Prioritizing Water on the Global Agenda

Prioritizing Water on the Global Agenda

Hannibal Hanschke/Reuters

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Food and Water Security

Angel Gurría provides his perspective on the crucial need to deliver on present and future water challenges around the world, and advocates for water as a driver of sustainable growth and development.

SIMMONS: Welcome, everyone, here and to those of you who are watching online, to tonight’s Council on Foreign Relations meeting on “Prioritizing Water on the Global Agenda.”

My name is P.J. Simmons. I’m the chairman of the Corporate Eco Forum. And I’m honored to be presiding over this evening’s discussion and to have the pleasure of introducing our esteemed guest, Angel Gurría.

You all have his remarkable bio before you, but just to point out a few things before I invite him to take the stage. Mr. Gurría is in his 11th year as secretary-general of the OECD following a distinguished career in public service in his home country of Mexico, which included highly successful tenures as minister of foreign affairs and the minister of finance and public credit. Through both his work at the OECD and in Mexico, Mr. Gurría has become widely known as both a visionary and as someone who can get things done. And he’s been recognized as such with such—with awards and distinctions from over 30 countries around the world for his extraordinary record of public service and his relentless pursuit of better policies for better lives. If you haven’t already, I urge you to take a look at the full list of awards in his bio, which includes the French Legion of Honor with the illustrious distinction of Grand Officier.

In preparing for tonight, I learned a couple of interesting things about Mr. Gurría. First and foremost, he has a consistently sterling reputation among everyone who’s worked with him. I received several unsolicited emails to that effect when colleagues heard that I was presiding this evening, one of which described him in Spanish as “un tipo fantástico,” “muy simpático,” “inteligente,” “y accessible.” (Laughter.) In short, he’s a great guy.

AUDIENCE MEMBER: Guapo.

SIMMONS: “Y guapo.” (Laughter.) In all seriousness, they actually said that. (Laughter.) I’m not kidding.

I also learned of the fairly remarkable coincidence that both of us will be celebrating our birthdays exactly two Mondays from tonight.

So, ladies and gentlemen, with that brief introduction, please join me in welcoming Angel Gurría to the stage. (Applause.)

GURRÍA: The “guapo” part, very important. (Laughter.)

Just a little bit of household here. There on the table as you came in—I’m going to be referring to the OECD Council Recommendation on Water. This is because, after Mr. Upton and his team produced this Recommendation on Water, it was then approved by the Council itself, which makes it—a recommendation sounds like, well, just a bit of advice or whatever. Legally, at the OECD, this becomes kind of a binding thing. They now have to abide by it, and the countries in theory have to abide by it also. So it’s kind of the highest category without becoming a legislated mandatory proposition.

The second is the Roundtable on Financing Water, where, you know, we’re working on the whole question of the very great challenge of financing water, and then what kind of water because, you know, there’s always—there’s always financing of water. This is the difference with water, that it has to happen. The only question is, how does it happen.

And then the OECD Principles on Water Governance.

So this is already—you know, it’s a little bit of the work that we do. There are about, I don’t know, maybe 100 titles that we’ve published in the last few years about water governance, water risk, and water financing, et cetera. And this one is today’s long version of putting water at the center of the global agenda, because obviously we’re going to do something a little shorter in terms of presentation. Then we can have maybe a dialogue.

So thank you very much. Thank you for Mr. Simmons to—for the introduction, and also because it’s really very privileged occasion to—you know, when everything is going—so many things are going on, it’s very difficult to suddenly say let’s focus on water, because they say, what is this guy about, you know? He said water. I mean, we’re talking about trade or we’re talking about this or we’re talking about that, so many hotspots in the world, et cetera, and suddenly the head of the OECD wants to talk about water. Well, it’s because we’re talking about all the other stuff anyway, you know, but because we continue to believe that water is a crucial element, and that it has to be in the global agenda. We think it’s time to get our water act together. And I’d like to thank the Council on Foreign Relations for hosting us as we launch this call. P.J. Simmons, again, thank you for the introduction.

Water is at the center of some of today’s biggest challenges. Half the world’s population suffers from polluted water, and 1.8 billion people still lack access to a safe and sustainable supply of fresh drinking water. More often than not, the poor are most affected by water-related risks and disasters. Eighty-nine percent of the deaths due to storms occur in low-income countries. So what? Well, only 26 percent of the storms occurred in those countries. Obviously, there is a massive impact in the poorest countries. Recent work by the OECD and the Global Water Partnership estimate that globally water-related risks cost more than 500 billion (dollars) per year.

