0:03

Aqualars . This

0:06

is the Water Foresight podcast powered

0:08

by the Aqualars group , where we anticipate

0:10

, frame and shape the future of water

0:13

through strategic foresight . Today's guest

0:15

is Professor Buzz Thompson , who is the Robert

0:17

E Paradise Professor of Natural Resources

0:19

Law with the Stanford Law School

0:22

. Professor Thompson also has affiliations

0:24

with the Stanford Door School of Sustainability

0:26

and the Stanford Woods

0:29

Institute for the Environment . Professor

0:31

Thompson has written a new book called Liquid Asset

0:33

how Business and Government Can

0:35

Partner to Solve the Fresh Water Crisis

0:37

. Professor Thompson , welcome to the Water

0:40

Foresight podcast , Matt . It's

0:42

my pleasure . Now , professor Thompson

0:44

, you are quite popular

0:46

and , as a result

0:49

, you have written a book called Liquid

0:51

Asset , a very interesting

0:53

book , a very timely book . Tell

0:55

us what is Liquid

0:58

Asset all about ?

1:00

Liquid Asset is about the growing

1:03

role of the private sector

1:05

in the management of

1:07

water , focuses primarily

1:09

on the United States , although it has world

1:12

implications . If

1:14

you look at the water sector , historically

1:17

it has been predominantly

1:20

public , but

1:22

the private sector does have a role and

1:25

what this book looks at is how

1:27

that's been developing and

1:29

what the possible opportunities

1:32

are for businesses to get

1:34

in and help us with our water prices .

1:38

You know that's interesting . There is often

1:41

. We

1:43

could use a lot of different words , but there are people who

1:45

don't really like the word

1:47

business and water

1:49

together . They may be specifically

1:52

opposed to private water

1:54

utilities or how just

1:57

regular commercial industrial businesses

1:59

have a very poor relationship

2:02

with water . How

2:05

do you respond to some critics

2:07

that might say well , gosh , professor

2:10

Thompson , this business

2:12

and government partnership stuff yeah , we've heard

2:14

it before . We don't like it . Do

2:17

you have evidence that these

2:19

partnerships are meaningful and

2:22

have been successful ? That gives you some

2:24

and gives all of us confidence

2:26

that it can be successful going forward

2:28

.

2:30

Matt , you're absolutely right that there are a lot

2:32

of people who , when you start

2:34

mentioning private businesses in the context

2:37

of water management , get nervous . And

2:39

I understand that . Water

2:41

is not a typical

2:44

commodity and

2:46

in fact , for many people water shouldn't be a commodity

2:49

at all . Water

2:51

is invested with a variety

2:53

of public interest . It

2:56

is a

2:58

public trust . We have to

3:00

worry about the environment when we're

3:02

worried about or thinking about

3:04

management of water resources . In

3:07

addition to that , there's also a human

3:09

right to water , so we also have to make sure

3:11

that all members of our society receive

3:14

an adequate supply of water

3:16

. And all of those things would

3:18

point you to the public sector . But

3:21

the private sector has actually always played a

3:23

role in the water field

3:25

and I think you

3:27

have to separate out different types

3:29

of rules . One in , as

3:32

you suggested a moment ago , matt , you

3:34

have privatization of

3:36

water supplies , and that's probably

3:38

the area where you

3:41

have the most legitimate concern , because

3:44

suppliers of water have significant

3:46

control over where they're going to take that

3:48

water from . That implicates the

3:50

environment and who they give the water

3:53

to and how much they charge for that water , and

3:55

that implicates the human right to water . So

3:58

privatization is , I would say

4:00

, a sort of one end of the

4:02

worry spectrum . At

4:04

the other end , however , you have

4:07

companies which are developing

4:09

new technologies or improving

4:11

existing technologies

4:13

, companies that are

4:16

supplying financing

4:18

for public entities

4:21

to go out and invest in the

4:23

infrastructure that we need

4:25

, and that's at sort of the other

4:28

end of the spectrum , where

4:30

there's far less reason for concern

4:32

and far more reason to say , hey , the

4:35

private sector is really necessary here .

4:38

Well and even to the

4:40

extent that some of

4:43

those items you mentioned in that argument

4:45

could be turned around where there

4:47

are private businesses that rely

4:50

upon abundant and safe supplies

4:52

of water and their government

4:55

run water or wastewater utility

4:58

is maybe not well

5:00

run and they have a concern over

5:02

this

5:05

issue , they may be champions of privatization

5:07

, they may think that private

5:10

water utilities can operate

5:12

drinking water and wastewater systems more

5:15

effectively , and

5:18

there's all kinds of other relationships that we can get

5:20

into investors , entrepreneurs

5:22

and innovators and

5:24

the like . In

5:27

your book , you start with

5:30

this idea of the

5:32

freshwater crisis and

5:35

tell us about that , and who

5:38

are the people that are concerned about the freshwater

5:41

crisis ? Are there people that are going

5:43

to be impacted adversely by

5:45

this crisis , and are there people who

5:47

are responding to

5:50

this freshwater crisis , and how does that all work

5:52

together in the world of government and private

5:54

business ?

