Shortage of water? Give us a break

8th August 2011

Well, the scientific community may well be very excited at having just found evidence of water on Mars, but us canny lads up North can tell you there’s no shortage of the stuff up here after the weekend. But the reason they’ve spent £millions on that research, is of course that water is so fundamental to the existence of life – you can live quite a while without any grub, but you’ve soon curled your toes up without any water.

I have always been interested in this fundamental ‘stuff’ – H2O – water. Playing on it and in it – its use for growing crops – for sustaining animals – enhancement of landscape – use by industry in processing and cooling – and the significant impact it can have when there is too much – flooding.

The World Water Development Report predicts that in the next 20 years the quantity of water globally available will decrease by 30% with world demand for water doubling. If take you on a journey to 2050, it is generally accepted that the world population will have increased to over nine billion. Demand for agricultural goods will have risen by 70% and the water ‘consumed’ as a result of growing food, will have increased by 53%. Here’s an interesting statistic for you – it takes 1,100 litres of water to grow 1 kg of wheat – it takes 15,500 litres to grow 1 kg of beef.

That’s why food is now at the top of the G8 Agenda – as we know, any ‘stuff’ that’s in short supply, becomes more valuable – people start to take more notice of it and ultimately fight over it.

Water in the UK is something we have largely taken for granted – it is simply there at our disposal. We turn on a tap or flush the loo, and our water provider, Northumbria Water, is under a statutory obligation to provide it – but have you tried living for a week without it? – what a ‘hell’ your life turns into. And our perception of the value of this ‘stuff’ is fascinating. You expect to get it out of the tap for virtually nothing, BUT you are prepared to pay over a £1/litre from the shop, because it’s in a branded bottle – ah, but if it was a litre of milk you’d be buying, you’d only expect to pay half that.

So what’s the relevance to the North East? Well in a world where this finite resource (they’re not making any more) is going to come under increasing stress from demand outstripping supply, it’s good to have plenty. The shortage is only just down the road – the South East of England has less water available per head that sub Saharan Africa. The practical reality of that will be business that needs water to process or cool, or farmers needing large quantities of irrigation, either sourcing their own water resource, paying a lot more, or relocating to a ‘place of plenty’.

And so to the valuation challenge – to place monetary/economic value on this ‘stuff’ – water – as a separate resource. There has been endless discussion, research and commentary about the environmental value of water and centuries old debate, tensions and legislation about the social/human right to receive water. However, in our modern capitalist society, you can’t get a truly balanced sustainable management of a resource until you grip the challenge of dealing with capital value – until you place a true capital value on a resource, it will never be managed effectively.

In my role as chairman of the RICS Working Group on the valuation of water, I’m having to grapple with fascinating new concepts and approaches – but we will be producing a new methodology for the valuation of water that is likely to put a significant value onto the North East balance sheet.

Never mind Mars, look around you canny lads of the North.