Well, water-related problems are not the preserve of developing countries. For example, at the global level, the expected annual impact of floods is estimated at 120 billion (dollars) per year just from property damage. And half of that is here in North America. Well, you know, a recent study about the relative levels of assets, you know, basically defined that that was the case. We looked at 27 megacities. We reveal that the megacity with the larger use of water per capita is New York. Los Angeles and Tokyo came fourth and fifth. Again, a lot of work there, and also a lot of risk.

To paraphrase the famous saying in Tip O’Neill’s book about politics in the ’90s, you’d say all water is local, hmm? And this is true in many ways, but it is dangerous to dismiss water as only a local concern. We do not have to stretch our imagination too far to realize how rapidly local water issues can become regional, then national, then international, then global.

The links between water challenges and increased migration, as well as the potential even for military conflict, are easy to discern. Tensions over the Tabqa Dam in Syria or transboundary water management in Central Asia, they’re just examples of—and they underscore the importance of water diplomacy as an integral part of foreign policy today.

We also know that drought in key agricultural sessions—in key agricultural regions can affect food markets and prices globally. And climate is changing, of course, amplifying the water resource challenges and the risks for many. The availability and the distribution of fresh water has already changed dramatically for some. It is not surprising, therefore, that the Sustainable Development Goals—the SDGs that were approved in September of 2015 at the U.N.—identified water as a major driver for sustainable growth and sustainable development.

The policy challenges underlying the issues I just described are numerous. Governance is one of them. How do we ensure the right decision-making systems are in place for the management of water resources, including at different levels of government?

Financing is another major challenge. While investing in water security makes economic sense, this doesn’t necessarily result in the financial flows that are needed.

At the OECD, we have been working on these policy challenges. Our recent OECD Council Recommendation, as I showed you, on Water, provides guidance on many of these issues. Our Principles on Water Governance, our Roundtable on Financing Water, they are just examples of how we’ve tried to distill best practices from a wealth of evidence, and put them at the disposal of OECD members and a growing number of non-OECD members that are asking for our support.

But one thing is clear: the efforts of individual organizations, although important, are not sufficient to tackle the scale of the challenges ahead. We need a global response. We need a new global water architecture. Today’s such global architecture is simply not fit for purpose.

Let me give you just, you know, a number of reasons why this is the case. We are failing to sustain the priority of both water policy and water politics. I was surprised to see, for example, that only three months after water was acknowledged as a distinct SDG—and let me tell you, we fought very hard in order to get it into the list of the SDGs as a goal. At best, they wanted to put it into a target, you know, one of 169. We said no way, you know; this is too big, too important. We already had it—we almost got it through the back door in the Millennium Development Goals, so we wanted to really push it as a Sustainable Development Goal. And we did. But only a few weeks after we had done just that, it failed to appear in the Paris Agreement on Climate Change. It was not there.

Moreover, we have failed to secure financing commensurate with the challenges we face and the goals we set. The world failed to meet the Millennium Development Goal when it refers to sanitation, and that is by a pretty wide margin. And on water, we declared victory. And suddenly, we—then we were part of something called the UNSGAB, the United Nations Secretary-General Advisory Board on Water and Sanitation. We founded that with Ryutaro Hashimoto, the former prime minister of Japan. And then he passed away, and then we got the crown prince of the Netherlands to chair. And he was very dedicated, very, very hardworking, but then he was promoted—to king. (Laughter.) So we lost him. And then we—you know, in the end, we—after—(inaudible)—there was a—we dissolved the group.

But the more important part of the thing is that the question of water, we all became very angry when the secretary-general didn’t—Mr. Ban Ki-moon declared that we had reached the water, because the fact that water was available had nothing to do with the quality of the water. A lot of the water—you know, people cannot live without water. That’s a fact. So they get the water someplace. The problem is that a lot of the water that literally billions were actually drinking were making them sick—was making them sick, and children were dying out of that kind of water. So we said no, it’s not a question of simply having some kind of water available to you. It has to be the quality of the water. So you can’t declare victory.

And, of course, when it comes to sanitation, what can I tell you? You know, just a huge, huge challenge.

As a former minister of finance myself, I know that lack of financing means that we probably have not been able to keep water high enough on the political agenda. Because if it’s not in a budget or it’s not financed, it means it’s not enough of a priority.

The second issue is the water community has no fixed focal point. Where can the water community meet? Or where, you know, is there a place where it can meet? Where can they discuss issues of common interest, engage in concerted and cohesive action at scale? The water community is fragmented. It is diverse. It coalesces regularly around specific interests in meetings like Amsterdam, Budapest, Daegu, Dushanbe, Singapore, Stockholm, Tel Aviv. We also have the World Water Forum that takes place every three years. But there is no cohesive engine behind these conversations, no cohesive engine that can ensure that the words translate into actions or recurrent policy deeds.

