“We’ve come to some extent the place most international locations are going to finish up adopting laws that may require disclosure of carbon on the books of corporations, banks and monetary establishments.”
“One low-hanging fruit [to improve water data], for those who ask me, is to construct water disclosure into present carbon disclosure frameworks,” he mentioned. “I don’t assume it’ll require the identical period of time it took for carbon… as a result of you’ll be able to establish water a bit extra simply than carbon.”
By latching on to present frameworks that regulators have endorsed, water information – which is presently sparse and fragmented, and never required to be disclosed by corporations even when collected – will be consolidated into an interoperable database.
“We are able to add it up. We all know precisely how issues are shifting from one area to a different, and we will take motion to handle them,” he mentioned.
The president additionally referred to as for water-related disclosures to require “double materiality”, the place corporations must disclose the affect of their operations on water ecosystems, past the monetary dangers that they face from their dependence on water.
“It’s the double materiality that counts,” he mentioned. Shanmugaratnam is among the 4 co-chairs the International Fee on the Economics of Water (GCEW), which launched a landmark report placing a worth on the worldwide water cycle for the primary time on Thursday.
Rising water consumption pushed by the synthetic intelligence (AI)-driven information centre increase, which the report addressed, has sparked concern globally. In 2022, United States-listed large tech corporations Google and Microsoft reported a 20 per cent and 34 per cent spike, respectively, in water utilization to chill their information centres.
However many AI builders, like OpenAI which created ChatGPT, are presently not subjected to disclosure necessities and proceed to hide how a lot energy and water their applied sciences use.
Environmental reporting non-profit CDP noticed investor demand for water-related disclosures greater than double prior to now 12 months, with tech giants together with Apple, Amazon and LG, amongst people who monetary establishments requested information for.
In contrast to the International Reporting Initiative (GRI) customary – which stays essentially the most widely-used reporting framework, regardless of being voluntary – or CDP, ISSB has adopted a “single materiality” strategy, which focuses solely on the potential impacts to the organisation, somewhat than its impacts on the atmosphere and societies. Greater than 20 jurisdictions are within the technique of adopting the ISSB framework.
What does “correct pricing” of water appear to be?
In discussions round elevating the value of water, which stays a delicate subject globally, individuals usually cite trade-offs between attaining financial effectivity and social fairness, noticed Shanmugaratnam.
However this can be a “simplistic and poisonous debate” that the world wants to maneuver past, he mentioned. As an alternative, he steered that well-designed water tariffs, accompanied by “smart” subsidies, are wanted to make sure equitable entry to water for lower-income households.
Whereas Shanmugaratnam didn’t give estimates for the “correct pricing” of water, he mentioned that pricing should at all times be thought of along with subsidies.
As an illustration, since 1973, Singapore has adopted a block tariff system, the place households pay a uniform worth as much as a specific amount for water consumption, past which further tariffs will kick in for bigger shoppers. To make sure equitable water entry, lower- and middle-income households routinely obtain subsidies.
Some international locations, like Chile and Kenya, have related pricing constructions, however most international locations proceed to underprice water, he mentioned. “When [public utilities] don’t have sufficient income, they fail to put money into the upkeep of their techniques, which finally ends up costing them much more, stopping them from extending the infrastructure to succeed in poor and weak communities.”
“Via the right design of pricing… we will be certain that we preserve water higher, we reward the most important customers of water – which generally are giant industrial and agricultural corporations – much less, and use the subsidies as an alternative to help the poor.”
“That’s the mix for correct, practical pricing of water that displays its shortage, in addition to its many ecosystem advantages and a redirection of subsidies,” he mentioned.
Over US$700 billion a 12 months is spent on dangerous agricultural and vitality subsidies, which incentivises its profligate use and skews the areas of essentially the most water-intensive crops and water-guzzling sectors, like information centres and coal-fired energy crops, to areas most in danger from water stress, discovered the report Shanmugaratnam co-wrote.
“The world is spending a fortune on the improper subsidies. It’s spending a fortune on subsidies that encourage the overuse of water and vitality, together with the 2 collectively, comparable to diesel subsidies for pumping groundwater, which nonetheless exists in lots of components of the world,” mentioned Shanmugaratnam.
Within the Indian state of Punjab, for instance, energy for pumping underground water reserves is commonly supplied at low or zero charges, which many researchers consider exacerbates the extreme pumping of irrigation water, the report mentioned.
Moreover, subsidies needs to be redirected to spur improvements in water-saving applied sciences, the place a bigger proportion of options are already commercially viable, in comparison with local weather change applied sciences, he mentioned.
“Within the case of water, I’d say confidently that no less than 75 per cent of the applied sciences are obtainable. They’ve been tried in a single place or one other, however they lack scale,” Shanmugaratnam mentioned.
In distinction, consultants estimate that about 50 per cent of decarbonisation options the world is counting on to get to web zero are nonetheless frontier applied sciences which are unproven and require a number of analysis and growth sources.
“
We now perceive a lot better how water is not only a sufferer of local weather change. It’s not simply concerning the warmth waves and rising temperatures resulting in a drying up of the soil and rivers. Water can be a driver of local weather change and biodiversity loss.
The report additionally cited how subsidies to water-intensive crops, comparable to rice, cotton and sugarcane, incentivise their cultivation in essentially the most arid components of the world, like Center East and South Asia – placing additional stress on their water sources.
Agricultural subsidies are chargeable for roughly 14 per cent of annual deforestation, which disrupts precipitation patterns past nationwide borders, it mentioned.
This in flip has led to the lack of a number of the most vital carbon sinks on the planet, mentioned Shanmugaratnam. Of the three largest tropical rainforests that the world depends on for carbon sequestration, solely Congo continues to retailer carbon on a web foundation.
“Southeast Asia has crossed that tipping level and now emits extra carbon than it sequesters by way of its forests. The Amazon is on the tipping level and susceptible to being a significant supply of carbon emissions in 10 years’ time. Brazil and others at the moment are attempting to reverse that pattern by going for reforestation,” he mentioned.
“We now perceive a lot better how water is not only a sufferer of local weather change. It’s not simply concerning the warmth waves and rising temperatures resulting in a drying up of the soil and rivers. Water can be a driver of local weather change and biodiversity loss.”
Use water to reinvigorate multilaterialism
Water tends to be uncared for in multilateral discussions as it’s seen as a neighborhood downside – as a consequence of local mismanagement or useful resource shortage – and never “a part of the broader ecological shifts that the Earth system goes by way of,” mentioned Shanmugaratnam.
The entire world is linked by way of atmospheric flows of moisture, also referred to as “atmospheric rivers”, which decide rainfall patterns outdoors political borders, he mentioned.
“Right here in Southeast Asia, we obtain moisture from Australia and New Zealand by way of the environment, and in flip, Southeast Asia and South Asia ship moisture to China and Northeast Asia… Our interconnectedness by way of water is way more than concerning the transboundary flows that we will see with our eyes,” mentioned Shanmugaratnam.
That is why the hydrological water cycle have to be ruled as a “international widespread good”, which requires multilateral mechanisms for nations to set widespread targets and transfer in direction of the right pricing of water for its conservation, he mentioned.
“Multilateralism is weak, however not lifeless,” mentioned Shanmugaratnam, referencing current multilateral agreements that have been reached, just like the 2022 Kunming-Montreal International Biodiversity Framework in addition to the 2023 Excessive Seas Treaty.
“Within the case of water, the advantages to nations might be salient, and so they don’t have to attend a century or half a century to see these advantages. The advantages are speedy. So I’m hopeful that we will use water to reinvigorate multilateralism.”
