Water Scarcity

              Based on an article in San Francisco, water scarcity has given entrepreneur an opportunity to develop innovation in water industry. A new start-up company in Seattle called Hydorvolt has develops a portable turbine that uses water flowing in irrigation canals to generate energy. Moreover, BlackGold Biofuels that based in Philadelphia reuse the wastewater by taking out fats, oil, and grease to create biodiesel. The reason why most of the firms starting to develop in the water industry because water is essential and dispensable to human in daily basis. According to David Henderson, a partner at XPV Capital in Toronto, water is critical because we uses a lot of water resources, for instance to produce, eat, drink and need which is now underpins well all economic development. Thus, entrepreneur seeks chances to use water scarcity as their business growth and it is a new path to expand and improve their business model. Besides that, entrepreneurs observe that human demand for water increases as the population increases which lead to daily reduction of water resources.

( Image source from : http://peopleint.wordpress.com/2012/06/26/lets-endprevent-water-scarcity-in-world/ )

( Image source from: http://www.toonpool.com/cartoons/water_84452# )

                According to the studying of economics, people in the society has unlimited wants and needs but Mother Nature is unable to satisfy everyone’s needs. Therefore, there is only provided limited resources to let the human make their choices. At the same time, people must forgo the second best of goods or services; it is defined as opportunity cost in economics. Scarcity occurs when what have the people demand for are readily available (Reilly, 2013). Scarcity is a fundamental issue in economics. In the theory of economics, scarcity refers to limitation, for example, insufficient resources, goods or the abilities to achieve the desired ends. On the other hand, economics assumes that people are greedy and always request for more than their limits. Due to infinity wants and needs, people have to find out ways to make the best use of scarce resources or find alternatives for the limited goods which is important for the future world (econlib, 2010). Without scarcity, an economy cannot exist and human will not learn to appreciate nature resources. Lastly, people will also study how to balance the demand and supply, in order to prevent shortage of a product or service in the economy. 

(Image source from: http://www.economicshelp.org/blog/586/markets/scarcity-in-economics/ )

The diagram shows that quantity supply of water decreases (move to leftwards) will increase the price but the quantity demand will decreases (move to leftwards) but it does not change much.

            World Health Organization has reported last year that about 884 million people are lack access to improved drinking water supplies and about 2.6 billion people are lack access to basic sanitation. In addition, even in well developed countries also facing water problems such as infrastructure is aging which causing leakage and pollution to the water supplies (Gies, 2011). This has proven that water scarcity problems are causing impact on people’s daily life in many ways. Moreover, micro pollutant is growing hazard to the environment and climate change makes the water supplies unpredictable which may get worse in near future. Besides that, uncontrolled use of ground water by the people has caused salination of the water which lead to the problem of the water in the coastal areas are becoming salty. This happened because of the sea water is slowly replacing the ground water, and people will not able to consume more ground water. The main reason of causing water scarcity is related to global warming. The decreased in rain fall recently which also indirectly deceasing the level of ground water due to lack of rain water. Furthermore, as the population will keep increasing which the consumption of water by people around the world will also increases (Edwin, 2010). Thus, there is lack of water available for cultivation. Obviously, water scarcity is lack in quantity of water to use and lack in quality of safe water to drink. Once again, it can be concluded that water can be considered as economic scarcity because it is time consuming and costly to find reliable safe water and it cannot be replace by any other goods.

Water Scarcity
( Image source from: http://meerkat21.wordpress.com/2010/10/10/water-scarcity/ )

           

            The problem of water scarcity will only continue to grow as more and more people are demanding for water but unfortunately water is a limited resource. The demand of water is increasing while supply of water is decreasing by time, and environmental factor. Based on the article, written by 2030 Water Resources Group, an association of the World Bank reported in 2009 that population growth and urbanization will be driving the demand for water up to 40 percent within 20 years. Moreover, demand for water is doubling every second when water and energy are closely linked. For example, nuclear plant crisis in Japan has caused huge amounts demand of cooling water. On the other hand, there is also a case that hydraulic fracturing is extracting U.S. shale gas and oil mining in Canada which both techniques require a lot of water to open up huge hydrocarbon reservoirs. From the examples given, they have proven that innovation in technology is demanding large amount of water. Therefore, quantity demanded for water will continue to rise significantly and expected to exceed the quantity supply. Eventually, shortage of water will occur in the market. According to Mr. Henderson (2011), industrialization lifts people to start consuming things like jeans, cars, smart phones, and shoes that need huge underlying water footprint to produce. Once again, supplies for water will never meet the demand of people for water which is very water intensive. Based on the law of demand, when the proc3e increases, quantity demanded will be reduced. As the demand of water kept on increasing, the prices of water are rising since 2010 from 18 percent until nearly 25 percent in some major U.S cities. Unfortunately, the demand of water did not change that much as water is an inelastic demand, which will not influence much of the demand curve (circleofblue, 2012). Water scarcity is not shortage. A shortage occurs when demand for a good exceeds supply which is affected by price changes or market is not clearing and this can be fixed but scarcity is always exists. Therefore, no matter how much the water company increases the cost of water bills, people will still continue to consume the service because they cannot disconnect their water supply. 