And then there is another angle, and that is we are not organized to produce and share the knowledge on the water that is needed at the global scale. Decision-makers need tools that allow them to develop robust policy responses at the appropriate scale. However, knowledge on the state of water is fragmented. It is patchy. No global network tracks water quality, for example. We know too little about groundwater availability, or the interaction between surface and groundwater in most parts of the world. Climate change will deeply affect water availability and water-related risks, but in ways that are still deeply uncertain at the local and regional scales. And again, I remind you, all water is local, and therefore it affects the way people act and react towards the issue of the availability, the cost, the quality, et cetera.

So, as a consequence, the attention we pay to water is episodic and unstable. It just changes. It’s all over the place.

Now, with a new secretary-general at the helm of the United Nations, it is time to put in place a more effective and inclusive global water architecture. I applaud the initiative of the U.N. General Assembly to discuss the integration and coordination of the United Nations on water-related goals and targets.

But today, even the U.N. is not equipped for the task, at least not yet. The 32 U.N. agencies that deal with water—only 32, hmm?—are loosely connected, approaching water from the perspective of their own respective agendas. Well, so they said, hey, what do we do about it? Thirty-two agencies, you know. Everybody said, rather than having just one or organizing it, this thing, they said let’s create U.N. Water so they will coordinate. So we said, oh, then who’s going to coordinate? Oh, we’ll rotate it among the different agencies, the 32 that deal with the issue. So the ILO finds itself, you know, dealing with the water issue. Of course, the ILO doesn’t, you know, deal with water. You know, just a—but they are responsible for water, you know, for six months or whatever. Then another agency. Some of them deal with water, some of them don’t, but you know, et cetera. This is the wisdom that they found, of course, because it’s politically expedient. Anything rotating is good, you know. It’s just kind of a, you know—you know your time will come, huh? (Laughter.) So—if you wait long enough.

But the problem is that U.N. Water is simply not equipped to reconcile the sometimes conflicting mandates and instructions given to agencies by member states. And here we’re talking about this lack of consistency does not apply only to the U.N. agencies, it applies also to the states, to the member countries that are giving instructions, because one is going to give them from the point of view of education, the other one from the health, the other one from the food, and the other one from this, and the other one from—you know? So the countries themselves do not—are not always very consistent in terms of the instructions they give to these agencies.

The lack of attention to the water Sustainable Development Goal has already been noted by the General Assembly, as well as in the assessment made by the then-U.N. Secretary-General’s Advisory Board on Water and Sanitation—this UNSGAB that I talked to you about.

Our role is to support the United Nations, and to work with and for the United Nations to build a new and effective global water architecture. We like to say about the OECD in a number of things that we are aspiring to get the Oscar for, you know, best movie and, you know, best director and best actor, and best this and best that. With the U.N., what we aspire to do is be best supporting cast, but still get the Oscar because we’re going to be good, you know. But it’s—you know, it’s the U.N. that has to do this. Nobody else can do it for them. But, at the same time, they need a lot of help. And this is one very, very big issue in which we need to focus.

Let me mention some elements that we may take into consideration when putting this new structure together. First, any effective response must be sustained and sustainable and stable over time. We need to see the right expertise and capacity, as well as the strategic political leadership. For cost reasons, for practical reasons, we need to build, as far as possible, on existing institutions and capabilities while recognizing that in their current configuration they are inadequate.

Second, any approach to water must be coherent both across geographic scales and levels of government. Again, national sounds good. Problem is, regional is a little closer; local is really where it’s at. And the responsibilities, the division of labor among the three levels, and then of course cutting across geographic scales. While national governments will play a key role in delivering the 2030 agenda, the SDGs, there are limits to what they can achieve at that level. Cities and regions must be key players in policy development and implementation.

And, third, the global water architecture cannot be limited only to water. Sectoral approaches to other challenges—I’ll mention some of them: food, health, urbanization, resilience, energy—also need to embed water concerns more effectively.

So, dear friends, in the 20th century we lost close to 50 per cent of our inland water systems. Obviously, we cannot afford to lose the other 50 per cent, because it’s the only one we got. We urgently need a consensus on a good-enough global water architecture, and to avoid the twin pitfalls of over-ambition—the perfect is enemy of the good—but also not to go—to resist that we move into a lowest-common-denominator response.

So let’s step up our efforts. Let’s push our boundaries further. Let’s get our act together. The water clock is ticking. In the words of Bob Marley: “You ain’t gonna miss your water until your well runs dry.” Thank you very much. (Applause.)

SIMMONS: Terrific. Thank you so much. Great food for thought.

