Hopes & Fears While Remaining Irrationally Exuberant

By Debra Tan 18 December, 2017

Spurred by recent news, CWR's Tan shares her musings

New tech e.g water extraction from air mean well but will it disrupt rainfall patterns? Ripple effects are unpredictable
We think we make smart decisions yet is an export-led consumption growth model right for Asia?
Given the potential consequences it is time we rethink our values & set ones that are good for us & the planet

It has been 6 years since the launch of CWR. I have been talking about water risks for a while. Reactions have been varied: some become very worried, some take action, some are skeptical and others combative. There is no doubt that awareness about water risks has increased, but when hedge funds focused on India still have no idea that India is water scarce, there is more work to be done. But what worries me more is the blasé attitude that we will work it out – or that tech will save us. I will share some of my recent hopes and fears spurred on by recent news …

1. Good intentions & new tech may not mean we get it right 

There is excitement over the Water Abundance XPRIZE awarded to best low-cost solutions to make water out of thin air with renewable energy. The site boasts that there is quadrillion m3 of water in the air that could be extracted. A casual reader may think that this would solve all our water issues but mass scale extraction could have long term implications for the water balance.

Imagine extracting water from air for the 884mn people  around the world without clean water…
…at what point would it disrupt rainfall patterns? The ripple effects are unpredictable

Israel is at the forefront of water tech including extracting water from air. At the moment the use is relatively niche – for the military, emergency operations and the likes. But imagine doing this for India or China for just under 3 billion people, or even for the 884 million people around the world who don’t have clean water. For reference, China alone used 604 billion m3 of water in 2016; even municipal water use was already 82 billion m3 according to national statistics bureau.
On such scale, at what point would it disrupt rainfall patterns? Would this result in stealing water from other regions? The ripple effects are unpredictable. The solution could essentially end up facing the same issues over water rights as cloud seeding. How do we share water in the air? We already face difficulty in coming to legal agreements in sharing transboundary bodies of water from lakes to rivers, let alone the water in our air.
Nevertheless, no one can deny that this is borne out of good intention but not all good intentions end up being good for the planet – look at what we have done with plastics. We are on the verge of a planetary marine disaster by using something that is made to be durable in a throw away manner in the name of convenience.
So although we can innovate to get past the cost barrier of scaling up the extraction of moisture from the air, it may just have to remain as an effective way to provide water to local communities, rather than a large scale solution.

“… I worry that we won’t have the resolve to make the right long term decisions…
… after all short term needs are more immediate”

We know we have a selfish gene so it takes steely resolve to act for the masses. When it comes to water, something we get rather emotional over (especially when we don’t have enough), I worry that we won’t have the resolve to make the right long term decisions, after all short term needs are more immediate. That said, I remain positive about our ability to innovate.
Those living in the same river basin also have to work together in order to flourish. This is easier said than done. Action will only likely be taken when the seriousness of the risk is understood. Lovers of Moutai, can start by taking a closer look at water risks lurking along China’s “River of Intoxicating Liquors”.

2. Overestimating our ability to make smart decisions means we are not asking the right questions

We also have a huge ego and we are smart but we are easily fooled by shiny stuff. When it comes to decisions, we can be easily influenced, if not, there would not be a multibillion dollar advertising industry. I was just in Japan and the “is it safe to eat sushi post-Fukishima” discussion naturally surfaced. It brought me back to the first time I was asked this question. I remembered thinking then how odd it was that they were asking this question was but happily drinking bottles of Pellegrino.
Each bottle of Pellegrino contains 6.4ug/L of uranium. While the US EPA sets the Maximum Contaminant Level at 30ug/L, it is worth noting that the Maximum Contaminant Level Goal (MCLG) – the level of a contaminant in drinking water below which there is no known or expected risk to health is zero. Clearly, we are not asking the right questions.
Lead in our drinking water is something else we worry about. BTW, the MCLG for lead is also zero whereas the Treatment Technique level (a required process intended to reduce the level of a contaminant in drinking water.) is 15ug/L. On the bright side, there are no traces of Lead in Pellegrino.

We are led to think that bottled water is clean & better for our health through ads & glossy packaging, but is it?

