The Big Thirst, page 15
Upon reflection, it is absurd for drought-ravaged Australia to wash wool in drinking water. In fact, almost regardless of resources, it’s crazy to use drinking water for things like watering soccer fields or flushing toilets. It’s just what we’ve gotten used to.
Says Salisbury manager Hains, “We are changing the relationship between people and their water.”
If there is one truly arresting sign that our relationship to water is about to shift in fundamental ways, it comes not from the world of science, or climatology, not from United Nations officials or the people who run water utilities or the aid workers desperately trying to get water to people in developing countries. No, the most unequivocal signal about what’s happening with water comes from the people like those who run Michell Wool, in a quiet suburb north of Adelaide, it comes from Monsanto, the agri-conglomerate, and from Royal Caribbean, the cruise-ship company, it comes from Coca-Cola and Campbell Soup and Intel, from Levi Strauss and IBM, from GE and MGM Resorts.
They all have that same tickle of anxiety—in corporate terms—about water security that Michell Wool had a decade ago. For many companies, it’s much more than a tickle. Companies that live in the world of water every day are worried about the quality of their water, the adequacy of their supply, the long-term security of their water, and they aren’t waiting for someone else to alert them, or for someone else to tackle the problem. For business, water management is fast becoming a key strategic tool. Companies are starting to gather the kind of information that lets them measure not just their water use, and their water costs, but their water efficiency, their water productivity—how much work they get from a gallon of water, how much revenue, how much profit.
IN DESIGNING ARIA, one of the signature hotel-casinos of its $8.5 billion Las Vegas development called CityCenter, the staff at MGM Resorts International went looking for a showerhead that was both low-flow—the goal was 2 gallons per minute or less, down from the typical 2.5 gallons per minute—and also provided the indulgent shower experience that guests in a luxury hotel want. Aria is a soaring, spacious, upscale hotel with 4,004 rooms, built in a desert community that gets just four inches of rain a year. That small change in one design element in a new hotel—how much water per minute the showerhead uses—can save millions of gallons of water a year.4 But the folks at MGM Resorts couldn’t find a showerhead that combined the flow they wanted, the shower experience their guests would insist on, and the design flair the Aria’s high-end interiors required.
“I’ve heard it a thousand times,” says Cindy Ortega, MGM Resorts senior vice president for energy and environmental services. “‘If I’m going to pay $400 a night, I should be luxuriating in the shower.’ Yes, I’ve heard exactly that. Along with the plushness of the carpet and the fiber content of the pillows.” CityCenter, as a development, aimed to build unusually environmentally sensitive buildings, and the goal of Aria, says Ortega, is, in part, “to dispel the notion that there is a trade-off between luxury and environmental impact. We thought we could get past the idea that luxury means big crown moldings and plush-plushy carpet.”5
So, working with the Delta Faucet Company, through months of prototype showerheads tested in other MGM Resorts hotels like the Bellagio, and in the homes of MGM Resorts managers, Ortega and the Aria’s staff designed their own showerhead. Their creation, when the hotel opened in December 2009, was bolder than anyone expected at the start: A square, flat-faced, mirrored showerhead with just four holes. And it had a flow rate not of 2 gallons per minute but 1.5 gallons per minute. The Aria showerhead could easily save the hotel, and the residents of Las Vegas, two thousand gallons of water an hour, twenty-four hours a day—enough water saved every day to supply all the needs of 140 homes in Las Vegas.6
In a completely different corner of the world, agricultural conglomerate Monsanto is doing exactly the same thing—trying to develop a new line of products for its customers that require less water. Monsanto is spending tens of millions of dollars a year developing drought-tolerant varieties of crops—plants whose genes have been tweaked so, biologically, they make better use of less water. Because as climate shifts, people in newly dry areas will still need to grow food. And because Monsanto sells $4 billion a year worth of seeds—it sells more seed than any other company in the world7—it wants to make sure it has products to sell to farmers, to nations, even when they’re struggling through drought. In the summer of 2009, Monsanto opened a 155-acre water utilization learning center, a working farm in Gothenburg, Nebraska, that is an R&D facility to test drought-resistant crops in the dirt. If a crop typically takes twenty inches of irrigation water during a growing season, can you get the same harvest with eighteen inches of water? Or seventeen inches? And when in the growing cycle do you water less?
“We believe that by 2030, we can double the yield for many crops, compared to the year 2000,” says Robert Fraley, the chief technology officer at Monsanto, who is helping drive the effort to find and test genes that do things like increase the efficiency of a plant’s roots to absorb water, or protect sensitive parts of the plant from heat. “Literally, ten years ago, this didn’t exist as an option, the possibility to confer drought or thermal protection. It’s really exciting.” Monsanto hopes to have drought-tolerant corn seed available in 2012.
Many of the biggest companies in the world are starting out simply trying to understand and manage their own water use, rather than producing water-related products.
