5 takeaways from Doug Baker's Friday speech on the future of water

(Ecolab CEO Doug Baker in 2013. Photo by Glen Stubbe.)

Projected shortages of fresh water around the world are at the center of Ecolab's business model.

A new global middle class is shifting its diet dramatically toward protein, which spurs demand from agriculture, which is by far the largest global user of fresh water. But energy is also a key driver of water consumption, and Ecolab is trying to focus on the "nexus between energy and water and agriculture," said Ecolab CEO Doug Baker.

It takes 450 gallons of water to make a hamburger, 700 gallons to make a shirt, and 39,000 gallons to make a car.

"We know that we're going to have more people, they're going to eat more food, they're going to demand more energy, and of course it's going to result in more water" consumption, Baker said in a speech to the Economic Club of Minnesota on Friday. "In very short order, in the next 15 to 20 years, you're going to have a mismatch of something like 50 percent between supply and demand for water."

Minnesota, which is one of the most watery places on a continent with an abundance of fresh water, will be fine, but there will be "regional challenges."

"Our positioning now is clean water, safe food, abundant energy and healthy environments," Baker said. "We like this position because we think its right for what the world's going to need."

Here are a few of the points Baker made.

Industry is starting to try to reduce its water consumption.

U.S. companies (including Ecolab) face the increasing risk of water scarcity at factories abroad and even in parts of the U.S., and they're starting to address it.

Coca-Cola wants to be water neutral. Ecolab, for example, helps hotels wash their towels in three cycles instead of six, has technology that helps kitchens reuse evaporated water multiple times, and is helping Pepsi use less water in cleaning its plants. Dow was facing a shutdown of one of its plants in a water-scarce community, and Ecolab helped the plant reduce its water consumption by 1 billion gallons per year, Baker said.

"All this stuff isn't the most exciting stuff in the world, but at the end of the day this is what fundamentally makes a change," Baker said.

This is good effort and good progress, Baker said, but not enough to overcome a 50 percent supply-demand mismatch.

"You fundamentally aren't going to make a big enough dent, and we probably aren't going to make it go away," he said.

Water prices around the world are crazy.

The cheapest water in the world is in Jeddah, Saudi Arabia, at 3 cents per cubic meter. Jeddah is in the desert next to the Red Sea, and gets its fresh water through a huge desalinization plant, which is very expensive.

"It makes no sense at all, but that's the lowest price in the world," Baker said.

The most expensive water in the world, ironically, is in Europe, which along with North America is the most water-saturated part of the world. In Copenhagen, water is $7.38 per cubic meter.

In China, where water is growing more scarce, it costs around 22 cents per cubic meter.

Ecolab's mission (cleaner, safer, healthier) is good for recruiting.

"A lot of people want to be successful but they want to be successful doing things that are helpful to the world, society as a whole," Baker said. "I'd say that's a big value we're finding for the generation coming up now."

The driving energy in a company can't simply be hitting an earnings target, Baker said.

"People also want a purpose larger than themselves and larger than just financial," he said.

Baker thinks the Twin Cities unnecessarily wastes water from the aquifer.

"We take 2 percent of the water out of the river before it hits the Cities, and then we supplement it with a lot of ground water, below surface water, which is principally what we use," he said. "In the end we pump 4 percent back into the Mississippi."

The aquifer ends up losing water to the river. The smart strategy would probably be to pump 4 percent out of the river before it hits the metro and pump less water from the aquifer back into the river, he said, but that would have an impact on the river, which justifiably has many defenders.

"There's no friends of an aquifer because you can't see it," he said.

Desalinization is not the silver bullet for water scarcity.

San Diego is building a huge desalinization unit right now, so experimentation is transforming into implementation.

Two methods are used to turn salt water into fresh water – boiling it, or pushing it through a filter that collects the salt and other particles.

"Think about the amount of energy it takes to push water through a membrane that fine," Baker said. "It's a highly energy intensive enterprise if you're doing evaporation or membrane. The physics of that may get more efficient but I don't think they're going to fundamentally change completely."

Another challenge is water can't be shipped long distances – across oceans or further inland.

"Desal's going to be one of the big answers," he said. "It will increase supply, but we're also going to have to get after demand."