Watching Water
Stefan Budricks

Recent damaging floods in Tennessee, Oklahoma, and Texas provide telling illustration of an observation made in a recent study by Lloyd’s, the global insurance giant: “Water is unique. It is not like oil or coal which we know are finite resources. One river may experience a drought while a neighbouring region experiences flood. The availability and geographical location of water resources are therefore subject to constant change.”

The study, titled “Global Water Scarcity — Risks and Challenges for Business,” aims to bring the water issues faced by the business community to the attention of risk managers. While the study is global in its reach (we learn, for example, that by 2050 the world’s population will have grown by another 3 billion to about 9 billion people; that only 3 percent of the total water in the world is fresh water; and that less than 1 percent is “readily usable” by humans), it also provides some up-close views of the challenges in the United States.

Parts of California, Nevada, Arizona, New Mexico, and Texas are, for example, identified as one of the “global water resources hotspots.” Gratefully, this is the only hotspot in North America. The problem here is the “physical scarcity” of water as opposed to much of Africa, for example, where lack of infrastructure for assuring reliable supply renders water an “economic scarcity.”

The study asserts that countries and companies will be judged by the “way in which they jointly manage and share water,” and then sets out three possible approaches they can take: first, increased competition through conflict and protectionism; second, commercialization (see this column, August 2008); and third, cooperation leading to equitable, efficient, and sustainable water management. The study text leaves little doubt as to which approach it deems preferable.

Looking back on the car wash industry’s involvement in water management, it is clear that cooperation is the approach it chose. It was close cooperation in 1996 between the San Antonio Water System and the local chapter of the Southwest Car Wash Association that brought about an equitable, efficient, and sustainable plan that allowed professional car washes to earn certification as water conservers, which enabled them to keep operating during drought conditions. Likewise, cooperation created an excellent working relationship between Puget Sound car washers and their local authority. When drought threatened their operations in 2007, a coalition of Georgia car washers worked with the state’s Environmental Protection Division in search of solutions.

The Lloyd’s study offers advice on water risk management strategies. Their application in the car wash business is apparent. The first suggestion is that companies “measure, mitigate, and market.” Haven’t car washers been doing this for years? The amount of water used per car washed is of critical importance to every operator, and every effort — from nozzle adjustment to reclaim — is made to minimize that number. The public is, of course, kept informed of any achievements in this regard. Second, companies are advised to identify suppliers who share their water concerns, influence the suppliers to mitigate those concerns, and invest in those who come through. This, too, sounds familiar.

Lloyd’s calls this a “new and dynamic field for companies.” Car washers have been working this field for a very long time.