Investing in Water Stewardship

Mar 23, 2022 8:15 AM ET

by Thomas Schumann of Thomas Schumann Capital and Willem Buiter of Columbia University

Scarcity of fresh, clean water will be a defining issue for the 21st century for companies and communities. It will be a major challenge – for many an existential one – even if climate change is addressed effectively. Further global warming will exacerbate freshwater shortages in much of the world, although increasing evaporation and higher average precipitation will benefit some regions. Reduced snowfall, rising sea levels, increased likelihood and severity of extreme weather events will adversely affect the availability and quality of fresh water in many regions. Freshwater scarcity is one of the key dimensions of water risk confronting businesses in every sector of the economy, as captured in the TSC Water Security Index.

Fresh water is a unique resource. It is essential to life, prosperity, and environmental sustainability. It is also a limited, scarce resource. Given enough time it is renewable through nature’s hydrologic cycle, or, more expeditiously, through the expenditure of real resources on recycling through treatment and purification. At any given point in time demand outstrips supply and water must be rationed.  Every community faces the challenge of designing a rationing mechanism that is efficient, environmentally sustainable, and just. Markets for physical water and for water rights must play a key role in ensuring efficient and environmentally sustainable water use. The government must ensure an equitable and sustainable allocation of water.

Read their complete article and watch a video interview with Mr. Schumann here -