You know, it’s tricky when you think about the global architecture, not only for the reasons you mentioned of the fragmentation of all the different 30-something groups that are working on this, but also because water is so intimately connected to so many other issues on the global—

GURRÍA: Well, 32 groups just in the U.N.

SIMMONS: Ah, right, right. So—

GURRÍA: Yeah. Of course, there’s every—

SIMMONS: Thousands of others, right?

GURRÍA: Well, every regional development bank, and of course the national authorities on the issue, and some of the regional authorities on the issue, et cetera. So it’s, you know—

SIMMONS: And you layer onto that the fact that water is so intimately connected to so many other issues on the—on the—

GURRÍA: Indeed.

SIMMONS: Including climate change. So how much do you think the solutions of solving the architecture issues are connected to fixing things within the existing systems, and how much of it is about creating something entirely new? And how do you see the OECD playing a role in all of this?

GURRÍA: Over the years, I’ve become a little skeptical about creating something totally new, you know, because everybody thinks about creating something totally new and then, of course, it becomes either too expensive or too difficult, or there’s a lot of pushback on what already exists and whatever. And also because there is always a way of improving things. And, you know, there are a lot of very important policymakers here who know that these proposals about creating something, you know, these days, with tight budgets and everything else, you know, it’s difficult.

So, no, I would say that we have it within ourselves to focus, certainly to target better, and at the same time to give it the appropriate visibility, the appropriate, well, even I would say kind of a naming-and-shaming way because if we do not succeed in creating a greater awareness in something that a lot—in many of our societies we still take for granted or believe it’s a right—I mean, in this—in these water fora that take place every three years, I remember Loic Fauchon, who was the president of the World Water Forum until recently, before Ben Braga took over, and they were pushing for this idea that it’s a kind of a—you know, a right—actually a right—and that everybody should accept that it’s a kind of a constitutional right. Yeah, but the problem is it’s a right to get the water, but it doesn’t mean it’s free. And then if you push this notion that it’s a right, you can very easily get to the conclusion that it’s supposed to be free because it’s a right, after all, and it’s in the laws and the constitutions. And then, well, you get the most expensive water in the world, which is in those places where because it is free the quality is not good enough and the amount is not good enough. And then you are subject to the water sharks of the world, you know, and then this guy with his—with his bicycle full of one-gallon plastic things with it, and they give you a shark’s price for the water, which is bad water in any case, instead of having a tap, which is the cheapest water in the world, and being connected and being measured and being—you know, and paying for the water, which for the poorest people is going to be one-tenth the price of the other alternative, which is bad quality.

So you even—you even have questions that have to do with what I would call simply the education. You say, OK, to the poorest people, what kind of water are you having? Because you can’t live without it. This is the big difference with anything else, you know, that you can’t live without it. And therefore, you have to have it; and therefore, at what price? Any price. In the end, you pay any price.

So I think there are enough—enough, let’s say, there’s data, there’s information. There’s also clarity about the consequences of the alternatives, you know, they’re so bad. And also, because this can pay for itself to a very great extent, having the proper tariffs.

After all, you only have three sources of financing. You know, one is tariffs, so if you pay for it. In Mexico, we have municipalities where you pay full operation costs, typically in the north where it’s—water’s more scarce, where there’s very little of it. They measure it very carefully and they charge for it, and they have the best systems and the best quality. And in the south, where they’re up to here in water, you know, typically they have bad water and they don’t have a good supply, et cetera, et cetera. This is where the whole—the floods take over. And they suffer and they get sick from the water. And they don’t charge for it. Why? Well, therefore, they’re very badly-financed water systems. And this is the same in Bangkok, you know, and it’s the same in Beijing, and it’s the same all over the place, you know? You just—if you don’t pay for it and there’s no shut-off price for the thing and there’s no opportunity cost to the thing, you’re going to get worse systems. You’re not going to get the investment that is necessary to keep up the quality of the systems.

So these evidences are quite abundant. But again, the politics of charging for the water in many cases are such that the politicians decide that they’re not going to put up the fight. In the end, that is more irresponsible than actually fighting to create the awareness and putting up the fight.

SIMMONS: Before we open the floor to questions, let me ask you one more—one more thing. I found it really encouraging over the last several years, there’s been this rapid uptick in discussions and awareness in the private sector and among investors about the connection between water risk and material business interests of a lot of major companies. In fact, last year there was a fivefold—five- or six-fold increase in the number of companies that were reporting globally on their—on their risks to the Carbon Disclosure Project, CDP. I think over 600 of the world’s largest companies reporting last year—

GURRÍA: Carbon disclosure?

SIMMONS: Yeah.

GURRÍA: Yeah.