Right from the Web sites of Coca-Cola, Intel, GE, and IBM, you can find out how much water each of those companies uses each year, often in stunning detail. Intel lists not only total water use but water use broken down by each of the company’s manufacturing plants around the world, including what each factory’s source of water is—the names of the rivers and aquifers Intel is tapping. You can easily figure that Intel isn’t doing that well on its water goals, either in the big picture or based on water productivity. In 2009, the most recent year for which Intel has provided detailed numbers, the company used 19 percent more water than it did in 2005, but Intel’s revenue actually fell 10 percent in that time, in part because of the recession.
So one gallon of water used by Intel in 2005 generated $5.74 in revenue and $1.29 in profit; in 2009, a gallon of water generated only $4.37 in revenue and 55 cents in profit. In terms of water, Intel’s profitability fell 57 percent per gallon used. That’s a measure you don’t see very often, even on a Bloomberg terminal. Intel also reports renewed determination to hit its goal for water productivity—to reduce water per chip below 2007 levels by 2012.8
Coca-Cola, whose reputation has been doubly stung by controversy over its withdrawals of groundwater in India and by a backlash against its growing Dasani and VitaminWater bottled-water business, has vowed, in the words of CEO Muhtar Kent, that by 2020 Coke will become “the first major global corporation where we will be water neutral.”
Almost all of Coke’s products end up as pee—Coke’s customers don’t need more than a few hours to close the loop in the water cycle on the soft drinks and water they consume—and it’s not quite clear what a “water neutral” Coca-Cola will look like. But the company is gathering, analyzing, and revealing cascades of water data.
According to its figures, Coke sells enough servings of drinks to indeed “buy the world a Coke.” The company can buy every single person in the world more than fifty cans of Coke or Sprite a year. The company’s global use of water is staggering—Coke uses enough water in its global operations each day to provide all the water necessary for an American metro area of 1.5 million people.9
Viewed from one perspective, in fact, Coke’s business is really a water processing operation. As a company, Coke is dwarfed by IBM and GE, which together have nine times the revenue of Coke, and themselves use billions of gallons of water in industrial manufacturing. Yet Coke uses three times the volume of water used by IBM and GE together. The industrial giants use 11 ounces of water to generate $1 of revenue. Coke needs 333 ounces of water to generate $1 of revenue.10
Coke says that that every liter of beverage it manufactures and sells requires 2.43 liters of water—1 liter for the drink, and an additional 1.43 liters of manufacturing, cleaning, and process water. The good news is that unlike Intel, that represents a 9 percent improvement over 2004. Between 2004 and 2008, Coke cut the amount of process water per liter of drink by eight ounces. Sounds small, except when you multiply it by Coke’s relentless popularity—the company serves up a drink to 67 million people an hour. Its improved water efficiency between 2004 and 2008 saved 8 billion gallons of water in 2008.11
It’s easy to be charmed and hypnotized by all the details. But, in fact, the details are both beside the point—and the whole point. This kind of water reporting is amazing because it’s totally voluntary, it’s all new, and it is, quite literally, a window on the future. These companies aren’t metering their water use with such precision to satisfy their curiosity or to amuse us. They’re doing it because they want to use less water, because they think they may soon have no choice but to use less, because they’ve discovered that simply measuring water use quickly leads to managing it better, and because some of them see that the very act of measuring and managing water use is becoming a huge business in itself.
Even for companies, like Coke, that are utterly water dependent, thinking about water strategically, in detail, is new. In Coke’s 2002 annual report—the so-called 10-K filing with the SEC required of all public companies, which Coke submitted in March 2003—there is a typical section on Coke’s business operations. Under the heading “Raw Materials,” the first sentence is: “The principal raw material used by our Company’s business … is high-fructose corn syrup, a form of sugar.” The word “water” does not appear in the “raw materials” explanation of Coke’s business operations, as detailed in 2003, and the filing does not mention water supplies, water scarcity, water effluent, or water quality even once.
In Coke’s 2009 annual 10-K filing, submitted in February 2010, the “Raw Materials” section begins this way: “Water is a main ingredient in substantially all our products. While historically we have not experienced significant water supply difficulties, water is a limited resource in many parts of the world and our Company recognizes water availability, quality and the sustainability of that natural resource for both our operations and also the communities where we operate as one of the key challenges facing our business.”
Three pages deeper in the 2009 annual report, in the section titled “Risk Factors,” Coke says that water faces “unprecedented challenges from overexploitation, increasing pollution, poor management and climate change. As demand for water continues to increase around the world, and as water becomes scarcer and the quality of available water deteriorates, our system may incur increasing production costs or face capacity constraints which could adversely affect our profitability or net operating revenues in the long run.”12
In 2003, the main ingredient in Coke’s products isn’t mentioned. In 2010, water supplies around the world are one of the key challenges Coke faces, so much so that Coke is warning that access to water could impact its cost of doing business. Just to be clear: Water didn’t change between 2003 and 2010—what changed was Coke’s appreciation of water, Coke’s understanding of water.
