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Page added on April 19, 2016
Hedging Your Bets in a Water-Stressed World
You probably have some sort of insurance – for your healthcare, car, house, or apartment. Acting on climate change is also like insurance. It is all about managing the risks.
We can’t know for certain what the future brings, but recent research predicts a 40 percent shortfall of available water across the globe by 2030. In the face of this prediction, a new report from the World Energy Council, “The Road to Resilience – Managing the Risks of the Energy-Water-Food Nexus” helps lay some groundwork to ensure we plan for the climate risks that will affect our most essential resources.
I have talked about the reliance of energy on water and water on energy (the energy-water nexus), and touched on their connection to food. But let me make that linkage clearer: 70 percent of available global freshwater is used by the agricultural sector, and energy is the second-largest freshwater user globally after agriculture (although this varies from country to country and region to region). Relatedly, about 15 percent of total U.S. energy demand is for the food sector (this includes both agriculture and processing), and roughly 13 percent of U.S. energy use is for water-related purposes.
The bottom line is: Each sector relies upon and influences the other two. Moreover, water stress or scarcity has a huge impact on both our energy and food. This report focuses on how the energy sector can better manage impacts on land and water, suggesting the industry would be wise to take out a little insurance to help bolster resilience and protect itself. Let’s break down the report’s recommendations.
Guidelines for creating a water-smart energy future
Because water and energy are so closely connected, vulnerabilities in one amplify the vulnerabilities of the other, compounding risk. Viewing energy through a water lens can help address critical concerns like electric reliability and resilience. Here are a few ways to get there:
- Project developers need to be able to better understand the water footprint of energy technology choices
Some energy sources use considerably less water than others – coal and nuclear top the list of thirsty energy, while energy efficiency, solar PV, and wind need negligible amounts of water. But many people are unaware of this critical factor. Taking into consideration the water requirements of energy choices could help ensure the development of projects that alleviate water stress. For example, having clear water-use data may mean electricity planners could prioritize the deployment of those sources with lower water intensity during times of drought – powering up natural gas instead of coal, perhaps, or increasing the amount of solar PV or wind in the energy balance.
- Risk assessments should reflect a comprehensive understanding of long-term system risks
It is irresponsible to plan future energy needs without careful consideration and incorporation of appropriate climate and hydrological scenarios. If full environmental modeling is not done to ensure resilience and reliability can be met with future water scenarios, investors in energy projects should rightfully be concerned. For example, if you’re planning to build a fossil fuel-fired or nuclear power plant without considering the increased water stress from climate change, the water may not be available in 15 years to cool the plant down, making these risky investments.
- Water scarcity has to be taken into account and, where possible, priced appropriately
An accurate price should include the true cost of water in relation to the energy sector. Water pricing is a highly sensitive issue, but when talking about the energy sector, just looking at the price power producers pay for the water they use – versus the water they withdraw – is not a reflection of the value. For example, although in general the amount of water consumed by an electric generating facility is much less than the water it withdraws, the water withdrawn (but not consumed) may not be in optimal condition (e.g., it may be hotter than it was when it was withdrawn). Furthermore, while the water is withdrawn it is not available for other local uses. But the price of water does not reflect these consequences. The true cost of water would include societal impacts and weighing current needs with future availability, based on climate models.
- Transparent and predictable regulatory and legal frameworks are needed
Currently water and energy are in two different silos when it comes to regulation and legal frameworks: different authorities, different budget streams, different professionals. A more comprehensive and collaborative approach could enable a more predictable and streamlined policy framework that reveals existing inefficiencies and undiscovered opportunities for efficiency.
- Measures to minimize finance cost and stabilize returns can be taken
Because of the disaggregated nature of the water sector, there are currently no comprehensive, robust financial tools to completely assess risk. One of the examples the report uses: Some parts of the financial services and insurance industries already offer instruments that consider electric price volatility, some reliability issues, and weather-related impacts. These financial products could be applied across the energy sector to hedge against risks such as water scarcity.
Because of the disaggregated nature of the water sector, there are currently no comprehensive, robust financial tools to completely assess risk.
Additionally, investors want to have confidence in the projects they invest in. Environmental Defense Fund has been instrumental in developing the Investor Confidence Project energy efficiency protocols, which help instill confidence that commercial building energy efficiency upgrades will produce the energy savings promised. In trying to establish similar protocols for water investments, the market is too fragmented for a streamlined protocol akin to energy. There is clearly a lot of work to be done, and understanding the risks as well as the guaranteed returns is critical.
