ITAURecently I was struck by the attached advertisement and the caption “Latin America Has 30% Of The World’s Fresh Water.  Invest with a bank that knows Latin America.”  The underlying message to business investors is “You have no choice but to locate in an area with a sufficient supply of fresh water, and we have it.  Invest here.”  As drought conditions persist in the US West, and as China struggles with vast amounts of pollution in its fresh water supplies, this message is incredibly relevant.

This advertisement is well conceived and surprisingly forward-thinking in its simplicity.  Water is, after all, essential for life — we cannot exist without it.  It is also essential for the production of food.  It is critical for power production and myriad industrial uses.  It plays a key role in travel and leisure activities as well.  Billions of jobs around the world revolve around water.  So if you want a viable business, you must invest where there is plenty of water.  And yet an advertisement such as this which points to the obvious advantages of water is a rarity.  We tend to avoid focusing on such an obvious benefit.  Why?  Because we tend to undervalue water.  We expect it to be available at all times, with high quality, for extremely low (if any) cost.  Due to its perceived abundance, most individuals bristle at the thought of paying even a small increase in fees for water.

The diamond-water paradox is a perfect example of our irrational thinking.  While we could easily do without them, diamonds are highly valued in our society.  On the other hand, water is essential for life, and yet we place almost zero value on it — considering it a free good.  Only when water supplies are disrupted do we immediately realize its value.  And clearly when talking about our survival, it’s water that matters, not diamonds.

A 2010 report by McKinsey points to the need to do more with less regarding water.  The report notes the growing gap between the amount of water that many countries can reliably supply and the associated demand by its constituents.  The gap provides opportunity for conservation and increased efficiency regarding water use.  ITAU bank is on the right track here. The bank is linking itself to the most valuable resource on the planet: water.  Its management team has likely awakened to the fact that global water supplies are increasingly stressed, and likely to become even more strained in the next 15-30 years as an increasingly affluent population puts more pressure on global resources.  The real question is when numerous other organizations are going to realize the true value of water.  And, more importantly, when they are going to start leading sustainability initiatives to use water responsibly as a normal course of business?