5:55

Matt , you're absolutely right . Start with this chapter

5:58

on the freshwater crisis

6:00

, and maybe what I should

6:02

have entitled it is the freshwater

6:04

crises , because the truth of the

6:06

matter is that we are faced right now

6:08

with a multiple set

6:11

of crises in the

6:13

water field . So , just really

6:15

quickly , you start out with water quality

6:17

. There are areas of the United States

6:19

and the world that have already and always

6:22

been short of water . California

6:24

, for example , is a good example . But

6:26

water shortage

6:28

is going to become a more serious problem in

6:31

the future with climate change . We

6:33

also realize throughout the world

6:35

, and including in the United States

6:37

, we face major problems with groundwater

6:40

depletion . The New York Times has been doing

6:42

actually an excellent job of

6:44

covering that crisis in

6:47

the past couple of months . But we

6:49

not only have a crisis with how

6:51

much water we have . We also have a crisis

6:54

on the water quality side Also

6:56

. Take , for example , safe drinking

6:58

water . We know that 30 million

7:00

Americans today

7:02

receive water from systems

7:04

that do not meet at least one

7:07

of the primary standards of

7:09

the Safe Drinking Water Act . And

7:11

then , if you look at our rivers and streams

7:13

, we know that 60% of them

7:15

don't meet Clean Water

7:17

Act standards , even though we assured the

7:20

American public back in 1983

7:22

that we were going to eliminate water pollution

7:24

entirely . So that's the water quality

7:26

crisis . Then you have a crisis

7:28

of the freshwater environment as

7:31

a result of trying to get more water

7:34

stored when it's available

7:36

for use . Later . We've constructed

7:38

dams , we've moved water hundreds

7:40

of miles in order to make sure

7:42

that cities in dry areas

7:45

receive enough water . All of that

7:47

has decimated our freshwater environment

7:49

so that over

7:51

the last 50 years

7:53

we have seen significant declines

7:56

in freshwater fish species

7:59

. And then , finally , the

8:01

other crisis I always focus

8:03

on , because I think it's very

8:05

serious , is our infrastructure crisis

8:07

, where , when the American

8:10

Society of Civil Engineers most

8:12

recently rated water infrastructure

8:15

in the United States , the

8:18

highest grade was

8:20

a C-minus , but

8:22

for most things like dams

8:26

, drinking water infrastructure and the like , the

8:29

grades were D . So

8:32

there you have it you have a water quality

8:34

crisis , a water quality crisis , a

8:36

freshwater environment crisis and an infrastructure

8:38

crisis .

8:39

Is it feasible to include

8:42

in a creative way

8:44

to the term freshwater

8:46

crisis or crises the

8:50

notion of a leadership

8:53

and management crisis as well as a

8:55

financial crisis ? Are

8:57

those two elements that we

8:59

could perhaps , in

9:01

another podcast , unpack those elements

9:04

? Are those

9:06

issues ? I'm adjunct

9:08

to a lot of the what I call maybe

9:11

technical issues , environmental issues

9:13

that you've listed correctly so

9:15

, but could you say that

9:17

Is that ? Am I in the ballpark ?