SIMMONS: Reporting their water—their water risks to CDP, which is now asking for water-risk disclosure as well. How do you see the private sector playing into this reform process that you’re describing? And for those leaders in the private sector that would love to be supportive, you know, what would you love to see them doing more of?

GURRÍA: Well, this is a very good example. It helps a lot that you started by mentioning the carbon disclosure, because this is something that we discussed at the G-20. And instead of doing it, you know, for ethical or moral reasons or whatever—you know, sometimes these are difficult to sell—we did it on the side of financial regulation. And Mayor Bloomberg actually created a workforce of CEOs, a group of distinguished entrepreneurs who basically started looking at the question of carbon disclosure. And they came up with a report, and come—well, come July I think we’re going to present the final—the final version of that under the FSB—you know, Mark Carney, governor of the Bank of England, but who’s also the chair of the FSB—on disclosure. And this basically means that companies are now saying how much carbon that they contain on their balance sheets because the carbon may never see the light of day. And if they have that as assets at a certain price with a certain value, and you’re buying stock from those companies, you have to be aware of the fact that they have this carbon content—you know, either coal or whatever it is, that there is a—that may never see the whole lifecycle, and therefore, because—for regulatory reasons or whatever. And therefore, it’s a question of disclosure. Then you can make up your mind. But you need to have the information.

Well, the same thing with water. You know, today you say I’m an equal-opportunity employer. We have created an ambiance, a certain, you know, environment where companies compete with each other to see if they have gender equality or gender parity or whatever, gender—you know, moving towards diversity in terms of nationalities or whatever. So diversity in general. But then something like—now, of course, everybody’s green. Now everybody’s—you know, the carbon disclosure is part of the green. Everybody competes to see who’s greener than the next guy, and that becomes an issue that is now becoming part and parcel of the impact on your consumers. The consumers are now reacting positively to those who inform and who tell them, and negatively to those who don’t. And then consumers, you know, apply their sovereign power in that.

And here I would say that absolutely yes, this idea that you just mentioned, that we could do something like that in terms of saying—maybe through a certification mechanism of some kind we say how good are you at doing the best out of managing your water. And you have pretty dramatic examples. I remember when Muhtar Kent, the chair of—former chair of Coca-Cola, said—because we were giving him a hard time because of all the water he used in the process of producing Coca-Cola. He said, I’m going to be water-neutral. Now, Stockholm is going to be carbon-neutral in 2050. But for Coca-Cola to say they’re going to be water-neutral, that’s a—that’s a—you know, that’s a huge undertaking.

Or, well, how many thousands of liters do you take to produce one pair of blue jeans? It’s almost a cliché by now. Everybody talks about those things. You say, well, normally we associate, you know, blue jeans with cool, you know, young people. And sort of the—and they are deadly when it comes to water. They just use so much water, even from the production of the seed of the cotton, and from there on including everything else, you know, to the dye and everything else. And, well, it’s one of those things, you know.

So, yes, I think it’s a great idea. And I think, if we can make it stick, if we can make it happen, then we could have this—the private sector is one that’s going to make it happen. Households also have to make it happen.

But then, of course, price. Price. This is the commissions. Put a big, fat—my big, you know, strategic, scientific recommendation about the perfect price of carbon should be big, fat price of carbon, you know? That’s it: big, fat price. That’s my big recommendation. (Laughter.)

So, well, the same thing with water. Price it correctly. Price it at least at the opportunity cost, and then people will appreciate what they’ve got and they’ll take better care of it.

SIMMONS: Well, and like we were talking about before we came in this evening, there’s a couple of companies—Ecolab and Microsoft—working with Trucost at S&P Global, that have put together something called the water monetizer—water monetizer tool that actually allows companies to drill down into their supply chains all around the world and put a monetary value and a financial risk value connected to their water use. So even when the governance structures aren’t in place and even when prices aren’t appropriate locally, it’s allowing companies to actually start making different decisions now, which is encouraging.

So let’s open up the floor to—

GURRÍA: So let me just mention that, because I’ve been to Minnesota. I’ve been in the labs at the Ecolab in Minneapolis. And they do just awesome work, you know. It’s fantastic.

And again, the concept is just what is the new ethics of the supply chain, OK? It used to be that you worried whether you respected the work conditions of your employees. Do you pay them overtime? Can they have, you know, a nice working atmosphere, et cetera, et cetera? Do they have social security protection, et cetera? But, you know, you bought everything from other sources, and you couldn’t care less.

