Water: The high price of cheap

Why water should cost a lot more

Tobin Low Feb 24, 2015

In today’s markets, the price for water does not follow typical supply and demand considerations and does not reflect water scarcity. In many high-growth regions of the world, the price of water is actually inverse to its scarcity. The disconnect between market price and risk makes it hard to substantiate the business case to invest in water conservation strategies. It also encourages growth in regions where water is scarce – and therefore where growth will be least sustainable.

In many major cities shown on the infographic, the price businesses pay for water is much less than its full value. Cities like San Francisco and Los Angeles, for example, have a risk premium 2 ½ to 4 times higher than the current price of water. Looking ahead, this risk is also expected to grow over the next ten years as populations grow and the demand for water grows. For cities like Las Vegas, Dallas, or Phoenix, whose populations and economies are forecasted to grow significantly, water scarcity presents a significant risk to businesses vitality and profitability. 

Data provided by Trucost and Ecolab.

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