By Will Sarni, Water Foundry
There is a convergence of trends taking place that provide an opportunity to address the world’s most urgent water challenges. The most significant of those is the increasingly rapid adoption of digital technologies.
Water resources are under stress from over-allocation, increased demand, pollution, climate change, and outdated public policies. Historical approaches to delivering water for human consumption, industrial production, agriculture, power generation, and ecosystems are no longer adequate to meet demands. As a result, we need to vastly improve the efficiency and effectiveness of our public and private sector processes in water management. Fortunately, advances in data acquisition (think: satellite imagery, drones, and on-the-ground sensors and smart meters), big data analytics, artificial intelligence (AI), and blockchain provide new tools to meet needs in both developing and developed economies.
A digital water portfolio, for example, brings the value of real-time, system-wide monitoring – and response – within the capability of water providers of all sizes and sophistication. As such, it promises to increase the long-term value of water resource assets while assisting in compliance with regulations. It also helps respond to the demands of population growth and evolving natural and business ecosystems.
The value of digital
Digital technologies are transforming the water sector and our relationship with water in ways that were unimaginable just a few years ago. We can now use satellite data and analytics to map groundwater, assess real-time water quality, and predict flooding, for example. Digital technologies enable the more efficient and effective management of utility infrastructure and industrial assets and have ushered in an age of smart water in urban and rural homes.
Likewise, digital technologies such as IoT devices and AI are increasingly available for the management of utility and industrial assets, and they support the transition to a digitally enabled human workforce. The water sector, and more broadly water issues and opportunities, have moved the analog world into the digital world. Digital technologies alone have been transformative, but they are also enabling new technologies to address water supply needs (such as air moisture capture) and more resilient and sustainable treatment technologies (think: localized treatment systems for buildings and communities) for improved access to water, sanitation, and hygiene services.
The launch of a water index
Smart water technologies are also enabling the public sector to better provide universal access to safe drinking water, the private sector to continue to grow, and ecosystems to thrive. These solutions have moved from a high-level value proposition to address “wicked water challenges” to a more robust understanding of the value of digital water technologies, specific use cases, and an ever-increasing global community of digital water technology startups and investors. I go into detail on this in my latest book, Digital Water: Enabling a More Resilient, Secure and Equitable Water Future.
This brings me to the role of digital water technologies in building healthy watersheds and enabling market-based solutions to efficiently and effectively manage water. The American West, and in particular the Colorado River Basin, is an excellent example of what is possible with digital technologies and emerging market-based platforms.
For context, the Encourage Capital: Water in the West report was one of the first comprehensive evaluations of the Colorado River Basin and innovative approaches to address water challenges in the watershed. Those innovative solutions to address risks and scale impacts included the facilitation of water trading and the creation of markets to improve groundwater and surface water management. Since this report was published in 2015, there has been progress in launching market-based platforms such as the Nasdaq Veles Water Index. Launched in 2018, the Veles California Water Index (NQH20) is a first-of-its-kind water index that benchmarks the spot price of water across the state of California. The transparency of the index yields greater price discovery and allows for the creation of new tradable financial instruments for the California water market, according to its overview.
Investing in technology helps address an urgent situation in the American west
More recently, an article by Aspen Journalism titled, Dropping reservoirs create ‘green light’ for sustainability on the Colorado River, highlights the challenges and opportunities to address water scarcity and associated issues in the Colorado River Basin and the American West. The ongoing decline in water levels in Colorado River Basin reservoirs has created a window of opportunity to invest in water management initiatives to move the Colorado River towards sustainability. This includes a plan by the states in the Lower Colorado River Basin like Nevada, Arizona, California to leave more water in Lake Mead and to spend “$200 million to add 500,000 acre-feet of water in both 2022 and 2023 to Lake Mead, the nation’s largest reservoir, which has dropped precipitously low due to climate change and drought,” according to the Aspen Journalism piece.
This opportunity to address water scarcity and move the management of the Colorado River Basin to a more sustainable and resilient future will include the use of digital water technologies and, in turn, market-based mechanisms. The Colorado River Basin can’t make the transition to a sustainable and resilient resource for economic development, business growth, social well-being, and ecosystem health without digital advances.
Progress is within reach
Sustainability and resiliency are within closer reach with new mechanisms for monitoring water quantity, quality, and pricing. The American west is advancing on all of these fronts in a compelling way and serves as a good case study for other regions to follow. The increased adoption of digital solutions, investment in innovative business models and technologies, and market-based platforms will continue to have a positive impact on water management in the US and globally. Action should be taken with urgency as the impacts of climate change advance.
Will Sarni is the founder and CEO of Water Foundry and a founder of the Colorado River Basin Fund. His latest book, Digital Water: Enabling a More Resilient, Secure and Equitable Water Future, is now available.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.