9:19

Yeah , I think you're definitely in the ballpark

9:21

with that , matt . I'm

9:25

not sure we have a

9:27

crisis in

9:29

water leadership

9:31

, in the sense that I

9:33

know hundreds

9:36

of managers of

9:39

water supply systems , heads

9:42

of state

9:44

water departments , members

9:47

of public utility commissions . You

9:49

know all of them are really

9:52

effective leaders

9:54

. You know they are really good

9:57

, experienced

10:00

experts in their

10:02

field . But having said that , I

10:05

think we do have number one a

10:07

crisis in innovation

10:09

, and I

10:12

don't think that's necessarily the fault of

10:14

the people who are in

10:16

the various jobs , but

10:18

particularly in the public sector , we

10:21

frequently do not reward

10:23

innovation . I was involved

10:26

in a survey of

10:30

water public water suppliers about

10:33

10 years ago and

10:35

one of the things that we asked people

10:37

was how

10:40

much time do you spend

10:42

looking at sort of

10:44

new innovative technologies

10:46

that might make your

10:49

water supply system better and

10:53

how much time do you think you should be spending

10:55

on it ? And virtually everyone

10:57

reported that they thought they should be spending

11:00

far more time than they actually were

11:03

spending . We

11:06

also have tried to measure

11:08

how much innovation

11:10

occurs in

11:13

the water field , and

11:15

that's a hard thing to do , but

11:18

one of the things that we've

11:20

tried is to take a look at

11:22

new patents , because you would

11:24

think that maybe the rate of

11:27

patenting of technologies is

11:29

one way of looking at the

11:32

amount of new technological innovation

11:34

in the water field . And

11:38

if you take the number

11:40

of new water

11:42

patents and you

11:44

compare it with the number

11:46

of new energy patents and

11:49

they're not exactly the same fields

11:51

but they resemble each other

11:54

in many ways One of the things that

11:56

you find is you go back 20

11:58

, 30 years and

12:00

new energy patents were always a little

12:02

bit more than new

12:05

water patents , suggesting that for one reason

12:07

or another , energy was always

12:09

a little bit more innovative . But

12:11

things really change

12:13

, beginning in the middle

12:16

of the 2000s , about 2007

12:18

and 2008 . And

12:20

at that point the number of new

12:22

energy technologies that

12:27

are being patented

12:29

. Just shoot up

12:31

, right , they just take off . And

12:34

the number of new water technologies

12:38

that are being patented just

12:40

flatlock . It just doesn't go

12:42

anywhere . And

12:45

I think there are multiple reasons for that , but again

12:47

, I don't think it's necessarily the people . I

12:50

think it's that we don't reward new

12:52

innovation , and

12:54

there are another number of other factors , including

12:58

the fact that

13:00

water is

13:02

relatively inexpensive

13:05

as a resource . That

13:07

means that we don't get as many patents in , and

13:09

that just really quickly brings me to your

13:11

second point , which is

13:14

sort of the financing side

13:17

, and

13:19

I think the fact that you don't have

13:22

adequate financing for

13:24

new technologies . That's another

13:26

drag on new technological

13:29

innovation , because frequently

13:31

a lot of water suppliers simply don't have

13:33

the money to go out there and invest in the new

13:36

technologies and

13:40

is , again , I think , a reflection of our

13:42

pricing of water . So

13:46

maybe that's a bit of a long answer , but again , I

13:48

think the people are really good , but we don't

13:50

reward innovation and , yeah

13:52

, we definitely have a financing crisis .

13:54

Well , you gave some really good , thought

13:57

provoking responses there , and I

13:59

want to connect that later when I ask

14:01

you about the

14:03

four policy recommendations that you have

14:06

in your book , because I think you've teed those up

14:08

at least one of them very

14:10

nicely . So we'll come back to that and

14:12

unpack those issues you just raised

14:15

. But a few minutes ago you used

14:17

a term that may

14:20

make some people very uncomfortable , and

14:23

that's the word commodity . You

14:25

talk about the commodification

14:28

of water and I think that can mean a

14:30

lot of things to a lot of people . But

14:33

how do you think this

14:36

commodification of water will evolve

14:38

over the next 10 to 20 years ? And

14:40

it could be impacting private water

14:42

utilities , public systems

14:44

, even this dirty

14:46

notion of bottled water right , A lot

14:48

of people in the world of water . They don't

14:51

like bottled water , right . And

14:53

then even over

14:56

in your neck of the woods in

14:58

America , where we have this thing called water rights

15:00

, tell

15:03

us about commodification

15:05

and where you think it's headed .

