Water Scarcity in Latin America
Latin America is world renowned for some of its majestic landscapes, rich biodiversity, and plenty of natural resources. The region is also quite rightly known for its abundance of water (over 30% of the planet?s freshwater).
Local governments have recognized the importance that water can have in creating conditions for economic growth and in the reduction of poverty. But climate change, persistently poor infrastructure, and inefficient water use for irrigation and urban supply have led to a mounting water scarcity problem in the region that has sparked social tensions between communities, governments, and businesses.
A 2014 study by the World Bank found that Latin American and the Caribbean are to expect longer droughts and extreme weather as effects of global climate change?such as the recent floods in Chile?s Atacama Desert. For example, rising temperatures will reduce the regular build-up of glacier ice in the Andes and the meltwater that some 50 million people in the low-land farms and cities rely on.
These changes have not gone without consequences. The region has already seen a rise of social conflicts whose root cause is water access, allocation, and contamination. Competition amongst vital sectors including agriculture, industry, mining, urban water supply, and natural reserves, will increase significantly as the region?s economic development continues.
This has struck extractive industries in particular. It is not uncommon for mining or hydroelectric companies to be in conflict with local communities over water use. In the Peruvian Andes, where glacial ice has receded rapidly in just 25 years, mining companies are being blamed for excessive or irresponsible water consumption that has resulted in shrinking lakes, disappearing watersheds, or the contamination of water sources that remote rural communities rely on for survival.
Social tensions arising from water scarcity has also hit Latin America?s highly populated urban centres. Populations in Brazil, Chile, Colombia, and Mexico have all recently experienced droughts and water rationing.
The most dramatic case to date has been Brazil. The current drought in Sao Paulo state?the worst in worst in 80-years and other dense urban areas have brought the issue to a fore, as citizens have had to put up with de facto water rationing for months. Sao Paulo city, Latin America?s largest and most populous city of 20 million, has seen its reservoirs? fall to one-digit levels. In Rio de Janeiro, the four reservoirs in the Paraiba system ? which is the main source of the city?s tap water ? dropped to their lowest level in history ? about 1%.
By January 2015, at least 93 cities in Brazil had imposed water rationing, affecting millions. Protests erupted outside of Sao Paulo when thousands called on the government to put an end to rationing. The government, mired in corruption scandals and the run up to carnival, did little to ease the situation.
Inefficient water use: from irrigation to urban utilities
Irrigation plays an important role in increasing agricultural production, but many countries of the region have levels of irrigation efficiency that range between 30% and 40%. Expansion of irrigation areas has grown and larger urban populations will add pressure to relocate water for agricultural purposes to drinking water supply in cities. For example, 80% of Peru?s water use is agricultural, with known inefficiencies, but the country is looking to expand production of water guzzling asparagus and other crops despite frequent droughts along its populous Pacific coast.
In Latin America?s urban areas, aging water infrastructure, insufficient investments, and inadequate regulatory frameworks pose key challenges to the water sector. The quality of service is mediocre and poor infrastructure causes high water losses that reach about 40% in the large cities and up to almost 75% in some extreme cases, according to the UN.
Other studies have pointed to the overall inefficiency of big urban water utilities, which do not have the necessary economies of scale or density despite their size and some privatization efforts. In Brazil, where the private sector?s participation has increased over the past decade, the main water companies are still publicly owned. And in the absence of well-defined regulatory policies, privatization did not lead to greater efficiency.
What can be done?
The issue of water scarcity begs some important questions. The overall mismanagement of water has negated the continents abundance of it, and with water becoming a greater source of conflict, both government and industry need to work together on actionable measures. What is being done? Are we likely to see Latin American countries follow California in imposing water restrictions? Where do the opportunities lie?
- Brazil: The Brazilian Development Bank (BNDES) is offering government incentives to companies that adopt and spread best practice in water use
- Chile: has turned to renewables and some of the country?s biggest miners, including BHP Billiton?s Minera Escondida, are looking to desalination plants for their water needs. Demand for desalination is expected to increase at least 400% over the next few years and some Chilean lawmakers presented a draft bill to congress to make the use of desalinated water obligatory in mining processes (it lacks government support). New mining projects in Chile are likely to be further regulated with the recent announcement that a new Glacier Protection Bill will be pushed through congress
- Mexico: President Enrique Pe?a Nieto launched in 2013 a national program against drought (PRONACOSE) overseen by the national water commission (CONAGUA). The program consists of drought monitoring mechanisms and measures to prevent and/or mitigate water basin droughts. Other countries are now following suit, including Brazil and Turkey
- Peru: in 2014 became the first country in Latin America to establish a social conflict prevention unit (UPGC) within its national water authority (ANA) to identify and address conflicts related to water use. It is still early days to measure success, but the unit is already engaging with the mining and energy sectors
Opportunities for business
This brings an interesting set of opportunities for businesses to take the lead on water scarcity and secure their competitive advantage while there is still time:
Consider tax incentives and other mechanisms to promote responsible water use (BNDES example in Brazil) Proactively engage with a variety of stakeholders on responsible water resource management to generate public awareness and identify priority areas of work and mutual cooperation Campaigns should lead to meaningful public-private partnerships around water issues that serve to share best practice and go beyond ?feel good? talking shops Companies expecting to face social challenges can build and secure their social license by innovating in this area while communicating effectively to key stakeholders Educate citizens about the gravity of water scarcity and the need to consume less water on a daily basis Select industries (extractive & water) can support drought public monitoring and prevention programs that provide capacity building and draw on international best practice Ramp-up safeguarding of crucial water supplies (lakes, wetlands, etc.) around areas of operation through robust conservation programs Partner to reduce municipal water losses in cities through strict monitoring and more effective infrastructure maintenance
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