Water shortage – a global issue that concerns us all

by Peter Brabeck-Letmathe, Chairman and CEO of Nestlé SA and Member of the Foundation Board of the World Economic Forum

Last year, water finally moved up the list of priority issues as identified by members of the World Economic Forum. In the Closing Session of the 2006 Annual Meeting, the risk, or rather the high probability, of severe water shortages emerged as one of the top challenges facing the world in the very near future.

What are the underlying issues? Water use is steadily increasing, particularly in agriculture – today, farming accounts for 70% of total water withdrawn. It will continue to grow as the world population increases and a higher share of water intensive products in daily diets also in the developing world.

Water use for agriculture is far from efficient. One of the reasons are agricultural subsidies in industrialised countries – to the tune of $US 1 billion are day. They tend to keep regions with potential for rain-fed farming (e.g. in Africa) out of the market. OECD estimates that ending these subsidies would reduce water use for farming by 10% – another good reason to resume the Doha trade talks.

In addition, water itself is often heavily subsidised or even provided at zero cost to farmers. Prices of many farm products from industrialised countries would be a multiple if the full cost of water was included. Poor countries can only compete with these products if they provide water at zero cost to their farmers, too, despite the fact that they know that they are stimulating overuse and undercutting their sustainability in an often dramatic way.

Water shortages – still seen by many as a local problem – are thus rapidly becoming a global challenge; the amount of water used globally approaches the natural replenishment rate of the world’s accessible aquifers. Why should we, as a food company, worry about water? Nestlé depends on agricultural produce – it is the basis for our products. We are thus very concerned by the emerging global water shortage. And we are concerned for those whose nutrition base is being eroded by unsustainable overuse.

We have taken the water issue very seriously at Nestlé for many years. Today, we seek to intensify the search for broad solutions for more sustainable water use. We are keen to see how and where we can contribute within a comprehensive, global and sustainable water strategy of governments and intergovernmental organisations and will publish a report on water, readily available April 2007 on our website www.nestle.com.

Solutions, I am convinced, are possible, but require bold steps in governance and through partnerships. The 2007 Annual Meeting offers an opportunity to constructively discuss the issue with governments and stakeholders.