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The diagram indicates that water is inelastic demand so quantity demanded will changes a little with a large movement in price.

( Image source from: http://www.cartoonaday.com/images/cartoons/2012/09/us-drought-watershortage-cartoon-598x427.jpg )

             However, entrepreneurs and investors think that water scarcity signal opportunity. Tamin Pechet, founders of Imagine H2O competition explained that human and environmental issue like water problems is a potential and commercially attractive market opportunity for businesses. Water scarcity has given them a new critical path to approaches water industry as business model. This market is potentially benefits when Rob Steiner and Peter Yolles set up a successful example. They have founded WaterSmart Software which helps residential users to track their consumption in order to save water and money. Moreover, Burton Hamner who is chief executive of Hydrovolts has proved that water industry help the company raised nearly 1.3 million by focusing on clean technology, innovation and venture resource. Consulting firms and contests are conducted to encourage more entrepreneurs to develop in water innovation. Eventually, different channels for water innovation exist and one of them is multinational companies. For example, Veolia has created its Innovation Accelerator program in 2010 to build awareness about environmental technologies such as renewable energy to the public.        

( Image source from: http://josecartoons.blogspot.com/2009/07/water-scarcity.html )

( Image source from: http://www.hersidefunnies.com/water-shortage-cartoon/ )

             Despite entrepreneurs uses natural resources to expand new technologies but they have uses far more energy and unintentionally polluted the environment. They have make use of the scarcity but not in an effective way. In my opinion, they should invest more money to give treatment to the corrupted environment rather than thinking how to use the environment to earn big. In order to make improvements regarding water scarcity issues, solutions and steps needed to be implementing now to prevent more impact in near future. Water scarcity can be solved by taking several actions such as preserving and conserving water. Besides that, we can make use of the advanced technology to treat wastewater as a resource which can save cost effectively and produce more financial assets. For instance, desalinization technology system filters salty water and removing salt from water through electro dialysis and reverse osmosis to useable water. This system is currently producing six billion gallons of water per day in 130 nations (Arrandale, 2002). Furthermore, task of conserving water can be started on smaller scale, with small improvements at home. Actions like avoid water taps running while washing dishes operate clothes washer when it is full, and install drip watering system can control the habit of wasting water. In addition, government can hold an event or a talk regularly about the importance of water to build awareness among the citizen. We also can put some effort in passing the knowledge of using water sensibly to family, friends, colleagues and outsiders through mass media such as advertising, internet, social media and radio. Likewise, people can spend a little time participating World Water Day and UN year of international Water cooperation so as to helps protect the water supply and save water (surfexcel, 2013).

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References:

Arrandale (2012) Water Scarcity: Tomorrow’s Problem. [online] Available from: http://sitemaker.umich.edu/section9group6/solutions [Accessed 6 June 2013]

Circle Of Blue (2012) The Price of Water 2012: 18 percent Rise Since 2010, 7 Percent Over Last Year in 30 Major U.S Cities. [online] Available from:  http://www.circleofblue.org/waternews/2012/world/the-price-of-water-2012-18-percent-rise-since-2010-7-percent-over-last-year-in-30-major-u-s-cities/ [Accessed 7 June 2013]

Edwin. S (2011) The Various Causes of Water Scarcity in the World. [online] Available from: http://www.saching.com/Articles/The-Various-Causes-of-Water-Scarcity-in-the-World-254.html [Accessed 6 June 2013]

Econlib (2010) Scarcity. [online] Available from: http://www.econlib.org/library/Topics/HighSchool/Scarcity.html  [Accessed 6 June 2013]

Gies. E (2011) Water’s Scarcity Spells Opportunity For Entrepreneurs. [online] Available from: http://www.nytimes.com/2011/03/22/business/energy-environment/22iht-rbog%20innovation-22.html?pagewanted=all&_r=1& [Accessed 3 June 2013]

Reilly. A (2013) What is scarcity in economics? [online] Available from: http://www.ehow.com/facts_5175741_scarcity-economics_.html [Accessed 5 June 2013]

Surfexcel (2013) How to Help Tackle India's Water Pollution Problem at Home. [online] Available from: http://www.surfexcel.in/environment-2/how-to-help-tackle-indias-water-pollution-problem-at-home/ [Accessed 5 June 2013]