Corporate investment in water: a fix for the California drought?

Dr Alex Money, Research Fellow at the Smith School of Enterprise and the Environment, explains the lack of appeal of water for investors, in a feature ‘California Drought: Finding a Fix’ on BBC World Service Business Daily.

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California is amidst a historic fourth year of drought. In April their Governor Jerry Brown ordered the state’s first ever mandatory water restrictions, directing cities and communities to reduce water usage by 25%.

Aired on Thursday 28 May 2015, the BBC World Service reports on how citizens and the government are coping with the drought, featuring an interview with the state’s Governor Jerry Brown and comment from Oxford University’s Dr Alex Money.

The programme asks: what is the role of business in tackling the water shortage problem? Why isn’t Silcon Valley – California’s global hub for high-tech innovation and development – leaping to find fixes to the Californian drought?

Dr Money explains that return on investments in water infrastructure is made through water fees paid by companies and individuals at the point of use. The problem is that the infrastructure required to deliver water is typically expensive. High upfront capital expenditure is coupled with a return over a long period of time, making water a risky investment.

While clever technologies such as desalination and membranes for water purification exist, investment is lagging because of the risk-return problem, according to Dr Money.

Asked whether California could learn from Israel’s example where 80% of municipal wastewater is reused for irrigation, he says: “In Israel’s case it reflects quite a long-sighted view that water is a scarce resource. They’ve made some important investments in terms of reclaiming, recycling and reusing water. I think the problem is, in many other places water hasn’t been regarded with the same level of scarcity or value as it has been in Israel.”

Listen on BBC iPlayer (17 minute total, Alex Money from 12:40)

 

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