15:07

Yeah Well , so

15:09

, man , I'm a professor , right ? So

15:11

I'm going to actually sort of start

15:14

with just sort of a foundational point

15:16

here and then I'll answer your question

15:18

, right . But the foundational point is

15:20

that , as I mentioned

15:23

earlier , water is not

15:25

a typical commodity . Many people don't think

15:27

it's commodity at all

15:29

, but water

15:31

is a sort of interesting resource that

15:34

what it is really sort

15:36

of varies depending upon how

15:40

that water is being utilized . So

15:43

, as I mentioned earlier , we care about

15:45

water's use in the environment

15:47

. There is not a commodity , and

15:50

you wouldn't want to commoditize I'll

15:53

come back and I can talk about it , but

15:55

you wouldn't want to sort of

15:57

commodify water

16:00

in the environment and

16:03

it's also a human right and in

16:05

that sense it's not a commodity

16:08

. But certainly in the

16:10

Western United States a

16:13

lot of the use of water looks

16:15

an awful lot like other commodities

16:17

. So 80% of

16:20

the water in the Western

16:22

United States is used by

16:24

agriculture , and all water in the Eastern

16:26

United States is used by agriculture

16:28

, and there water really

16:31

is a commodity . It is something

16:33

that farmers need , just

16:36

the same way that they need seeds

16:38

, they

16:42

need their various types

16:44

of farming equipment

16:47

. I frequently said

16:50

that water is a public

16:52

commodity . It is a commodity

16:54

in many ways , but it is also a public

16:57

resource and it's sort of that really

16:59

odd combination which

17:01

is one of the things that makes the

17:05

appropriate role of the

17:07

private sector in the water

17:09

field really

17:13

unique , really challenging

17:16

and really interesting

17:18

. So I'll just start

17:21

with that as

17:23

background and

17:26

now let me answer your

17:28

questions . As to the future

17:31

of water as

17:35

a commodity , I

17:39

think the area where we

17:41

are going to probably see the most

17:43

growth in

17:46

treating water as a commodity

17:48

is in water markets

17:51

. As you know , in

17:53

the Western United States people

17:55

have water rights . In

17:58

the Western United States those are known as

18:00

prior-appropriative rights

18:02

and frequently

18:04

the people who have those

18:08

private rights

18:10

to water have

18:13

it because if they

18:16

still own , for example , the same farm

18:19

as their great-grandfather your great-grandfather

18:21

was the first one out there and the first

18:23

one to the river to get the water . That

18:27

means that water

18:30

is not necessarily allocated today

18:32

in a way

18:35

which best

18:37

benefits the

18:39

economy and

18:42

again , 85% 90% of water

18:44

is used in

18:46

a way that is advancing

18:49

the economy . And

18:53

what water markets permit is

18:55

that if there is somebody

18:59

who needs more water

19:01

, they can go to somebody who

19:03

can conserve

19:05

water or

19:08

is growing

19:10

relatively

19:14

marginal value crops and

19:17

say , hey , I would love to

19:19

buy some of your water in

19:21

order to move it over here and

19:24

do something even more economically

19:26

valuable with

19:28

that water and

19:30

water markets

19:32

have grown over

19:35

the last 25

19:39

to 35 years in

19:42

the Western United States and I expect

19:44

that they will grow and become more

19:46

sophisticated going forward .

19:49

Do you think it will follow the

19:52

way of the

19:54

carbon trading type of situation

19:56

or markets that we might have , where

19:59

you can reduce your CO2 or

20:01

other emissions , obtain credits

20:04

and maybe trade them in a market-based

20:06

framework ?

20:09

So it is another foreign market and

20:13

I don't think that the analogy

20:15

to carbon

20:19

markets

20:21

is a bad one , but

20:24

at the same time , every market is a little bit different

20:26

. Water

20:29

markets are one of the more challenging

20:31

markets because of the way in which we actually

20:33

define

20:35

water rights . If

20:37

you take carbon , carbon

20:40

emissions are pretty much the same everywhere

20:42

because it all goes

20:44

into the atmosphere and it doesn't matter

20:47

whether it's a

20:49

carbon molecule in Northern

20:51

California or

20:53

a carbon molecule in Southern California

20:55

. With water , however , it

20:58

all depends on location . So

21:00

water markets become a

21:03

little bit more challenging , but

21:08

I do think that

21:10

, as I said , they are likely

21:12

to grow , moving

21:15

forward .

21:17

Maybe a better analogy would be if

21:20

I am a agricultural

21:22

organization

21:24

that has the rights to say

21:27

10 million gallons a day

21:29

of water from the Colorado River and

21:33

I engage

21:36

in innovation to repair my

21:38

irrigation infrastructure , which saves me

21:40

1 million gallons a day of water , so

21:42

I could monetize that and

21:45

sell it to my local water

21:47

utility who may be struggling to find

21:50

water resources

21:52

to provide to customers . Is

21:55

that a better example ?

21:58

Yeah , I think it is a

22:01

better example . I think that throughout

22:03

the West you find a variety of

22:05

farmers who are looking for ways

22:08

of conserving water in

22:10

order to be able

22:12

to sell that water or

22:14

lease that water for a period of time

22:17

to a city

22:19

or municipality that

22:22

is short of water

22:24

, and there

22:26

are more and more that are

22:28

fearing that future

22:31

shortage because of climate change impacts

22:33

. One of the things

22:36

I really like about the example

22:38

that you just gave is that

22:40

one of the real advantages

22:43

of water markets

22:45

is that they encourage conservation . If

22:49

you just have a right to

22:53

use a certain quality

22:56

of water and you can

22:58

get by with less , but

23:00

if you get by with less , you're

23:04

not going to get any benefit out of

23:06

it . Water

23:09

is just going to go back

23:11

into the river stream . Then

23:14

there are a lot of farmers that just aren't

23:16

going to take the

23:19

effort or invest

23:22

the money necessary to conserve

23:26

that water . It might

23:29

be some who will say , hey , I really want to put

23:31

that water back in the river , but

23:33

a lot of them just won't do anything . What water

23:35

markets do is they say to that farmer

23:37

okay , if you conserve

23:39

that water , then you're going to get

23:42

paid for it , and

23:44

that then gives an economic incentive

23:47

to farmers to conserve

23:49

water , and

23:53

there have always been regulations

23:55

designed to try to get people to

23:57

conserve water , to try to design

23:59

to get people to use less water

24:01

, but they've never been

24:03

very effective , and so one

24:06

of the things I like about water markets

24:08

is that they are an

24:10

effective way of

24:13

encouraging conservation

24:16

. So that's one of the things I

24:18

really like about that example Go

24:22

ahead , go ahead . Oh , I'm sorry , I was

24:24

just going to say . That example that you gave , though

24:26

, also shows

24:29

one of the challenges

24:31

of water

24:34

markets , and

24:36

that is that there

24:38

are a lot of farmers who

24:41

really worry that one of the

24:43

things that water markets might do

24:45

is to dry up agricultural

24:47

areas at

24:49

the benefit of those large

24:52

urban areas , and those

24:54

farmers are frequently suspicious of those

24:56

urban areas to begin with , might

24:58

not even like those urban areas , and

25:01

so their notion is no

25:03

, we shouldn't let water move

25:05

, water should stay in a particular

25:07

area . So that again

25:09

shows one of the complications of water

25:11

markets .

