Sunday, October 19, 2008

Water May Be the New Oil in a Thirsty Global Economy

Knowledge @ Wharton discusses if water is truly the new oil in their recent article "Ebb without Flow: Water May Be the New Oil in a Thirsty Global Economy".

Excerpts from the article are highlighted below:

  • Is water the new oil? The answer is yes, according to a number of economists, business leaders, scientists and geopolitical strategists, who argue that it's time to stop taking for granted the substance that covers 70% of the planet and makes up a similar proportion of the human body. Just as the late 20th century saw an oil shock, the early 21st century may feature a water shock, where scarcity leads to a sharp price hike on a resource that has always been plentiful and cheap. Such a scenario could have an even bigger impact than peak oil, transforming markets, governments and ecosystems alike.

  • Some quick facts:
    - 97% of the world's water is salty. Humans use the remaining 3%.
    - 10% of the globe's fresh water goes into ordinary people's drinking glasses, showers or cleaning buckets. Twice that amount is devoted to industrial use, while 70% -- higher in many developing countries -- is taken up by the agriculture sector.
    - 40% of Fortune 1000 companies believed the impact of a water shortage would be severe to catastrophic, only 17% said they had prepared for such an eventuality.
    - It takes 13,000 liters of water to raise one kilogram of beef. A similar amount of wheat requires 1,300, and a like quantity of potatoes takes just 100 liters.
    - Over the past decade, oilman T. Boone Pickens began buying up acre after acre of subterranean water rights across the Texas panhandle. Today, he owns more water than any other individual in the United States. His plan: Build a pipeline across the state in order to sell the water to the city of Dallas.

  • Plain old water is fast on its way to becoming "blue gold," a commodity to be sought out, fought over, trundled from country to country and possibly sold to the highest bidder -- a situation that represents a threat and an opportunity all at once.

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