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Management in Practice

How Can Social Entrepreneurs Respond to the Growing Freshwater Shortage?

The idea of "water capital" is gaining resonance in a range of industries and regions around the world as supplies of freshwater come up short. Some of the critical solutions to this fast-developing, social-environmental problem are coming from social entrepreneurs who see a business opportunity. Anupam Bhargava, CEO of Clearwater Systems, discusses the role of cleantech in ensuring a sustainable water supply.

Over 700 million people have moved out of extreme poverty since 1990, largely due to development in emerging economies, an unmitigated good from a human-welfare perspective. However, increased economic activity all along the development spectrum has stretched natural resources, including water. The availability of freshwater is increasingly being seen as a limiting factor shaping social, economic, and business development across sectors and at local, regional, and global levels.

The United Nations' 2012 World Water Development Report highlighted four interlinked processes driving water shortages: economic development, growing population, rising demand for food and energy, and climate variability. "The conclusions are clear. Freshwater is a cross-cutting issue that is central to all development efforts," writes Irina Bokova, director-general of UNESCO, in the report. "Freshwater is not being used sustainably according to needs and demands."

While policy can help create a coherent framework for often-siloed perspectives on water, there is tremendous need and opportunity for innovation. Much of the world's water is being used, not for drinking or watering crops, but in generating electricity, which is often heavily water dependent (coal and nuclear power come with some of the largest water demands; solar and wind can have none). In the United States, 41% of freshwater demand comes from power plants, according to the Union of Concerned Scientists. Thirty-seven percent is used for agriculture, 13% for drinking water, and 9% for other industrial uses.

The combination of economic development and climate change mean that an increasing proportion of that energy usage is going for one purpose: air conditioning. Roughly 1 trillion kilowatt-hours of electricity goes to air conditioning each year; some forecasts predict it will grow to 10 trillion kilowatt hours—about half of the total current global electricity demand. Until recently, the U.S. used more electricity for air conditioning than the rest of the world combined. But China, with an increasingly prosperous and urbanized population, facing increasingly hot summers, is on pace to pass the U.S. in electricity demand for air conditioning by 2020.

Anupam Bhargava '98, the CEO of Clearwater Systems, which provides non-chemical water treatment for mechanical systems in large buildings, talked with Yale Insights about cleantech and sustainability opportunities involving water. He says that businesses are starting to understand that water availability has a direct impact on industry, but entrepreneurs still need to work hard to build understanding and awareness. "Awareness, ahead of reaching that tipping point of adoption, takes a lot of education of the marketplace," Bhargava says. "That's a part of the life of an entrepreneur. If you do something great and innovative you're necessarily ahead of the curve."


Q: What is the relationship between economic development and water use?

Anupam Bhargava: So, the growth that we have experienced around the world in recent decades has been fantastic when you look at places like India and China and the burgeoning middle class. And the opportunity that that represents is, of course, very exciting; it represents lots of business opportunity. But as those cities have grown, as new cities have been developed, the use of resources, of course, has gone up dramatically.

And when you think of water and the availability of water and the fact that it’s not easily replaced or created, there’s a real big impact on society. And you think about skyscrapers that are developed in Mumbai, well, every time that skyscraper goes up and uses lots of water—we’re talking thousands of gallons a day to keep the cooling system in the building operating—there’s a direct impact on the masses who also rely on that same portable water supply and now fundamentally have less water to consume.

So when I think about water, when I think of the impact on society of construction of economic growth, I think about the limitation on water resource availability and that we really need to be using what we have more efficiently.

Q: Does the average person understand the larger issues surrounding his or her own use of water?

Bhargava: As a clean-tech entrepreneur, one of the things that I’ve learned—when you’re bringing an innovation to the marketplace, or creating a new market for your product or service—is that raising awareness really matters. And that awareness ahead of reaching the tipping point of adoption takes a lot of education of the marketplace. So whether it’s California or China, there’s an awareness that’s building that water is not unlimited the way we thought it was 20 years ago.

And as we translate that into building resource efficiency, I think people are really starting to look at what are the things we can do, not just to save energy. You know LED light bulbs are now ubiquitous. That’s a great thing. We’re starting to put things like low-flow toilets into place. That’s a good thing too. But when you really think about the heart of a building and where a lot of the energy and water is consumed, it’s the HVAC system. So, that’s a little harder.

It takes a little more time to build the awareness, outside of a small group of people that is very focused on mechanical systems, for there to be a groundswell of interest that says, “Hey, we want this thing.” Of course, that’s also part of the life of an entrepreneur. If you’re doing something great and innovative, you’re necessarily ahead of the curve, and so you rely on building something of value that the market is really going to adopt. And of course, you bring a lot of optimism to that exercise. And I think we are certainly aided by macroeconomic factors, where people are fundamentally getting the fact that water is not an unlimited resource.

Q: What are the challenges of being socially responsible while increasing value?

Bhargava: So, I was fortunate to have the chance to speak at the Social Innovation Summit in Silicon Valley last December. And I was on a panel that was addressing social entrepreneurship or, in this case actually, intrapreneurship: how people in large organizations can act and really bring about positive change. One of the things that I commented on was that passion for a cause isn’t enough.

It’s certainly the spark. It certainly helps you keep working into the wee hours of the night, but as people really look to get involved in an important cause or work for a company or any entity that they believe in the values of, you really have to bring something to the table. You have to bring the skills. So whether it’s business skills or technical skills or other skills, it’s really important to bring something to the mix.

In the case of building businesses like EcoPower at Pratt and Whitney or really expanding Dolphin WaterCare at Clearwater Systems, I think those fundamentals—What does a good business case take? What are the right elements of marketing? What are the right elements of operations and finance that you have to bring together to make something that’s investable and then scalable in the marketplace?—are really important.