This World Energy Council report underscores the need for a more systemic approach to both energy and water. Both sectors know they impact and rely on the other, but also face competing demands and the seemingly overwhelming task of where to even start. These recommendations lay out some good first steps for ensuring the future resilience of our energy sector through a more comprehensive lens that includes water. Think of it as energy taking out a water (and food) insurance policy.
22 Comments on "Hedging Your Bets in a Water-Stressed World"
makati1 on Tue, 19th Apr 2016 9:27 pm
Drip…drip…drip…
Wasted water is rampant in many countries. Until it becomes a matter of life and death, the problem will be ignored or unknown to the masses.
Apneaman on Wed, 20th Apr 2016 12:23 am
More warming=more moisture in the atmosphere=more frequent and bigger flooding. Which washes all sorts of toxins into waterways and everything else for that matter.
This week’s deadly flooding in Houston is just the beginning
“For starters, when floodwaters begin to recede, they bring their own set of hazards and dangers. A spokesperson for the American Red Cross noted the extreme toxicity of floodwater, reports ABC News, which constitutes a sludge of debris from cars, houses, and infrastructure — not to mention overflow from contaminated waterways like Texas’ Blanco River. The rising waters also disrupted wildlife — officials warned that aggressive snakes washing up on people’s properties were a risk factor. During cleanup, Houstonians will be exposed to a Pandora’s Box of mold and airborne toxins that could aggravate asthma or respiratory illness.”
more
http://grist.org/news/this-weeks-deadly-flooding-in-houston-is-just-the-beginning/
makati1 on Wed, 20th Apr 2016 12:40 am
Ap, but all that destruction and hazards just add to the financial god, GDP. so it can’t be a bad thing can it?
LOL
BTW: Couldn’t happen to a better state. The home of the petro world in the West.
Apneaman on Wed, 20th Apr 2016 1:38 am
mak, watch all the tough talking independent types who are always going on about welfare queens and Big Government get real quiet when they go to cash their Big Government FEMA flood insurance cheques. How many more years do you think that program can last? In some instances as much as half of the premiums on flood insurance is subsidized. When it’s gone most won’t be able to afford it. You won’t find any deniers in the insurance industry. No no no, they are all about facts and hard numbers and the numbers say – raise the rates. I wonder how that will affect mortgages in the higher risk areas? Instead of sub prime they will have sub marine. Banks don’t care they just want signatures then they can bundle up a bunch of sub marine mortgages and sell them to pension funds.
After that falls apart the talking heads on the MSM will throw up their hands and say -“who coulda saw it coming”
makati1 on Wed, 20th Apr 2016 2:03 am
Insurance of ALL kinds are reaching their expiration dates. Life insurance? Forget about it unless you die soon. Home insurance payments will eventually exceed the mortgage payments. Un-health insurance is leading the way. Flood protection? Not available. All of the other social safety nets will evaporate under the on-slot of Mother Nature. I think Social Security will be the last one to go, after the Meds. But it too will be history someday.
makati1 on Wed, 20th Apr 2016 2:06 am
BTW: You mentioned pension funds. That one is the biggest joke of all. They are all invested in junk and underwater (literally) home bundles. They too will go bankrupt as will 401Ks, mutual funds, etc. Wait and see.
Kenz300 on Wed, 20th Apr 2016 5:14 am
Yet the world adds 80 million more people every year….
All of them need food, shelter, WATER and jobs……
Endless population growth is not sustainable…..
Davy on Wed, 20th Apr 2016 5:38 am
“I think Social Security will be the last one to go” I detect a cognitive dissonance of someone dependent on something he cannot accept will end. Could this mean he has nothing once it is gone? Wait and see and pass the popcorn.
Davy on Wed, 20th Apr 2016 5:52 am
First you have to mention why we are in water stress everywhere. That relates to population size and consumption levels. Since we are a global economy water stress anywhere effects everyone indirectly or directly. If food and energy become effected in one place other places are effected and this continues on in a domino effect. The global system has been very robust in the years of solid growth.