Coke is hardly alone. Although water supplies are critical in semiconductor manufacturing, in Intel’s 2002 10-K filing, just as in Coke’s, water was not mentioned as a risk to its business. By 2009, it was included.13
This water focus isn’t trendy green consciousness, or corporate altruism, although in the case of Coke, it is vitally important PR. It’s business. Any water that the showers in the luxury rooms in the Aria hotel don’t spray on guests is water that MGM Resorts doesn’t have to buy from Las Vegas, water it doesn’t have to heat, then pump up to rooms, and then pay to have cleaned as wastewater. Similarly, the 8 billion gallons of water that Coke’s bottling operations didn’t use in 2008 was 8 billion gallons that Coke didn’t have to buy or pump out of rivers or aquifers, clean to food-manufacturing standards, and then dispose of. Companies are realizing that the water bill includes the electric bill, the natural gas and heating oil bill, the chemical treatment and filtration bills. Reduce your water use 9 percent, and you reduce a cascade of costs alongside the water bill.
That is the sense in which, in this instance, business is actually ahead of politics, and ahead of popular awareness. When a company that cleans dirty wool in Australia, a company that hosts gamblers in Las Vegas, a company that makes microchips in Ireland and Israel, and the company that sells the most popular drinks in the world in more countries than belong to the UN—when four such different organizations, in such different geographies and lines of work, all agree that a major shift is under way in something as basic as our relationship to water, when they don’t just agree, but change their behavior, that’s something the rest of us should pay attention to.
In the last decade, business has discovered water as both a startling vulnerability and an opportunity to reduce costs and turn water itself into a business. No less a sage than Warren Buffett has quietly realized how the water landscape is changing. In 2009, Buffett’s company, Berkshire Hathaway, became the largest shareholder in Nalco, a water services, treatment, and equipment company that has no public profile but twelve thousand employees and nearly $4 billion in revenue.
Sometimes the water consciousness percolating all over the world of commerce results in efforts that are less revealing than they are slightly silly. Levi Strauss, the apparel company, has been worrying about water for more than a decade. Since the 1990s, Levi has tried to get the outsourced global factories that make its jeans to treat their wastewater, in order to reduce pollution. In 2009, Levi released a painstaking “life cycle analysis” of the water involved in a single product—a pair of men’s 501 medium-stonewashed jeans. Levi wanted to track water use during the life of a pair of blue jeans. Levi, which now only designs and markets jeans, outsourcing all the sewing, discovered that that single pair of blue jeans required an astonishing 919 gallons of water during its lifetime. Levi attributed 450 gallons of water (49 percent) to growing the 2.2 pounds of cotton the jeans required; it charged 416 gallons (45 percent) of water to our washing the jeans once we bought them, leaving just 53 gallons (6 percent) for which Levi itself was directly responsible. In a moment of humility, Levi assumed the jeans would last only two years (104 washes)—otherwise our water burden as customers could easily have been much greater. One of the company’s great water-saving insights from this project is that the jeans would “use” a lot less water if we, the wearers, would replace our top-loading washing machines with more water-efficient front-loading ones.14
This kind of water analysis is so new, in fact, that a certain amount of silliness is inevitable, even desirable. No one has ever asked the kinds of questions that we are starting to ask about water and how we use it. Perfectly reasonable questions will sometimes bring silly answers; apparently silly questions will sometimes result in wonderful changes in perspective.
Cruise ships are fascinating water laboratories, because while floating on an unlimited cushion of water, they must be water self-sufficient, either tanking up on potable water in port or using fuel to run onboard desalination and purification systems. Every toilet flush, every cup of coffee, every shower, every ice cube, uses water that had to be ordered and accounted for. One of the great symbols of indulgence on cruise ships is the dining, and nothing captures the onboard culinary culture quite like their prodigious buffet lines, offering dozens and dozens of items, often available fourteen hours each day to provide anytime dining. Those buffet displays require literally tons of ice on each ship each day. For this ice, water has to be made or loaded onboard, ice makers have to run nonstop, ice beds must be laid out and replenished, and meltwater must be drained into the ship’s water treatment system, where energy has to be used to clean it before it’s released back into the ocean.
In 2008, the vice president of culinary operations for Royal Caribbean’s high-end Celebrity ships, Jacques Van Staden, suggested substituting superchilled river rock for ice on the buffet lines. Van Staden had come to Celebrity from Las Vegas, and he thought in addition to saving water, the river rock would look better. It had a high-fashion flair—distinctive black rock instead of prosaic clear ice.
“This was the heyday of super-high fuel prices,” says Scott Steenrod, director of food and beverage operations for Celebrity. “As Jacques and I talked about it, we knew this would save a lot of energy as well. We tried it on one ship. We knew immediately that [the rock] was equally effective at keeping the food chilled. And people liked it—it looks good.”
In fact, testing showed that the smooth black river rock actually held cold longer than ice. Now, on all nine of Celebrity’s megaships, the river rock has replaced ice for cold food on the main buffet line at breakfast, lunch, and dinner. Each ship has two sets of 1,500 pounds of rock—one set of rocks clean and being chilled, one set out on the buffet line. The rock is easily sanitized—kitchen staff take it from the buffet line and run it right through the standard dishwashers on sheet trays. The rock is chilled in belowdecks cold rooms that are already in use, and wheeled out to support the buffets as easily as ice.
