LOWVILLE, N.Y.—When the Philadelphia Cream Cheese factory here star ted making string cheese, too, in the summer of 2017, it brought scores of new jobs to town.
It also boosted the facility’s water usage by hundreds of thousands of gallons on some days—eventually bringing its overall demand to more than 80% of the town’s typical daily supply. The draw sucked t he municipality’s reservoir to dangerously low levels. Town officia ls, caught off guard, banned the village’s 3,500 residents from was hing cars and watering lawns.
“People can’t believe how much water that plant needs,? ?? says Lowville Mayor Joseph Beagle.
The incident put the factory, owned by Kraft Heinz Co., at the center of a water clash in one of the most unlikely of places: a farming and cheese-mak ing hamlet in upstate New York that normally gets plenty of rain and snow, and sits just 40 miles from Lake Ontario.
Water is unlike any other commodity. Seen as a natural human right, it is a vailable when we turn on the faucet or slurp from the water fountain at the park. Behind that veneer of plenty, though, companies are waking up to a n ew, water-constrained future—even in places like Lowville, usually blessed with plenty of it.
A potent mix of population growth, surging industrial demand, pollution and climate change is putting relentless stress on water resources all over th e world. It is also pitting companies, used to near-limitless water, agains t other businesses and nearby residents, who need more of it, too.
During most of the 20th century, just 14% of the global population lived in conditions of scarce water supplies—broadly defined as insufficien t water to provide for human needs—according to a 2016 study by a t eam of water scientists published in the research journal Scientific Report s. Today, that has leapt to nearly 60% of the world’s people, a res ult of surging population growth and dwindling supplies of freshwater.
The situation is especially dire in the developing world. In India, 600 mil lion people face high to extreme water stress. Severe droughts have struck everywhere from East Africa to Central America in recent years, hobbling in dustry and farmers and forcing cutbacks in personal consumption.
More than half of the world’s cities regularly experience water sho rtages, according to U.S. environment nonprofit The Nature Conservancy. Las t year, Cape Town, South Africa, implemented severe restrictions for months to keep from running completely dry.
Climate change, too, can heighten water scarcity as rising temperatures dry up available resources. Alternatively, it can increase rainfall and floodi ng, leading to other challenges corporations must face as weather becomes m ore unpredictable.
“With population growth, water scarcity will proliferate to new are as across the globe,” a 2017 World Bank report on the causes and ef fects of water scarcity said. “And with climate change, rainfall wi ll become more fickle, with longer and deeper periods of droughts and delug es.”
Many companies dependent on public water access are just now coming to grip s with the new challenges—often only after a crippling supply disru ption, or the threat of one.
“A lot of companies talk about water being an important issue? ? but do little to adapt, said Jason Morrison, chairman of the United Nat ions’ CEO Water Mandate, which presses executives to assess their c ompany’s water usage across their supply chains and implement polic ies to make it more sustainable. “Then something happens, and there ’s a massive supply-chain hit.”
CDP, a London not-for-profit charity that tracks companies’ environ mental-impact disclosures, found that between 2015 and 2018, the number of companies reporting water-reduction targets doubled among firms it polls in an annual survey. Underscoring the challenge, though, nearly 50% more comp anies during that period reported using more water, not less.
The new risk is showing up in stock prices, too, according to an analysis b y Peter Adriaens, a University of Michigan professor of environmental engin eering and finance. Exposure to water risk among energy companies such as o il-and-gas drillers—which use huge amounts of water and are also ex posed to production-halting storms—translates to their shares being 23% more volatile than the broader market, his analysis shows. Other secto rs, like industrial firms and consumer staples, also show heightened volati lity attributed to their need for water.
Arjen Hoekstra, a Dutch water scientist, came up in 2002 with the “ water footprint,” a measure of how much water goes into products, i ncluding all the water used along the way. The metric helps quantify what P rof. Hoekstra describes as “the hidden water use behind the goods a nd services” people consume. That includes the water used to grow t he cotton in a pair of trousers, or to feed the cows that produce a gallon of milk.
A glass of wine takes nearly 30 gallons, if you count the water that goes i nto growing the grapes, according to his figures. A pair of bluejeans, made from irrigated cotton, can take more than 2,500 gallons. A pound of cheese : 668 gallons of water. Blame hungry cows eating water-intensive grains.
Mr. Hoekstra says a big reason water consumption is expanding around the wo rld is food—primarily, meat and dairy products. As economies grow a nd wealth increases, more people are eating meat and cheese, which have far bigger water footprints than fruit and vegetables. [...]