25:13

Yeah , I've read articles that suggest

25:16

that type of mindset , that

25:18

sort of lack of trust . Or what's

25:21

the future going to be like for me if

25:23

I sell or lease

25:25

a portion of my water rights

25:27

to some other sector

25:29

of the world ? What's going to happen

25:31

, especially when

25:33

it's a family farm ? I

25:36

was going to add and you can correct me if

25:38

I'm wrong but I think not only

25:41

does this idea of commodification

25:43

inspire conservation

25:45

, but also innovation

25:48

. I

25:50

think perhaps the monetization

25:52

of a portion of the water rights might inspire

25:54

entrepreneurs to develop

25:56

innovations to help drive advanced

26:00

conservation methods or

26:02

technologies that , when

26:05

acquired by different organizations

26:07

, could be an agricultural

26:09

, could be a farm , could be a municipality

26:11

with a water system , but these things will

26:14

help drive water conservation

26:17

. Now we get into a conversation

26:19

about that term

26:21

you mentioned called water

26:24

rates . What's the price of water ? Is

26:27

it free or is it ? It doesn't cost

26:29

too much , right ? So it's

26:31

tough to do these

26:33

innovations when it's

26:35

just cheaper to let the water leak

26:38

out of the pipe sometimes . But I

26:40

would add the word innovation , and you can tell

26:42

me I'm wrong , but it seems to me that with

26:44

conservation comes that innovation opportunity

26:48

.

26:50

Oh yeah , no , you're absolutely right about

26:52

that . I remember

26:55

the first time

26:57

I think that I really saw

27:00

it in practice

27:03

was in

27:06

the Tung River

27:08

Valley of Montana

27:10

. I was appointed

27:13

special master for the US Supreme

27:15

Court in a case

27:18

between Montana and Wyoming

27:20

over the

27:22

Yellowstone River system , the Tung River part

27:25

of the Yellowstone River system . I was up there

27:27

talking

27:29

to one of the farmers

27:31

who was involved . He

27:35

was showing me around his farm and he was showing

27:37

me all of these innovations

27:41

that he had adopted

27:43

, including and

27:46

this was like 15 years ago

27:48

now including linking up his

27:50

iPhone with

27:53

all of his irrigation

27:55

systems . He

27:58

had done all of this in order to conserve

28:00

water

28:04

. If you give farmers an

28:06

incentive to conserve

28:09

, or you give really anyone

28:11

an incentive to conserve

28:13

, and they will find innovative

28:15

ways to

28:19

do it . Let me actually

28:21

just give you another totally

28:24

personal example

28:27

. It

28:29

used to be 15

28:33

, no , maybe 25 years

28:35

ago that on

28:37

the Stanford University campus , which is where

28:39

I live , all

28:42

water was provided to those of us who

28:44

lived there at a

28:46

separate , so no matter how

28:48

much water I used , I

28:52

would pay

28:56

the same price . I

28:58

think of myself

29:01

as an environmentalist , and

29:03

so I did a whole variety

29:05

of the type of things that you do in

29:07

order to conserve

29:09

water , but then suddenly Stanford

29:12

went to a new tier

29:14

pricing system where

29:17

I would not only pay for every

29:19

gallon that I used

29:21

, but as I started to use more and

29:23

more gallons , the price per gallon went

29:26

up , and again

29:28

I thought I was pretty good at conservation

29:30

but suddenly I found myself

29:32

out there looking

29:34

online for new technology

29:37

that I might be able to use , and one of the things I

29:39

found was a smart

29:42

irrigation controller that

29:45

I could buy , and

29:48

that smart irrigation

29:51

controller measured

29:53

how much water I needed on

29:55

all the parts of my

29:58

property and made sure that

30:00

the amount of water that was being delivered

30:02

was a minimal amount needed to sort

30:04

of maintain the upkeep

30:06

if it rained , and automatically

30:09

turned off the

30:12

irrigation controller

30:14

, and my water use plummeted

30:17

like 50% as a result

30:19

of that , and what it was

30:21

was that economic incentive . And

30:24

again , I don't want to say that I didn't try to conserve

30:26

before it , because I did , but I

30:29

think no matter how much you try , you

30:31

get that economic incentive , and sometimes

30:33

you can try even harder .

