May 4, 2016, 1:22 AM ETConference Presentation, Panel, Fireside Chat

Solving the Global Water Challenge

Over the past 25 years, 2.5 billion people have gained improved access to drinking water, a milestone cited as an achievement in solving complex global problems.
The UN estimates that by 2025, two-thirds of the global population will reside in water-stressed areas due to population growth and increasing competition from food, energy, and housing demands.
Significant disparities persist: hundreds of millions in the developing world lack water access, while developed nations face infrastructure failures, exemplified by the Flint, Michigan contamination crisis.
In developing markets, 660 million people lack access to improved water supplies, and 2.5 billion lack access to improved sanitation.
Low-income populations spend approximately $250 billion annually coping with water deficits, with many families dedicating up to 25% of their income to purchasing water from vendors.

Current water pricing models often fail to reflect the "real price" of water, as consumers do not account for infrastructure maintenance, environmental externalities, or historical subsidies.
Seth Siegel argues that agricultural pricing is artificially low due to 150-year-old allocation systems in the U.S., incentivizing farmers to waste water to maintain future allocations.
Rob McLean (California American Water) notes that utilities are cost-of-service regulated, often limiting their ability to invest in infrastructure at a rate sufficient to prevent aging pipe failure (e.g., replacing only ~1% of 48,000 miles of pipe annually).
Gary White (Water.org) highlights the "poverty trap" where the poor cannot afford the $200 connection fee to public utilities, forcing them to buy water at higher rates from informal vendors.
Water.org introduced "Water Credit," a microfinance model leveraging private capital; since 2008, $12 million in seed funding from PepsiCo leveraged $160 million in private loans to serve 3 million people with ~99% repayment rates.
The "Water Capital" fund, a $11 million social impact investment vehicle, aims to provide 100,000 people with water or toilet access for every $1 million invested, offering a 2% annual dividend to investors.

Agriculture accounts for the majority of water use globally, specifically 70% of U.S. freshwater and 78% of California's fresh water.
Chris Siafi (PepsiCo) identifies agricultural innovation strategies including direct drip irrigation, fertilizer runoff control, and breeding water-efficient crop varietals (rice, potatoes, wheat).
Seth Siegel cites Israel's 50-year agricultural revolution as a model, noting their early adoption of drip irrigation and the use of 90% treated sewage for agriculture starting in 1952.
Siafi proposes alternative biomass solutions using salt-tolerant plants (halophytes) and mangroves in coastal ponds to create water-neutral energy sources.
A civil rights dimension is noted regarding irrigation adoption: wealthy farmers can afford technology, while poor, minority, and female farmers often lack access to loans or collateral for water-saving infrastructure.

Climate change is driving a shift toward "resilience" strategies, with operators hardening assets against Superstorm Sandy and planning for sea-level rise in desalination infrastructure.
Rob McLean emphasizes that utilities must focus on backup power generation, as water pumps fail during power outages caused by extreme weather.
Seth Siegel suggests using water scarcity as a "gateway drug" for climate policy, focusing on observable facts like changing rainfall patterns and soil hardening to bypass political polarization on climate change theories.
Chris Siafi notes that technology solutions like desalination are energy-intensive, necessitating a "crack the code" approach to couple them with renewable energy (e.g., solar-powered reverse osmosis).
Desalination is gaining acceptance in California as a viable solution after conservation and recycling options are exhausted, though it faces environmental and cost hurdles.

The Carmel River dam removal project in Monterey, California, is the largest of its kind in the state, costing an additional $40 million for sediment removal to restore 25 miles of river habitat.
Gary White and others note that transferring bulk water from water-rich regions (e.g., Great Lakes to Arizona) is politically impossible and logistically prohibitive due to the high energy cost of moving heavy water.
Desalination costs in Southern California are projected to become comparable to regular water prices within 3-5 years, particularly when considering the energy costs of water transport.
Environmental opposition to desalination is described as a "religious battle," though proponents argue that combining it with renewable energy and minimizing brine disposal impacts can secure broader support.

The panel consensus identifies the "value of water" rather than the "cost of water" as the critical driver for innovation and conservation.
Chris Siafi suggests that monetizing water costs within corporate supply chains (e.g., PepsiCo) shifts mindset from water as a free resource to a critical capital expense, unlocking R&D investment.
Audience inquiries highlighted the potential for "Water ESCOs" (Energy Service Companies), where third parties install water-saving technology in exchange for a share of the savings, a model adapted for utilities lacking upfront capital.
Future progress relies on public-private partnerships that leverage private capital for the "base of the pyramid" while using public funding for large-scale infrastructure, recognizing that water solutions must be localized to specific contexts.
The transition from humanitarian aid (grants) to commercial finance (loans) is seen as essential to solving the water crisis at scale, as charity alone is insufficient to reach 660 million people without access.