O ne de votre The columnists’ favorite way to spend a warm afternoon in Monterrey, three hours south of the Mexican border with Texas, is with a cold bottle of locally brewed Bohemian beer next to a plate of cabrito(roast kid). For a business writer, this is a justifiable use of the expense account. Beers like Bohemia have helped make Monterrey the industrial center it is. The Cuauhtémoc brewery, now owned by Heineken, a global giant, was established in 1890 by members of the Garza and Sada families, who became Mexico’s largest industrialists. Lacking suppliers in the arid north, they manufacture their own bottles, caps and packaging, giving rise to conglomerates that fuel the modernization of the country. Today, Mexico is the largest beer exporter in the world.

Monterrey is always awash with beer. But it is also hit by drought. This has left millions dependent on leaky public pipes desperately short of water, even as the industries that employ them gobble up the material, thanks to better private infrastructure. Brewers claim to consume less than 1% of local water, most of which is used by farmers who have no incentive to conserve it. This did not prevent President Andrés Manuel López Obrador, who never misses an opportunity to hit the rich, from blaming the industrialists. He told the beer companies to raise their sticks and move south, where the rivers still flow.

The industry is keeping its head down, treating this as populist rhetoric rather than a genuine threat to transplanting brewery locks, stock and barrels across the country. Yet the imbroglio is also illustrative. It shows how water shortages, combined with reputational damage and over-regulation, could affect many industries dependent on hydropower, food production, mining and power generation. clothing and electronics. Colin Strong of the World Resources Institute ( wri ), an NGO, argues that while the private sector tries to use water more efficiently, scarcity will be exacerbated by climate change, population growth and the greater use of water that accompanies growing prosperity. He cites a pithy refrain common in environmental circles. « If climate change is the shark, water is its teeth. »

The heat and the dryness leave teeth marks everywhere. In Chile, the world’s largest copper producer, the driest decade on record has forced mining companies such as Anglo American and Antofagasta to cut production this year. In recent days, companies such as Toyota, an automaker, and Foxconn, which makes iPhones for Apple, halted production in southwest China after a drought caused hydropower shortages. On August 16, the US government took unprecedented action to reduce water use in states in the lower Colorado River Basin to protect reservoirs critical to power generation. Norway, known as the battery of the Europe for its abundant hydroelectricity, says water shortages could force it to limit supply to its neighbours’ grids. In Germany, the Rhine fell so low that it affected the transport of cars and chemicals to the north, and of coal and gas to the south. Across Europe that was exceptionally rain-free, cereal crops have dried up in the heat. The same goes for the cotton fields in thirsty Texas. Europe exceptionally free of rain, cereal crops have dried up in the heat. The same goes for the cotton fields in thirsty Texas. Europe exceptionally free of rain, cereal crops have dried up in the heat. The same goes for the cotton fields in thirsty Texas.

The problem is not the lack of water per se. Climate change can make some places drier and others wetter. It is the uneven distribution of fresh water – which fast-growing places like India are sorely lacking – that creates the conditions for a crisis. This situation is aggravated by waste, pollution and the almost universal underpricing of water. Some governments, notably that of China, have created pharaonic projects to transport water to where it is needed. Others, like Mr. López Obrador’s, peddle the fanciful idea of ​​shifting demand to where the water is. The best long-term outcome, at least on paper, is the simplest: less stuff is used, and more of what is used gets processed better. VS’

Industries directly affected by water shortages have a head start. Global mining companies use desalination plants in Chile. Beer and soft drink companies, existentially dependent on clean water, have efficiency improvement goals (Heineken says it uses 2.5 liters of water to make a liter of beer in Mexico, about half of the global industry average). In collaboration with the wri, Cargill, an agribusiness juggernaut, recently extended water-use monitoring from its own operations to the farmers who supply its crops. Fashion retailers, whose suppliers are often heavy users of water and dyes in dry areas, are considering similar measures, to avoid outbursts of anger from local residents who fear they are second in line to taps.

This requires careful management. When Cape Town was at risk of running out of water in 2017, a B InBev, one of the world’s largest brewers, helped city officials reduce water losses from the network. Ingenuity also helps. In Singapore, NewBrew makes craft beer from reclaimed wastewater. André Fourie, head of sustainability at a B InBev, says that in the future, many companies will need to treat and reuse water to overcome scarcity.

Last orders

Looming shortages still don’t get the attention they deserve. As a heavily subsidized commodity, water is so cheap that many CEOs forget about it. A report this year by Planet Tracker and cdp , two NGOs , said about a third of listed banks do not assess water-related risks in their portfolios. For shareholders, it especially ranks far behind carbon emissions as an environmental, social and governance ( esg ) issue of concern. This is not a risk that can easily be reduced to oversimplification esg ratings. It is so dependent on local conditions that it requires a myriad of

According to consultant Will Sarni, water is an enigma. “It’s a personal matter. It is a social problem. It has a spiritual dimension. He hopes that new technologies that use solar energy to capture moisture from the air could bring creative destruction to the water supply. Schumpeter, Bohemia in hand, would drink there. ■

Read more from Schumpeter, our global trade columnist:
Tencent is a splinternet-tormented success story (August 11)
The Spirit deal is a missed opportunity for creative destruction (July 28)
Meet Keyence, global factory consultant (July 23)

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