We are led to think that bottled water is clean and better for our health through ads and glossy packaging, but is it? The problem is that not all contaminants present in bottled water are required to be listed on the bottle. We typically see just the ones that sound like they are good for us like calcium, potassium, sodium, magnesium and so on. I am sure we would think twice about buying the product if we saw uranium on the label. Marketing – it’s brilliant, it distracts us from asking the right question and makes us a slave to consumption. For more on bottled water check out “Bottled Water: Drink Responsibly” and “8 Things You Should Know About Bottled Water in China”.
Our search for the next cool thing has also brought us to feel more spiritually with it/cleansed by drinking water bottled in the Himalayas. But is it really that cool? After all transporting that bottled water from source is surely adding to climate change which is in turn affecting glacial melt, an important source of water to the locals in the mountains. Anyone who has followed my rants knows that the state of our glaciers is something I worry about, which is why efforts to alleviate summer droughts by innovators like Sonam Wangchuk are important.

“…we need to look at the big picture in order to find sustainable solutions. We also need to ask the right question…”

Now more than ever, it is important to recognise that our decisions have wide impact and that we need to look at the big picture in order to find sustainable solutions. We also need to ask the right question – maybe we can start with: Is an export-led consumption growth model right for Asia, especially since our two largest economies have limited water resources? On this front, it is good to see the polluting and wasteful fashion industry starting to make efforts to go circular – if you have not been following this, check out “Fashion Headlines”.
Nevertheless, I remain irrationally exuberant and irrationally egotistical for thinking that I can make a difference. It doesn’t take an army, but a few women and men who can see the big picture, to tap the power of advertising for good and the rest will follow.

3. Living in irrational bubble by driving value down and waste up

As I was flipping through newspapers, an article in the New York Times International Edition caught my eye. It was titled “In the age of Amazon, gadgets are diving in price” (online version here). My heart sank at reading that, especially after a weeklong investor roadshow talking about the highly polluting and toxic core of many tech products. The article put forth a view that argues that it’s not a race to the bottom as products are better quality, putting those that produce poor quality stuff out of business.
This is premised on the belief that low prices + good quality = good value for money. Perhaps so, but doesn’t this view erode value? Given the choice between a $5 vs. a $100 tee-shirt, one would think harder over buying the hundred dollar tee than the cheaper one. Once bought, we would naturally value the hundred dollar tee more. So cheaper albeit better quality stuff only serves to encourage us to buy more perpetuating the current excessive consumption and throw away lifestyle.

 Cheap goods are not cheap…
…someone has to pay – the environment suffers & people get sick from drinking the polluted water or food

We think we benefit from the cheap goods, but cheap goods are not cheap. Someone has to pay – the environment suffers and people get sick from drinking the polluted water or food. China, where the vast majority of goods (both useful and completely unnecessary) are produced is seeing the effects of this from groundwater over-extraction, water and air pollution, soil pollution to cancer villages. Now that China is saying no to pollution, surely brands and consumers should move away from the mantra of ever cheaper and better quality and seize the opportunity to work with China in building a circular economy? Continuing with the current business model will only accelerate the shift pollution to South East Asia and/or Africa.
We know we can’t endlessly buy goods because we know we don’t have unlimited resources. We like to think this is fine because stuff is recyclable, yet deep down we know just because it is recyclable, doesn’t mean it is recycled. We are also left with tons of packaging waste. Food packaging in Japan is particularly fabulous looking but is it really necessary to wrap each biscuit individually? Let’s not even start on the environmental implications of packaging used to ship and return goods from the convenience of online shopping.
Cheap products give us an illusion of plenty and lulls us into a free flow, ever-cheap consumption led life. By looking for value in the ‘best deal’, we have in reality lost real value; only waste rises. Since China is now also saying no to being the dumping ground of global waste, there are interesting times ahead for the waste industry.
We are not simply rational.  History has shown us that nature wins yet we always think we can do better.  Stepping into the age of AI is interesting – if we programmed machines to be rational, their first intelligent decision would probably be to remove our power to make any important decisions for the planet or get rid of us altogether!

It is time we start making rational decisions; to rethink our values & set ones that are good for us & for the planet…
…China has made a start towards marrying the economy & environment

It is time we start making rational decisions; to rethink our values and set ones that are good for us and for the planet. China has made a start towards marrying the economy and environment. Helmed by a strong hand, it is turning its course towards a Beautiful China. It will face difficulty ahead and we have said that this would require a more austere path. Already government sponsored animated gifs preparing the Chinese for this are hitting the social media space. Looks like the party is also tapping into the power of social media and advertising! American style US-army-will-save-the-world action flicks, like the Wolf Warrior series are also emerging from Chinese cinema. These together with the great push on the Belt and Road initiative and a Chinese model for foreign aid means that the new pecking order may be here sooner than later.