30:37

Yeah , that's great . That

30:39

is great . I'm

30:41

going to defer my questions

30:44

on commodification maybe

30:46

when I from the standpoint

30:48

of flipping the coin and talking

30:50

about some of the unintended consequences

30:53

or other scenarios . But we'll get into

30:55

that when we talk about the

30:57

policy recommendations I want to ask

31:00

you about and you've

31:02

sort of touched on this and unpacked a little

31:04

bit but what will businesses

31:07

is the way you've discussed

31:09

it in your book but what will businesses offer

31:11

to the future of water when

31:13

it comes to innovation or

31:16

innovative business models or technology

31:19

, or even this notion that you talk

31:21

about , you know , esg , environmental social

31:23

governance or corporate social responsibility

31:26

? What will businesses

31:28

offer to the future of water

31:31

on these items ?

31:33

So , I've tempted Matt , to

31:36

tell your

31:38

listeners that the

31:41

easiest way to get the answer to that question

31:43

is to read my book and

31:45

the only reason . I've tempted to say that

31:47

is because there are so

31:50

many ways that private businesses

31:53

are already and are likely

31:55

to play a really

31:57

significant role going

31:59

forward . So start

32:02

out with the

32:05

technology song . I've

32:08

frequently said . I've heard other people

32:11

say that you

32:13

know , water is one of those fields where we're

32:15

dealing with 21st century problems

32:17

, with 20th

32:19

century technologies and

32:21

19th century laws , and

32:25

there are a lot of companies

32:27

out there that are trying to

32:29

move us from those 20th

32:32

century technologies into 21st

32:35

century technologies . So

32:38

, for example , xion

32:41

, which is one of the larger

32:43

water technology companies , has developed a whole variety

32:47

of technologies designed to

32:49

help water managers

32:51

diagnose their systems right . So they might

32:55

be , you know

32:57

right swimming monitors that can swim

33:00

through the pipe systems and detect where there

33:02

are going to be pipe breaks

33:05

. As a result of systems of that

33:07

nature , we've been able to greatly

33:10

reduce the amount of

33:12

lost water in our municipal

33:15

water systems over the last five

33:18

to well

33:20

to 10 years

33:22

. We also don't have a lot

33:24

of companies out there who are

33:26

not necessarily working on

33:29

a totally new technology

33:31

but are working to improve

33:34

and bring down the costs of those technologies

33:37

. So , for example , there are a lot of

33:39

companies out there working on water

33:42

reclamation . On water recycling Historically

33:47

for water recycling what we were really interested

33:50

in was

33:52

bringing , taking

33:54

that wastewater and turning it into fresh

33:57

water that could be utilized . But

34:00

now you have technologies

34:02

that to an increasing degree , can not only

34:04

produce fresh

34:07

water and increasingly pure fresh

34:09

water . They can only do that , but they also can produce energy

34:13

. And in

34:16

fact there are technologies now

34:18

non-commercial use , but new technologies

34:21

that can actually

34:23

produce more energy

34:25

than have to be put into the recycling process

34:27

. So that means

34:29

energy that could be sold back out on the

34:31

market and also get

34:38

valuable

34:40

substances like

34:43

calcium or phosphates out

34:46

of that water that could then

34:48

be sold Right . So

34:50

again , water recycling has been around

34:52

for a while , but there's that opportunity

34:55

to improve that

34:59

particular technology

35:02

. So that's on the technological

35:05

side . But

35:09

you also have companies

35:11

that are trying to come up with new

35:15

financing techniques

35:17

for financing that infrastructure

35:19

, which is getting

35:21

old and needs to be replaced in

35:24

the United States . You going

35:26

back to your point about water markets , there

35:28

are a lot of farmers or others out

35:30

there who are constantly looking

35:33

at some innovative new

35:35

approach for saving

35:38

water . In

35:41

my book I talk about this farmer

35:43

in the central valley of California

35:46

, don Cameron . And

35:48

Don was

35:51

told hey , we

35:54

are mining groundwater

35:57

in the central valley of California and pulling

35:59

down the groundwater levels , and he noticed

36:02

one day , when

36:04

there had been a lot of rain , that there

36:06

was floodwater going by his property , and

36:09

so he thought that's just water

36:11

being wasted . And so

36:13

what he did was he took that floodwater

36:16

and he turned it onto his fields

36:18

this was in the winter and

36:21

he grows grapes and

36:23

fruit

36:26

trees and so he thought you know

36:28

, I could probably put that water on my fields

36:30

. It's not going to bother my crops , it

36:33

might even improve the

36:37

crop yield a bit , but I will

36:39

basically pull

36:41

that water over and let it sink

36:44

down into the groundwater aquifer and replenish

36:46

the groundwater aquifer . That

36:49

, and I could go on

36:51

at length . But

36:53

it's that type of innovation

36:55

, both by companies that are out there specifically

36:57

focused on innovation

37:00

, as well as those who

37:02

they're not . They don't think of

37:04

themselves as in the business of innovation

37:06

, but if you tell them water is shorter

37:09

, you tell them they can make a profit at it . They

37:11

will come up with some innovative new

37:13

approach .