Today at limits of growth and diminishing returns this has changed we are now facing problems everywhere that increasingly cannot be solved because of overpopulation and declining resource base one of which is water quality and quantity. It is related to the decline of quality and quantity of fossil fuels. These issues cannot be solved by business strategies. The issues can be slightly mitigated for the time being. More often than not these business strategies are just business opportunities for more exploitation of a public resource for private profit. The usual condition of corruption of a civilization approaching decline and collapse.
Davy on Wed, 20th Apr 2016 6:17 am
“India drought: ‘330 million people affected”
http://www.bbc.com/news/world-asia-india-36089377
“Authorities say this number is likely to rise further given that some states with water shortages have not yet submitted status reports. The drought is taking place as a heat wave extends across much of India with temperatures crossing 40C for days now.”
“Water availability in India’s 91 reservoirs is at its lowest in a decade, with stocks at a paltry 29% of their total storage capacity, according to the Central Water Commission. Some 85% of the country’s drinking water comes from aquifers, but their levels are falling, according to WaterAid.”
Apneaman on Wed, 20th Apr 2016 11:01 am
The other water stress.
Houston Flood Control Efforts Are Failing
Houston’s flood control efforts haven’t kept up with population growth and urban sprawl.
http://www.usnews.com/news/us/articles/2016-04-19/houston-recovering-from-yet-another-deadly-flood
Guaranteed failure once they allowed/promoted most of it to be developed after they had been warned a million fucking times exactly what was going to happen. Same deal happened in Calgary. The province and city were warned that it was coming and did nothing. Flood in 2010 and they still did nothing. Then the big flood of 2013. That’s pegged at 6-8 billion. Now they are not exactly swimming in extra cash to build up the defences. Many places cannot be defended and others that can – it’s too costly. If you live in Houston get out while you can. Sell before it’s too late. There will be no warning for when the steeple final clue in and the real estate panic starts. Not a very good option, but be grateful you still have one because it’s just a matter of time before we have none.
Apneaman on Wed, 20th Apr 2016 1:02 pm
“you know the person who has had the greatest positive impact on the environment on this planet? Genghis Khan, because he massacred 40 million people. There was no one to farm the land, forests grew back, carbon was dragged out of the atmosphere, and had this monster not existed there would be another billion of us today “
https://www.youtube.com/watch?v=87F2jX5Qk2Y
Apneaman on Wed, 20th Apr 2016 6:36 pm
Houston officials watching ‘high risk’ dams amid heavy flooding
Officials in the state say there is about two months’ worth of water to get rid of as heavy rains continue to inundate parts of Texas.
“Authorities said Wednesday the dams — at 50 per cent capacity — are working well and were classified as high risk only because they’re about two decades beyond their life expectancy and in a populated area.
Richard Long, with the Corps’ project operations branch, says it will take a long time to drain the reservoirs behind the dams in controlled releases. There is about two months’ worth of water to get rid of.
But as more water continues to come into the reservoirs from rivers and streams, officials expect some homes and streets near the dams to be flooded.
Officials also said Wednesday another person has died in Houston-area floods, raising the toll to eight.”
http://www.thestar.com/news/world/2016/04/20/houston-officials-watching-high-risk-dams-amid-heavy-flooding.html
Apneaman on Wed, 20th Apr 2016 8:10 pm
Here we go
Canadian Fire Season Starts Far too Early as Fort St. John Residents are Forced to Flee the Flames
“The new Canadian fire season, the one that climate change is bringing on, now starts in April. And it will likely continue on through September of this year. Nearly a half year of wildfires burning in what should have been one of the coldest climate zones in the world. A place now wracked by dangerous and difficult changes. A place where billions of sparks will fly this year over one of the world’s greatest piles of sequestered carbon.”
https://robertscribbler.com/2016/04/20/canadian-fire-season-starts-far-too-early-as-fort-st-john-residents-are-forced-to-flee-the-flames/
Apneaman on Wed, 20th Apr 2016 8:55 pm
At least 160 dead in Indian heat wave — including 12-year-old fetching water
Thousands of farmers have committed suicide, tens of thousands of farm animals have died, and crops have perished as temperatures hit 45 C.
http://www.thestar.com/news/world/2016/04/20/at-least-160-dead-in-indian-heat-wave-including-12-year-old-fetching-water.html
makati1 on Wed, 20th Apr 2016 9:23 pm
Ap, these are the signs of the times and will become more and more prominent in the news. Well, at least the news outside the US MSM Iron Curtain.
