Article by Robson Braga de Andrade*
While the world is focused on reducing greenhouse gas emissions to counter the rise in temperature, climate change is already affecting life on Earth. Its impacts are now apparent in various parts of the planet as the intensity and frequency of natural disasters such as droughts and floods is heightened. Brazil holds 12% of the world’s freshwater supply, and one of the most worrying effects in the country – as incredible as it might sound – is water scarcity.
In addition to the risk of water shortages, water scarcity could lead to significant production losses, increased costs and diminished industrial competitiveness. To give an idea of these effects, total revenues generated by the electricity sector under the tariff flags system adopted due to the latest water crisis reached R$ 12.9 billion in September-December 2021, according to the Electric Energy Commercialization (CCEE). This is a fourfold increase from the last four months of 2019 – the year before the Covid-19 pandemic broke out – and a sixteen-fold increase from the same period in 2020.
The explanation for this scarcer water supply lies in the lower frequency of rainfall in areas of already high and growing population and industrial density, such as the Southeast Region, which accounts for nearly half of Brazil’s GDP and 45% of the population while holding only 6% of the country’s water supply. Meanwhile, the North Region – where only 5% of the population lives – holds 81% of the freshwater available in the country.
These factors account for the water scarcity, but do not explain the water insecurity we are experiencing. We need to learn how to cope with this environment in a more predictable, creative and agile manner. After all, water security is vital for human survival, for industrial and ecosystem processes, and for generating employment and income. In the face of the additional challenges imposed by climate change, a more holistic view of the various uses of water is required, with the design and implementation of viable alternatives for a more efficient use of water.
For quite a while now, the Brazilian industrial sector has been doing its part to reduce water consumption in its processes and products. Today, with a share of 20.5% in the Gross Domestic Product (GDP), the industrial sector accounts for only 9% of the total water withdrawn from water sources. Yet, the industrial sector continues to work toward reducing the pressure on water bodies by making investments in new technologies, especially in alternative sources, such as the reuse of treated wastewater and desalination projects.
The sector has been investing heavily in efficiency-related initiatives and support for the diversification of the energy mix. This contributes to reducing the share of fossil sources in the energy mix and meeting the goals of reducing greenhouse gas emissions. It has also been working toward expanding energy generation through renewable sources (such as solar, wind and biomass) and reducing our reliance on hydropower, which currently accounts for 65.2% of the mix.
The actions adopted by the industrial sector to prepare for water supply crises need to serve as an example for other sectors and civil society to follow, and they could inspire the search for efficiency throughout the country’s water management system. According to estimates by the National Water and Sanitation Agency (ANA), there will be a 42% growth in water withdrawals by 2040, from the current 1,947 to 2,770 cubic meters. This means an increase of 26 trillion liters extracted from water sources.
To prepare for this challenging scenario, the National Confederation of Industry (CNI) will soon launch the study Cobrança pelo direito de uso dos recursos hídricos (Payments for the right to use water resources), which includes proposals to improve water management over the coming years. The report shows that over the past 10 years the system has evolved very little and there have been some setbacks, such as the contingency or misuse of the funds collected, which could be reinvested in projects to secure water supply in the coming decades.
Proposals to enhance the system include its reorganization, the potential establishment of watershed concession or management arrangements by the private sector, and the regulation of fund collection and allocation. It is critical to harmonize methodologies and models of delegation and collection in states sharing a watershed and to clearly articulate the statutory roles of the entities involved.
A major breakthrough was seen as the new general framework for basic sanitation was passed in 2020. In addition to encouraging investments and fast-tracking the universalization of this service, this regulation brought about business opportunities for wastewater treatment. These can be reused by the industrial sector and even consumed by humans and animals, though this would require bringing down a cultural barrier.
Alternative sources of water, such as water reuse and desalination, also lack regulatory arrangements in order to impart legal certainty and attract investments. We need to urgently tackle these and other issues, speed up construction works currently underway and launch other priority projects. “Estimates by ANA show that failure to implement these tasks by 2035 could mean that around 70 million people would be at water risk and that the industrial and agricultural sectors could face losses of BRL 518 billion.”
Water-related challenges are far-reaching and complex, but we are fully capable of overcoming them. The alternatives to address them are at hand. Above all, we need the political will and leadership to push them forward. Thus, Brazil is poised to hold a prominent position in an environment where sustainable solutions are sought for tackling climate change and for fully recovering the economy.
*Robson Braga de Andrade is an entrepreneur and president of the National Confederation of Industry (CNI)