The Value of Water: Water as an Economic Development Driver

Clean water in the right place at the right time is crucial for human health and is essential to life. It also drives the world economy. In a world of increasing population growth and climate change, access to high quality water for consumption, energy, agriculture, industry and recreation stands to significantly drive economic development for decades to come. Water will be the ?new? oil.

While water covers two-thirds of the planet?s surface, and some of its subsurface, more than 97 percent of the Earth?s water is saltwater; water in icecaps/glaciers adds roughly 2 percent to that total. Accessible fresh water is very limited ? water in lakes, streams, and rivers makes up less than 0.01 percent of the Earth’s water. Groundwater makes up another 0.6 percent. Access to abundant clean water is an economic driver. Scarce water, either in terms of quantity or quality, will become a key limiting factor in the growth of regional economies. Currently 22 percent of the world?s GDP ($9.4 trillion at 2000 prices) is produced in water-scarce areas.

Simply, water drives the world economy.

Despite being the world?s most precious resource, fresh water is incredibly undervalued. Here in Northeast Ohio, we are working to elevate the conversation on the value of water by tying our region?s commitment to clean and reliable water to having direct and increasing value to our economic development system. By tying clean and reliable water to direct, indirect and induced economic impacts, gross regional product, job creation, per capita income and labor force participation we aim to increase our infrastructure, research, and business investments in clean and reliable water. In short, our emerging blue economy is moving Northeast Ohio and Cleveland from the rust belt to the water belt.

The Value of Water in Northeast Ohio

The work in Northeast Ohio on growing our fresh water assets is led by the Cleveland Water Alliance (CWA), a network of leading corporations, regional universities and research institutions, public agencies, stewardship organizations and utilities. CWA serves to coordinate, facilitate, and foster economic development through a water innovation cluster while elevating the conversation about the value of water to our region.

CWA launched a two phase study on the Value of Water to Northeast Ohio in 2015. Phase 1, or the ?Preliminary Screening,? was a partnership between CWA and the Northeast Ohio Regional Sewer District. It provided a general reconnaissance of available data and studies, and initial bounding analyses, resulting in preliminary ?ballpark? estimates of potential values for a range of different types of economic, social/psychological, and ecological values. Key benefit categories included:

  • Local business and economic development
  • Avoided water treatment costs
  • Tourism and recreation (and associated economic impacts)
  • Avoided water treatment costs
  • Public health
  • Property values
  • Water supply reliability
  • Habitat and non-use values for ecosystem services

The Cleveland Water Alliance is currently launching Phase 2 with the financial support from the Coca-Cola Foundation. Phase 2 explores the link between clean and reliable water to local economic and business development, including the connections of industry, jobs/workforce development and gross regional product. From this work we will report out on direct, indirect and induced economic impacts. Here are some of our goals in those areas.

Economic & Business Development

  • Fully calculate from the definition of ?Water Enabled Industries? (WEI), how WEI contribute to the local Northeast Ohio economy. Data collected as part of this effort will include information on gross revenues, employment, and wages.
  • Evaluate the National Oceanic Atmospheric Administration?s Economics: National Ocean Watch (ENOW) data set, which NOAA develops annually to assess the dependency on the ocean and/or Great Lakes of coastal counties (including counties adjacent to the Great Lakes). This will allow us to further explore the characterization of WEI in Northeast Ohio, and how these industries contribute to the local economy.
  • Interview 30 local and non-local (as appropriate) businesses to obtain a broader understanding of the value of water quality and the comparative advantage that it affords. We will also address the importance of having a reliable, high quality water supply when considering whether to expand, remain locally, relocate businesses to (or from) the region, de-risk reputational exposure, or the ability to receive financing. With many parts of the nation facing significant drought and long-term water supply scarcity, the comparative advantage of a relatively water-rich region such as northeast Ohio is important.
  • Use IMPLAN economic input-output model to calculate the ripple effects/multipliers associated with an assumed increase or decrease in specific water-enabled industries or sectors in the. This will help us to examine how the direct impacts of water-reliant businesses ?ripple? through the regional economy to create multiplier effects (i.e., indirect and induced economic impacts) on employment, payroll, output, and tax receipts.

Recreation and Tourism

  • Building on local economic development and economic growth, we will conduct an in-depth analysis of the recreation and tourism sector within our region. This will include the implications of potential improvements in water quality and water quality degradation or specific events. We will demonstrate the importance of the sector and explore the link between clean water and tourism-related economic activity. ?

Value of Water Supply Reliability

  • Interview businesses specifically on the value of water supply reliability.
  • Perform in-depth literature review on the value (for both residents and businesses) of avoiding water supply delivery disruptions.
  • In addition, we will examine the recent Toledo toxic algal bloom incident as another indication of the value of maintaining and improving water quality. The costs and inconveniences incurred through the recent algal event, and other historical water-quality related events, provide a highly recognizable and credible indication of the adverse impacts that arise when water quality is not maintained.

Our goal is simple. We must change how we value water to accurately reflect the growing opportunity water affords our economy. And we must improve the economic development support system around water. In many ways, water is where the energy sector was 15 years ago in regards to perceived value, innovation, new technologies, entrepreneurship and economic impact within our communities. The bottom line is investment in water infrastructure and water innovation grows our regional economies and provides jobs (at a growing rate).

The impact is similar or greater than investments in clean energy, transportation and health care. Cleveland Water Alliance will work through this study to educate our policymakers, businesses, academic and research institutions, cities and communities on the value of water. We will use this study to influence the economic development system to bring more innovation, entrepreneurship and investments to the blue economy and our partners here in Northeast Ohio.

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Bryan Stubbs is the executive director of the Cleveland Water Alliance, a water technology and innovation cluster on the shores of Lake Erie. Stubbs is recognized for his management and actions in building and implementing stronger, impactful and more sustainable economies and communities. Notably, Stubbs recently finished up a three-year project as managing director of the Oberlin Project, where he implemented an internationally-recognized pilot model to grow a local economy while reducing greenhouse gas emissions (a partnership of Oberlin College, City of Oberlin and the Clinton Climate Initiative). Stubbs can be reached at [email protected].

 

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