklahoma, Kansas and Arkansas - is especially vulnerable to expansion and contraction that compromises the track bed structure, operability and safety.  When widespread drought conditions occur, damage and subsequent costs from infrastructure repair are incurred by the companies.  For example, in 2001, Union Pacific saw increased operating expenses of $18 million due to repairs and other costs associated with damaged tracks in the state of Texas."

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