There was a moment, Rana Plaza; 1,100 people died in a single building which collapsed. And that changed the logic. So H&M doesn’t care, you know. What is it, Zara doesn’t care. Gap doesn’t care. You know, any other companies doesn’t care about where this thing is coming—of course you got to care. Take a look at the supply chain, and you—if you’re going to sell me something, you are responsible for making sure that nobody there is having children in slavery or—you know, I was with Kailash Satyarthi recently in Delhi, you know, launching the march of millions for millions—or whatever it was, the name—against child slavery because, you know, all these—and they work in suppliers of the large companies. So, again, looking at the supply chain is absolutely crucial.

And again, we don’t have to reinvent the wheel. These are concepts which already are applied to other concepts—to other cases, and therefore we could apply it to water.

Sorry to chip in there.

SIMMONS: Absolutely. No, it was terrific.

So a reminder that we are on the record this evening. And let me just remind you all to please speak clearly into the microphone when you’re asking a question. State your name and affiliation. And, as always, please try to keep to one question and keep it concise so that others can contribute.

Yes, sir.

Q: Thank you, Angel. Good comments.

You only mentioned—

SIMMONS: I’m sorry, your name? Your name and affiliation?

Q: Richard Huber, InVina Wines, with extensive agriculture operations in Chile, where we pay a very high price for our water as you know.

GURRÍA: Good. (Laughter.)

Q: But you—indeed. But you only commented on the biggest user of water, which of course is agriculture, once, in your comment about cotton for the jeans. Really, we all are aware of urban use of water because that’s us. But the biggest user by far around the world is agriculture, and the biggest waste of use of water is agriculture. Do you have some comments on that?

GURRÍA: Yes, I do.

SIMMONS: Vamos.

GURRÍA: And it is true. What you just said is the greatest single problem. We are fighting about the 10 percent margin for the cities. You know, there’s an urbanization process, that’s going to be a higher and higher percentage. But in developed countries, in the most efficient developed countries, as low as maybe a third to 40 percent of the wat is for agriculture. In developing countries, in the least efficient, 70 to 80 percent is for agriculture. Therefore, you can eat into that double percentage—you know, 40 to 80 or 30 to 80 (percent)—and you just need about 10 percent of that to make sure that the cities are fully served. Now, there’s also industry, which is getting more and more aware of this.

So we are fighting a very artificial fight, if you will, because we’re rending our clothes. You know, this is like when we’re talking about trade, Monsieur Froman, you know, where we’re talking about agriculture, where we’re talking about manufacturers. And 75 percent of our economies are services. And we could never get the deal on the services off the ground because everybody was so defensive and so absolutely, you know, it was—and because, also, there’s, you know, many areas, some of them very sensitive. But anyway, it’s the same thing with the question of the water. You are fighting many, many fights which are kind of the wrong fight. If we get the diagnostic wrong, then you will get—you will fight the wrong fight, and you will spend a lot of energy and time and money, et cetera, and you won’t get the results. And you will neglect the essence.

Now, rolling water, covering the canals, drip-drop—I mean, drip drop—it was invented by the Israelis, I don’t know, 50 years ago. It still works like a charm. And you still have rolling water out in many of the developing countries, which is all—you know, which evaporates, or which is absolute waste, it doesn’t do anything. So, yes, there’s a lot—that a little bit of investment, a little bit of modernization, a little bit of it helps—would help a lot, and certainly would make is possible with the water that we have today, this endowment of water that he have today, to, you know, make it work.

SIMMONS: Yes, sir.

Q: Hi. Jay Koh from The Lightsmith Group. We’re a sustainable investment platform.

You’ve talked a little bit about climate change exacerbating all of these issues, as well as remarked on the taskforce that was set up by Mayor Bloomberg, and Mark Carney, and the FSB. Part of that focuses on the physical climate risk disclosure as well, which is some of the CDP data. I’m just wondering if there will be more of an engagement that you can see between government, public policy, and investors to really focus on this issue, whether it’s a question of setting prices or making sure that the data is adequate, or that we’re looking standardized scenarios to look at what the impact of climate change is going to be on all of these issues, since the primary vector of the risk is going to be water.

GURRÍA: The answer is yes. And that is because there is going to be greater regulatory focus. There’s also going to be very important peer focus. Everybody’s going to be breathing down each other’s throats to see if you’re actually disclosing and you’re actually saying what—actually that whatever you’re saying is actually true because, you know, if you’re using it as a competitive tool, which I would say, you know, eventually you want to get it like a competitive too, because then you get the other guy trying to upstage this one and the other and nothing, nothing, nothing, even—you know, good competition beats the best regulator, hmm? So you get—you get the competition going. And of course, if you get good competition and the good regulator, that’s the best thing. But you get the competition going, and you will see it happening.

