The challenge posed by current high oil prices is nothing compared to what lies ahead amid dwindling supply and growing demand for a far more basic commodity – water, warns a Massachusetts Institute of Technology (MIT) professor.
“We once assumed that water is free, air is free and power is cheap. The latter is clearly no longer true and we are increasingly realising the truth about water,” argued MIT Sloan School of Management Professor Sarah Slaughter in a May 2008 paper.
Whereas oil prices are breaking all time records, leading many families to face budget challenges, “few have to drive to survive,” while water is “absolutely critical for personal and public health, which is why governments have always subsidised its cost,” explained Slaughter.
She notes that people in the developed world are taking free quality water for granted. According to her, consumers do not recognise the “enormous expense” to the public sector of building, maintaining and operating water systems and only directly pay “a fraction of the real cost of the clean drinking water” coming out of their taps.
Some 97% of world’s water resources are in the oceans, but for it to be used for drinking or agriculture the salt must be removed, which in turn requires a lot of energy.
Slaughter argues that as awareness of the vulnerability of water systems increases together with concerns over climate change, “public utilities are discussing how to restructure water rates to better reflect true costs without causing public harm”. Meanwhile, the price of water is increasing.
The solution to the looming water crisis could, according to her, be provided by innovative companies who seize water as “the next opportunity for smart innovation”. She cited a particular ultraviolet treatment technology already being used to deliver clean drinking water to various communities.
As for the EU, water crept up the bloc’s political agenda last summer following the serious drought that swept across Europe. The event forced the Europan Commission to react and publish a Communication on water scarcity and drought, which proposes higher water prices to deter overuse.