Lowville Had Lots of Water. Then String Cheese Came to Town.
By Scott Patterson, 6/5/19, Wall St. Journal

LOWVILLE, N.Y.€”When the Philadelphia Cream Cheese factory here started making string cheese, too, in the summer of 2017, it brought scores of new jobs to town.

It also boosted the facilitys water usage by hundreds of thousands of gallons on some days€”eventually bringing its overall demand to more than 80% of the towns typical daily supply. The draw sucked the municipalitys reservoir to dangerously low levels. Town officials, caught off guard, banned the villages 3,500 residents from washing cars and watering lawns.

€œPeople cant believe how much water that plant needs,€� says Lowville Mayor Joseph Beagle.

The incident put the factory, owned by Kraft Heinz Co., at the center of a water clash in one of the most unlikely of places: a farming and cheese-making hamlet in upstate New York that normally gets plenty of rain and snow, and sits just 40 miles from Lake Ontario.

Water is unlike any other commodity. Seen as a natural human right, it is available when we turn on the faucet or slurp from the water fountain at the park. Behind that veneer of plenty, though, companies are waking up to a new, water-constrained future€”even in places like Lowville, usually blessed with plenty of it.

A potent mix of population growth, surging industrial demand, pollution and climate change is putting relentless stress on water resources all over the world. It is also pitting companies, used to near-limitless water, against other businesses and nearby residents, who need more of it, too.

During most of the 20th century, just 14% of the global population lived in conditions of scarce water supplies€”broadly defined as insufficient water to provide for human needs€”according to a 2016 study by a team of water scientists published in the research journal Scientific Reports. Today, that has leapt to nearly 60% of the worlds people, a result of surging population growth and dwindling supplies of freshwater.

The situation is especially dire in the developing world. In India, 600 million people face high to extreme water stress. Severe droughts have struck everywhere from East Africa to Central America in recent years, hobbling industry and farmers and forcing cutbacks in personal consumption.

More than half of the worlds cities regularly experience water shortages, according to U.S. environment nonprofit The Nature Conservancy. Last year, Cape Town, South Africa, implemented severe restrictions for months to keep from running completely dry.

Climate change, too, can heighten water scarcity as rising temperatures dry up available resources. Alternatively, it can increase rainfall and flooding, leading to other challenges corporations must face as weather becomes more unpredictable.

€œWith population growth, water scarcity will proliferate to new areas across the globe,€� a 2017 World Bank report on the causes and effects of water scarcity said. €œAnd with climate change, rainfall will become more fickle, with longer and deeper periods of droughts and deluges.€�

Many companies dependent on public water access are just now coming to grips with the new challenges€”often only after a crippling supply disruption, or the threat of one.

€œA lot of companies talk about water being an important issue€� but do little to adapt, said Jason Morrison, chairman of the United Nations CEO Water Mandate, which presses executives to assess their companys water usage across their supply chains and implement policies to make it more sustainable. €œThen something happens, and theres a massive supply-chain hit.€�

CDP, a London not-for-profit charity that tracks companies environmental-impact disclosures, found that between 2015 and 2018, the number of companies reporting water-reduction targets doubled among firms it polls in an annual survey. Underscoring the challenge, though, nearly 50% more companies during that period reported using more water, not less.

The new risk is showing up in stock prices, too, according to an analysis by Peter Adriaens, a University of Michigan professor of environmental engineering and finance. Exposure to water risk among energy companies such as oil-and-gas drillers€”which use huge amounts of water and are also exposed to production-halting storms€”translates to their shares being 23% more volatile than the broader market, his analysis shows. Other sectors, like industrial firms and consumer staples, also show heightened volatility attributed to their need for water.

Arjen Hoekstra, a Dutch water scientist, came up in 2002 with the €œwater footprint,€� a measure of how much water goes into products, including all the water used along the way. The metric helps quantify what Prof. Hoekstra describes as €œthe hidden water use behind the goods and services€� people consume. That includes the water used to grow the cotton in a pair of trousers, or to feed the cows that produce a gallon of milk.

A glass of wine takes nearly 30 gallons, if you count the water that goes into growing the grapes, according to his figures. A pair of bluejeans, made from irrigated cotton, can take more than 2,500 gallons. A pound of cheese: 668 gallons of water. Blame hungry cows eating water-intensive grains.

Mr. Hoekstra says a big reason water consumption is expanding around the world is food€”primarily, meat and dairy products. As economies grow and wealth increases, more people are eating meat and cheese, which have far bigger water footprints than fruit and vegetables. [...]

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