Now, the question is—on the one side, is how exposed are you to certain—already, for example, carbon. The other one is saying, OK, how exposed would you be in the case of? Now, if you’re in the Midwest, clearly tornadoes are, you know, something you got to look at. But when you are in either drought territory or you happen to be in Japan where the problem of too much water is the greatest source of risk, as you know. And we really—again, the answer is yes, because I believe that this is an inevitable trend. And that the question—this is like labeling. It’s going to be like labeling, you know? You’re going to have the labels that are going to say those things. And everybody is going to be more and more aware of these issues. And it’s also going to be good management, because it’s going to increase the awareness of the companies themselves to the risks that they are running, and perhaps be better prepared, and then maybe get some insurance—you know, or this could be good business also, you know, there’s this.

And so, do the prudent thing, and also develop some technologies to deal with it. It can be a source of business. Green can be a source of business. And also prudence can be a source of business. Doesn’t have to be only a source of costs. So.

SIMMONS: We have a question right here in the second row.

Q: Guy Erb, Berkeley Research Group.

SIMMONS: Hold on just one second till we get the mic.

Q: Guy Erb, Berkeley Research Group.

I want to bring back to—bring it back to politics, as water is local, just like politics. And I’m thinking particular of cities, not so much their access to water but their effluence. When it floods here in the Mississippi Valley, hundreds of cities’ water systems are overwhelmed, and millions of gallons of raw sewage goes into the Mississippi River. This is probably true in other river systems, but the Mississippi, of course, is central to the whole United States. So what can we do to make cities compete for improvement in their status as a water—not an effluent creator, but water saver? You know, because people are definitely taking steps to sanitize their effluence, particularly under harsh conditions when the local systems are just overwhelmed. St. Louis is using storage tanks—huge storage tanks. But there must be other solutions as well.

GURRÍA: One expression that stuck in my mind when I was watching the U.S. election very closely, with great interest, was Mr. Trump’s now rather famous expression that 10 years ago you couldn’t drink the water in Mexico and that Michigan was producing the cars. And now that now, of course, the opposite is the case. I thought it was a very good phase. You know, it was kind of a sticky phrase. It’s the kind of thing that, you know, makes—whether it is in absolute terms, and whether it’s fair or not, that’s another matter.

But it’s a kind of a—now, you have situations where, you know, in the city, in Michigan, you effectively couldn’t drink the water. But it’s also there was procrastination. Now we know. There was procrastination. The authorities didn’t act immediately. They had identified the problem. Somebody told somebody else that somebody else kept it for a while. So finally, they told somebody else. And by the time it had gotten to somebody, you couldn’t drink the water, and people actually were—you know, with very serious consequences.

So the question of the cities—you know, we theoretically say that the world is mostly urbanized because 52 percent of the world lives in cities. That is true. In the OECD, however, it’s 75 percent of people. Eighty percent of the people live in cities. So the question of what is happening every day in the cities is absolutely crucial. So the question of water in the cities. I’d say that this—Guy, this kind of this drive to do better with the water is now something that is generally shared, understood—you know, maybe in Flint—not in Flint, but, you know, or the past people in Flint. But basically, everybody is aware. First of all, the question of the availability, the question of the quality, and therefore in a greater and greater number of cases, the question of the price.

And then the discrimination of the use, because it can be agriculture, it can be industrial, or it can be for, you know, family use. And then you have to eliminate the distortions. For example, I’ve been to a number of countries where there’s a very, very heavy subsidy on the electricity that is used to pump water out. And then on top of that, the water is free, or close to free. So pumping it is very cheap. And the water itself is free. What is happening in every single case—and that is in the Middle East where the water is scarce and in other countries where the water may or may not be abundant—is the phreatic levels are just down and down and down. They’re being contaminated. They’ve become saline. They become—you know, there’s also chemical contamination, et cetera.

Now, you talked specifically about effluence. Technologically now we are more and more capable of dealing with the effluence efficiently, even pretty heavy effluence, you know, with heavy metals and stuff like that. And being able to reuse it for limited—depending on how heavy or how difficult is the question is the effluent—for limited use and limited purpose, or reusing it for—including, technically—technologically that the heaviest water can actually be drunk again, if you clean it enough. And it’s technologically possible. And that is—but, of course, it’s a question of cost. There’s a practicality issue, and then there’s a stigma kind of a—depending on the—you have to be—again, make people aware about the origin of the water, and then make them take a choice.

But I see this as—first of all, there’s regulation. That means more and more it has to become mandatory. And then there is I would say healthy competition, and that means awareness. And last but not least, naming and shaming for those who won’t, because then it becomes part of the politics, and therefore citizens will feel my mayor, my city council, my water commissioner, not good enough. Not up to date. Not worried about my own—you know, it’s—water is local, but it’s also very intimate. It’s very mine, you know. It’s me and my water, my use of water. So therefore, you have to appeal to this kind of relationship with the water in order to force upon the policymakers the right decisions.