37:16

That's a very we could really

37:18

talk about each one of those issues quite

37:23

some length . I might add

37:25

that the world of business

37:27

can offer innovative

37:31

governance , leadership or management

37:33

paradigms , and we'll get to that

37:35

when we talk about policy recommendations

37:37

. I think that's interesting . It

37:40

moves us from just simply water is

37:42

all about technology to what

37:44

about the softer issues of

37:47

leadership , management and

37:49

ethics . But

37:52

let me turn the tables and say it

37:55

sounds like business can offer a lot , but does that mean

37:57

the government doesn't offer anything ? I

37:59

mean , is there anything the government can offer the

38:01

future of water when it comes

38:03

to these same issues technology , esg

38:06

your thoughts ?

38:09

So government is

38:12

essential in

38:14

this area and

38:16

government is well

38:19

. I'll just start out by saying government

38:21

is always important . Government

38:23

is out there to ensure that

38:29

society is a

38:32

safe place for everyone

38:34

to thrive . And

38:37

if you don't have government , you can't even have a

38:39

market right . Government is the one that

38:41

creates and

38:43

monitors markets . But

38:45

, as I mentioned earlier , water

38:47

is a human right , it's

38:50

a public trust , and that means the

38:52

government's role in water is even

38:55

more important . And even

38:57

if that weren't true , government

39:00

has played the predominant role in the past

39:02

of the water field and

39:04

it's not suddenly going to turn

39:06

everything over to the

39:09

private sector . So

39:13

government is essential

39:17

and you can go

39:19

through the various ways . We

39:21

do have a

39:24

significant sector of

39:26

private water suppliers in

39:29

the United States . It depends

39:31

upon what state you live in , but you know

39:33

nationwide , probably about

39:35

15 , 16% of all the water

39:37

supplied to homes commission private

39:39

water suppliers . The government

39:42

is crucial in

39:44

overseeing those private water suppliers

39:47

who

39:49

. Those are natural monopolies , right

39:51

. So you need a public

39:54

utility commission to oversee

39:56

those private water suppliers and

39:59

ensure that they provide the

40:01

services that they promise

40:03

and that they do

40:05

not charge excessively

40:08

high prices . So

40:10

you need public utility commissions in

40:15

that particular area

40:18

, and you

40:21

also need government

40:26

to , as I say , make sure

40:28

that , as private

40:30

companies are coming up with

40:33

, what I think are frequently very exciting innovations that

40:38

the profit motive

40:40

does not lead

40:42

them to do something which

40:44

is potentially

40:46

dangerous to

40:51

the public . And let

40:53

me give you another example

40:55

there . So if

40:57

you take the oil and gas field

41:03

, the companies produce a lot

41:05

of wastewater , what's known

41:07

as produced water

41:09

, and historically what oil and gas

41:12

companies have done is they've taken that produced water

41:14

which has a variety of contaminants in

41:16

it , and they

41:18

have generally just

41:21

pumped that wastewater

41:23

underground to get rid of it

41:26

. That's just a waste of water

41:28

. Well , as water has become more valuable

41:30

, a number of oil and

41:33

gas companies have started to think

41:35

about well , what if we could recycle

41:37

that water ? Could

41:40

we then sell

41:43

that recycled water ? And

41:45

that's really exciting

41:47

. I mean it's great to think you could

41:49

take all of that produced water and

41:53

turn it into something

41:55

which is valuable . In

41:58

California , oil and gas companies actually

42:00

for several decades now , have been selling

42:02

some of that water to local

42:05

farmers , because frequently

42:08

you find oil and gas fields in California

42:10

, at least near farming

42:14

communities . And again

42:16

, that's great because those farmers need water . They

42:18

don't have enough water , but

42:20

you need

42:22

to worry . Is

42:27

it possible that that water

42:29

might still have some contaminants

42:32

in it that get into our food system

42:34

? Another area which we

42:36

have a strong public interest in

42:38

In California . The

42:41

California State Water

42:43

Resource Control Board did

42:45

an H-year study of whether

42:48

or not there was an

42:51

environmental health

42:54

concern there , and they concluded

42:56

that there was not . But

42:59

that's the sort of thing that again

43:01

, the government needs to be playing

43:03

that important role of

43:06

ensuring that the public interest

43:08

is always

43:10

protected .

43:11

Yeah , I think you're right . I think it's

43:14

not so much that the government is Google

43:17

or Amazon or Apple

43:20

in terms of an innovation culture

43:23

, but they often can

43:25

act both as an economic regulator

43:27

and an environmental regulator to

43:30

ensure , perhaps , a level playing field

43:32

and to all the

43:34

business communities as well as the other , for

43:37

example , public treatment

43:39

facilities , but that acts

43:41

as kind of that cultural barometer

43:43

to ensure fairness

43:45

across this world of water

43:48

. Is that fair ?

