Smart Technology vs. Water Becoming the New Oil

The phrase “water and oil don’t mix” is a warning against trying to establish a linkage between elements that are too unlike each other to get along (e.g., friendship and money). One could say that the “Is Water the New Oil” debate is being conducted between those who believe that water and oil
can be mixed, i.e., water, like oil, should be managed by market forces vs. those who argue that water and oil might both be natural resources, but it would be a mistake to apply oil industry values and practices to the water domain.

The over-arching issue is how sustainable water management practices can be efficiently enforced


in a world where 1.1 billion people worldwide lack access to water, and a total of 2.7 billion find water scarce for at least one month of the year. And, as shown by the map on the right, it is by no means a third-world issue. The research article “Unprecedented 21st century drought risk in the American Southwest and Central Plains” published February 12th in Science Advances reports that the US faces the worst mega-drought in 1,000 years.

One of the foremost spokespeople for the water = oil side of the debate is Peter Brabeck, chairman and former CEO of Nestle. In Suzanne McGee’s July 2014 article in The Guardian, Companies proclaim water the next oil in a rush to turn resources into profit, she notes that Brabeck is correct in arguing that we risk depleting the world’s supply of fresh water through careless consumption of what is perceived as a free resource. In Brabeck’s view, citizens don’t have an automatic right to more than the water they require for mere “survival”, unless they can afford to pay for it.

In contrast, in her December 2014 article Why Water Is Not the New Oil, Sharlene Leurig brings three very cogent reasons why water and oil must be managed differently:

  • Oil has no value except in its production whereas water creates value intrinsically. Flowing rivers, for example, enhance property values. If rivers dry up due to over-pumping of ground water, the value that water creates is lost.
  • When an oil reservoir is depleted, the land it is situated on loses value but can still be used. A depleted aquifer irrevocably damages the land above it.
  • Oil can and will eventually be replaced by other forms of energy, but water will always be as necessary to future generations as it is for us today.

The middle ground is expressed very eloquently by Charles Fishman, author of The Big Thirst: The Secret Life and Turbulent Future of Water in his guest Freakonomics post in April 2011 Why Water Will Never Be the Next Oil where he noted that the true solution to scarcity has to be smarter, innovative thinking about water itself, how we use it and how we price it. At the heart of the technology revolution that is transforming the water industry are smart solutions that allow utilities to institute carefully tiered pricing policies that acknowledge the consumer’s right to affordable water, while putting a premium on over-consumption that will encourage thoughtful water usage.

Where do you stand on the “Water is the Next Oil” debate – we would love to hear your comments.

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