Now what …

So where does this leave the rest of us? Given that we are still addicted to cheap Chinese goods we could be facing multiple disruptions ahead. It’s not just gadgets but even our fish appears to be “made in China”.

We could be facing multiple disruptions ahead…
…especially with the new water law going into effect on 1 Jan 2018

Last month, Goldman Sachs issued two reports dedicated to the implications and impact of China’s Air Ten on various listed stocks it covers citing a “new discipline”. It posits that China clean air goal reshapes the supply outlook across basic materials from steel, cement to aluminium. If clean air can reshape global supply outlook of basic building materials in less than two years after the air law is effective – imagine what the Water Ten will do. Bad air is an emission of production whereas water is both an emission and a necessary input. The new water law that accompanies the Water Ten will go into effect on 1 Jan 2018 so watch this space.
Here’s to making sensible decisions today for our water tomorrow. Have a happy holiday, stay exuberant and please subscribe to CWR if not already!

Further Reading

  • Fashion Headlines This Festive Season – With lots happening in fashion over the last quarter, China Water Risk’s Dawn McGregor shares what is making her hopeful but also fearful. Plus, see what she says is forcing the industry to develop a new relationship with pollution
  • Moutai: Risks Along The Intoxicating River – Moutai’s stocks have soared & with a 90% profit margin it is hard not to have a hopeful outlook but China Water Risk’s Yuanchao Xu warns of river basin risks – best to keep a clear head to ensure future prosperity
  • Aquaculture: 8 Fishy Facts – Think because we get fish from water that its “Fish forever more”( 年年有“鱼”)? China Water Risk’s Woody Chan shares 8 must-knows on aquaculture that will make you re-think this
  • Making Glaciers On Top Of The World – We sat down with Sonam Wangchuk, the real-life Phunsukh Wangdu of the Indian movie ‘3 Idiots’, to learn why he is and what challenges there are to overcome in creating artificial glaciers, known as Ice Stupas
  • A Chinese Model For Foreign Aid – As the US & the EU retreat from their foreign-aid commitments, Professor Asit K Biswas and Kris Hartley from the Lee Kuan Yew School for Public Policy see this as an opportunity for a new and willing aid champion, China. See why
  • Toxic Phones: China Controls the Core – We review CLSA U®’s report which warns that transitional risks are abound as China says no to pollution and yes to a high tech future. What are the top-5 ‘bewares’? China Water Risk’s Debra Tan expands
  • ‘Science Unusual’ to Counter Fake News! – Science & policy have their own language but given significant climate risk overshadowed by fake news, can we afford to speak in tongues? Hu & Tan on why it’s time to step up efforts to bridge science and policy with finance
  • What ‘Xi’s Thought’ Means For Water – One key message from Xi Jinping at the 19th National Congress was harmony between environment & economic growth, surely this bodes well for water? China Water Risk’s Feng Hu reviews
  • Can China Clean Up Its Act? – China faces unprecedented air, water & soil pollution after decades of growth. With its contaminated land area bigger than the United Kingdom, Asit K Biswas & Cecilia Tortajada look at what China’s policymakers are doing to change this
  • 2016 State of Environment Report Review – The signs are positive for China’s environment in 2016. Groundwater quality improved after 5 years of decline though there is mixed news for rivers & lakes. Is the tide turning in China’s ‘war on pollution’?
Debra Tan
Author: Debra Tan
Debra heads the CWR team and has steered the CWR brand from idea to a leader in the water risk conversation globally. Reports she has written for and with financial institutions analyzing the impact of water risks on the Power, Mining, Agricultural and Textiles industries have been considered groundbreaking and instrumental in understanding not just China’s but future global water challenges. One of these led the fashion industry to nominate CWR as a finalist for the Global Leadership Awards in Sustainable Apparel; another is helping to build consensus toward water risk valuation. Debra is a prolific speaker on water risk delivering keynotes, participating in panel discussions at water prize seminars, numerous investor & industry conferences as well as G2G and academic forums. Before venturing into “water”, she worked in finance, spending over a decade as a chartered accountant and investment banker specializing in M&A and strategic advisory. Debra left banking to pursue her interest in photography and also ran and organized philanthropic and luxury holidays for a small but global private members travel network She has lived and worked in Beijing, HK, KL, London, New York and Singapore and spends her spare time exploring glaciers in Asia.
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