I wonder when the next volcanic eruption will happen in the US? The next big quake? The Rim of Fire is waking up and shaking the world.
Apneaman on Wed, 20th Apr 2016 10:56 pm
Global Warming and the Planetary Boundary
“Climate change is on a fast track, a surprisingly fast, very fast track. As such, it’s entirely possible that humanity may be facing the shock of a lifetime, caught off-guard, blindsided by a crumbling ecosystem, spawning tens of thousands of ISIS-like fighters formed into competing gangs struggling for survival.”
“Whereas, most leading climate scientists are not willing to honestly expose their greatest fears, as discovered by Amy Goodman of Democracy Now! while at COP21 in Paris this past December, interviewing one of the world’s leading climate scientists, Kevin Anderson of Tyndall Center for Climate Change Research, who said: “So far we simply have not been prepared to accept the revolutionary implications of our own findings, and even when we do we are reluctant to voice such thoughts openly… many are ultimately choosing to censor their own research.”
http://www.counterpunch.org/2016/04/20/global-warming-and-the-planetary-boundary/
Boat on Wed, 20th Apr 2016 11:09 pm
ape,
” Kevin Anderson of Tyndall Center for Climate Change Research, who said: “So far we simply have not been prepared to accept the revolutionary implications of our own findings, and even when we do we are reluctant to voice such thoughts openly… many are ultimately choosing to censor their own research.””
If only Trump would get on board with climate change, and Putin. They must not monitor peakoil.com.
makati1 on Wed, 20th Apr 2016 11:27 pm
Boat, hey cannot change the direction we are going in. No one can. We are all in a speeding car to hell and the capitalist polluters have their foot on the gas. It is only a matter of time until all we know is history and maybe we will even be gone, permanently. We shall see.
Boat on Wed, 20th Apr 2016 11:51 pm
mak,
Well be dead then but somebody will see.
GregT on Thu, 21st Apr 2016 1:09 am
“Well be dead then but somebody will see.”
I’m guessing you meant ‘we’ll’ Kevin?
Speak for yourself. Many of us here have plans in effect that don’t include being a part of the die-off. If recent trends are any indication of a runaway event, then you would be correct, except that the somebody else won’t likely be a human being.
Davy on Thu, 21st Apr 2016 6:52 am
This lack of acceptance of revolutionary implications are more than just with climate scientist. This is at most every level. It is not that we do not acknowledge findings, although many live in a narrative of denial, it is the connecting of the dots across the many levels of findings that is the failure. Far too many climate scientist are embracing renewable strategies without accepting the inability of those strategies to scale. Population findings are another area of gross deception. These deceptions concern growth trends and mitigation efforts. People do not want to face the thought of a die off. They do not want to face the thought of a trend of excess deaths over births. Some accept these findings and acknowledge the implications but are afraid to discuss it because they will be labeled and disregarded. Economics is truly a deceptive field. The list goes on and on.
The list of solutions on the other hand is huge. Humans have become hardwired for optimism and hope. The technophiles and the industrialist are always ready to offer the solutions. This is often profit driven like when a desal company wants business to help with a country in water stress. What political campaign could succeed with a reality based message? None, absolutely none.
These solution offers drown out any reality testing that could occur. We know the sheeple are confused and many are unwilling to even deal with issues so far above their level of understanding. Yet, we also have individuals who are academics and or part of the vast leadership class of business, groups, and politicians that choose to embrace solution optimism over reality. These solutions are just repackaged blind belief in technology, development, and more efficiency. The same stuff that got us into trouble in the first place.
What is needed is honesty and humility. Honesty to the facts and not just the trees but the forest. Humility that our technology, development, and quest for ever greater efficiencies is a failure. We must embrace a failure narrative. We must accept we are the problem. Our lifestyles and attitudes are a failure. You cannot solve a problem that you do not acknowledge is a problem. In our case it is a predicament and it can’t be solved but it can be adapted to as one adapts to a disability or terminal illness. We will get there because we have a crisis that will shake humanity to its foundation just over the horizon. Crisis always produces change by necessity.
The question is then is it too late to make a difference? Maybe all the deception is a good thing. Often we don’t tell very old people what is really wrong with them because it will destroy their quality of life. We may choose not to tell young children bad news or why something happened because they will not understand. Maybe our society can’t handle the truth so it is better to just forget about trying to educate them. The truth is always the best option but it can be argued away.