Hi, Race to Zero readers. I’m Walter Frick, membership editor at Quartz. This week, I was lucky to edit a field guide for Quartz members all about the crisis of freshwater scarcity. As close followers of energy and sustainability issues—and the critical role businesses play in their evolution—I think you’ll enjoy it. In particular, I wanted to share one concerning parallel I saw between water and clean energy.
For Quartz’s project The World in 50 Years, my colleagues asked a group of experts—entrepreneurs, artists, activists, and academics—what the most valuable resource in the world would be in 2070. Several of them answered in one word: water.
Like the race to develop low-emissions energy infrastructure, water scarcity is an urgent issue that the private sector doesn’t have adequate incentives to solve. How urgent? “Half the world’s population will be living in areas of high water stress by 2030,” according to the UN, and water scarcity will displace somewhere between 24 and 700 million people by that time. Unsurprisingly, climate change is one of the major causes of this shortage—though far from the only one.
But businesses of all kinds are waking up to the importance of managing freshwater scarcity, as John Engen explains in this week’s field guide. (Check out his roster of the organizations leading on this issue.)
Here’s where a potential problem surfaces, though. Technology is critical to better water management, so it’s perhaps natural that a growing number of startups are working on everything from better detection of leaks to more efficient irrigation. But increasingly, funding for those efforts is coming from venture capitalists—albeit from a small base.
And VC interest in sustainability can be fickle. I saw this first-hand years ago, working in clean energy policy and innovation. In the mid-2000s, lots of prominent VCs were excited about that sector. But in recent years, they’ve dramatically scaled back their investing. This wasn’t just bad news for the entrepreneurs who’d founded these companies—it damaged energy innovation overall. An analysis by Brookings found that US cleantech patents fell 9% from 2014 to 2016, a setback for the race to zero emissions.
Water issues, like energy, can’t be solved by technology alone. And, even where technology is the answer, the traditional venture-capital model may not fit. Business innovation needs to be paired with public investment, supportive policies, and improvements in public management. If we get those things right, the water startups founded today will have a chance to become the most important companies 50 years from now.
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