SIMMONS: Question in the back, Mr. Ambassador.

Q: Thank you. Juan Jose Gomez Camacho, Mexican ambassador to the U.N. Very good to see you, Mr. Secretary-General.

Let me actually bring you back to—stay on the politics of water, both in terms of pricing water and also in terms of investing in water, in terms of governments or from point of view of politicians. Dividends of investing and pricing water are very long term. So the incentives for political leadership to invest and work in water are complex and if not very limited. And one of the challenges in terms of, for example, water infrastructure development—people can’t see it, it’s very costly, and very often creates trouble for the public. So again, they’re politically complex.

Pricing, which is even harder. And let me go back to what you were saying on pricing, and even to use example of agriculture. In Mexico, you are quite rightly in the sense that in the north is well-charged—priced and charged, the south is not. At the same time equally, in Mexico, 30 percent of the use of water goes to urban—or is for urban use. And this is where—in the north is well-priced and in south is not. But 70 percent of water is used, as the gentleman was saying, for agriculture. Now, the 70 percent is for free. We don’t charge it. So we only partially charge the 30 percent, and the 70 percent—which is for agriculture—is totally for free.

I don’t even want to start imagining the public and the political reaction if the government of Mexico, for example—as it should, I think—thinks of a policy of charging—pricing and charging this 70 percent of agricultural use of water. What do you think there? Because I conclude by saying that President Pena Nieto, as you know, co-chairs the high-level U.N. panel on water. And one of the big challenges that we are having in the U.N. in trying to bring water and to put water in the center of the global agenda, because it’s really important, is precisely pricing it, valuing, and making sure that political leaders can naturally do it. Thank you so much and, again, very good to see you.

GURRÍA: Thank you, Ambassador. I remember when we were discussing whether you should put a price on carbon. Said: Do you imagine what will be the political reaction if you put a big, fat price on carbon? And they goes, well, you couldn’t talk about it. Some countries, however, were doing things. Today, when you’re talking about carbon, you have countries that are still subsidizing the use of, you know, fossil fuels, and countries, like Sweden, which are charging 117 euros per avoided ton of CO2 equivalent. So some subsidize it and some charge 100 euros per ton.

The ETSs, the—you know, these systems where you issue rights to issue, you know, emissions to produce emissions and then sell them at a price—you know, you auction them, have been a total failure—total failure. The Europeans have tried four times to get it off the ground, hopeless. They’re not getting anywhere. And then I say well why, you know, big fat tax for the big fat price, does it? They say, no, because tax is a four-letter word. (Laughter.) Well, politically it’s a four-letter word. (Laughter.) I say, OK, so you can’t put a price on the thing because it’s going to be politically dangerous and you have the next election coming and whatever. Well, the fact of the matter is, well, yes, it took an international agreement.

And, now, water is a little bit more local than emissions, because the emissions go to, you know, deplete the ozone and whatever, and all sorts of impacts. And that affects everybody in the world. And so that has to be socialized, if you will, it has to be globalized. But water in a way will also. And there’s many cases of basins that are—but in the end, if you’re going to get better water with better quality. You know, many of those people are going to realize—and they should be informed about the fact—that in their case there’s not going to be an opportunity cost for water. There’s simply not going to be any water, period. And those people who are today enjoying an economy which is completely artificial by having the fundamental input free, it means they’re in a different business. You know, they’re not in a business where they should be in, because if it doesn’t work with a level price of electricity and a level price of water, then that is something they shouldn’t be doing.

Now, it is easier said than done to say the vocation of a piece of land can suddenly be switched. You know, you can produce corn but maybe you can’t produce, you know, aubergines, hmm, for exports, or whatever. You know, so you have to be careful with that. But my various serious reflection upon your very serious and important question, is what is the worst of the two evils? Either, you know, the danger of becoming unpopular for the next election or fixing something which is going to affect the next generation? This is an intergenerational responsibility. It’s not about the next election or about making people very angry. It’s about the parents knowing that their children are not going to have any water of any kind. And maybe they’ll think about it twice.

SIMMONS: Well, Secretary-General, in the interests of staying on time, I want to—I want to close this evening. But I want to thank you for your thought leadership on this work. Thank you for urging us to think a lot about the importance of a big, fat price on both carbon and water. And thank you very much, most importantly, for your patient leadership, and steady leadership, on these really important, complex issues. Please join me in thanking the secretary-general. (Applause.)

(END)

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