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Steven R. Loranger

Steven R. Loranger

Posted: May 3, 2010 07:18 PM

Water Infrastructure: The Unseen Crisis


When most of us think of infrastructure, we probably think of bridges, roads, trains and fiber optic cable--the visible circulatory system of a society that moves goods, services and knowledge from one point to another. But we now face new challenges brought on by unprecedented population growth that require us to rethink how we define and address the issue of global infrastructure.

This was a hot topic at this year's Milken Institute Global Conference, which I attended last week. Something I addressed there is my belief that we must redefine infrastructure to include systems that ensure a supply of clean, usable water and virtual networks such as national air traffic management systems.

In the latter category is NextGen, the new U.S. air traffic control system, which will bring satellite tracking and navigation to aviation. The resulting benefits will include faster, more direct flights that use less fuel and generate fewer greenhouse gas emissions. In fact, once fully rolled out, NextGen could save the U.S. economy more than $40 billion a year through fuel and labor cost savings alone. ITT's Senior Vice President and President of Defense & Information Solutions business, David Melcher, recently wrote at length on the environmental benefits of an upgraded air traffic management system in a Huffington Post column earlier this year, "Making Our Skies a Little Greener."

The importance of investment in air traffic management modernization remains a priority, but one month since World Water Day, let's focus on the unseen crisis of global water infrastructure.

Simply put, the world is running out of water - and people are feeling the impact, and the consequences. Although clean, drinkable water is among the most fundamental human needs, less than 1 percent of the world's water is safe to drink. Freshwater withdrawals are predicted to increase by 50 percent in developing countries and 18 percent in developed countries by the year 2025. In a world where every drop counts, we must invest in the infrastructure needed to conserve clean water and prevent what is already a global shortage from becoming a crisis.

At Milken, I heard a lot about the challenges of infrastructure finance. Pierre Beaudoin, President and CEO, Bombardier, Inc., estimated that less than 2 percent of most Western budgets is allocated to infrastructure development. Of that small amount, none is dedicated to water infrastructure. In the U.S., current funding for water infrastructure, including federal stimulus money, is only a tiny fraction of what is truly needed to keep water systems running efficiently to provide safe water to 300 million citizens.

One barrier to investment is that water infrastructure is almost invisible to the average person - and even when something breaks, it often goes unnoticed. Unlike a bridge collapse or a power blackout, which immediately leads to calls for infrastructure reviews, water infrastructure failures typically do not draw public outrage in the same fashion. For example, little attention is paid to the fact that 240,000 water main breaks occur around the United States each year, or that the value of the lost water alone from such breaks is $2.6 billion annually.

I believe that all levels of government must find ways to increase the overall investment in infrastructure. We must also put in place policies that provide financial incentive for investment. The EU might be a good model to follow, given the advances it has made in requiring efficient municipal systems and other ways of ensuring adequate investment at the local level. The EU's Water Framework Directive (WFD), for example, requires member states to introduce water-pricing policies with incentives for efficient water use.

But the answer cannot lie with government alone. The private sector must play a central role. Those of us with expertise on water issues, as well as those in water-intensive industries, have a great stake in finding workable solutions and are capable of making a lasting contribution. In recognition of this fact, many of us joined together with the World Business Council for Sustainable Development to develop a Water Tool - a process to help businesses measure and reduce their water footprint.

Partnerships, at all levels of government, business and society, are going to be critical in the coming years on a wide variety of issues, and water is one of the most important.