43:49

Yeah , I think that's definitely

43:51

fair . I

43:54

thought frequently when

43:57

I was writing liquid asset

44:00

that in

44:03

the water field today , there's

44:05

an imbalance

44:08

. The private sector

44:10

is not playing as large of a role

44:13

as it can , as it should

44:15

. As a result , we're losing

44:17

a lot of the innovations that the private sector

44:19

could provide . And so

44:21

what liquid asset is about is really

44:24

how do we write that balance

44:26

?

44:26

Well , how do we ?

44:27

write it in a way that does not create the

44:29

opposite problem of

44:31

a private sector run amok

44:33

without

44:36

government being

44:38

there to ensure that the public interest

44:40

is protected .

44:42

Yeah , well , I

44:45

want to turn to what I think is the most important

44:47

part of your thoughtful text

44:50

. It is your four policy

44:53

recommendations . As

44:55

you move through the book , there is

44:57

a lot to consume , a

45:00

lot to think about , and you conclude

45:03

your thoughts with four

45:05

policy recommendations , and I

45:07

want to walk through each one and

45:10

talk about each

45:12

one from the perspective of if they

45:14

are adopted . If the policy

45:17

recommendations are adopted , what does that mean

45:19

for the future of water In the

45:21

next 10 to 20 years ? Is this

45:24

going to be a good policy recommendation

45:27

or are there some unintended consequences

45:29

that we may not be really thinking through ? And

45:32

I think you are wise

45:35

to see that there

45:38

could be some unintended consequences with

45:40

every policy recommendation that we need to be mindful

45:42

of . But real

45:44

, quickly . Your four policy recommendations

45:47

are we need some reforms in the public

45:49

sector . Second , you

45:52

title this Rethinking Regulations

45:54

, which can be a good

45:56

thing or a scary thing , depending on where you are

45:58

in the world . And then , third

46:00

, you have the ethical obligations of

46:02

business . Now , some people may

46:04

think that's an oxymoron , right , but we'll

46:07

get there . And then , finally

46:09

, you talk about the need for stronger public-private

46:11

collaboration . So those

46:14

are your four policy recommendations

46:16

, at least the titles , and I want

46:19

to ask for you to walk

46:21

through each one and tell us what you mean

46:23

and let's talk about that

46:26

each scenario in the future . But first

46:29

, reforms in the public sector . You

46:33

started to unpack this at the beginning

46:35

and you talked about fragmentation

46:37

and full-cost

46:40

rates . What is the price of water

46:42

? And maybe we can reconnect that discussion

46:45

. And how does that link to your

46:47

first policy recommendation ?

46:50

Yeah , so let me talk about both

46:52

of those . So the problem

46:54

of fragmentation in the United States is

46:56

that , although we have a lot of large

46:59

water suppliers , the vast majority

47:01

of water suppliers in the United States

47:03

are small . My

47:06

favorite statistic is there

47:08

are more water

47:10

suppliers in the United States than

47:13

there are elementary

47:17

schools , junior high schools

47:19

, high schools and post-secondary

47:21

educational institutions combined

47:27

, and a lot of those water suppliers are just

47:30

very small . They might be serving

47:32

500,000

47:35

customers , and

47:38

that poses a variety of problems

47:41

. The reason I bring it up in my

47:43

book is that

47:45

it poses a problem for

47:48

companies coming up with new

47:50

technological innovations , because

47:52

it means that you

47:54

have to go out and go

47:58

to thousands

48:00

of small suppliers

48:03

, many of which will

48:05

not be able to afford

48:07

or effectively integrate

48:09

those new technologies into their

48:11

operations . So it's one

48:13

of the barriers to technological

48:17

innovation . The

48:19

other problem is on

48:22

the pricing side

48:24

. We

48:26

could spend an entire episode of your

48:28

show , mat , talking about the problems

48:31

of the pricing

48:33

of water , but let me just start out

48:35

with the

48:37

most basic , which is

48:39

that there are a lot of

48:41

water supply

48:44

systems in the United States that

48:46

right now are not charging a

48:49

rate for their water which

48:51

is adequate even

48:54

to replace their

48:57

current aging infrastructure

49:00

, let alone invest

49:03

in new technologies

49:06

which might improve their

49:09

water performance moving

49:11

forward . Furthermore

49:14

, very few public

49:18

water suppliers in the United States have

49:21

anything in the way of

49:23

an R&D

49:25

budget , a budget to actually

49:28

look out there to see what are the new technologies

49:31

that they should be

49:33

investing in , or where

49:35

are the areas that they would like a company

49:37

to help develop a technology for

49:41

them . And

49:43

so that failure

49:45

to adequately

49:48

I think I can use

49:51

that term in this context adequately

49:54

priced water

49:57

is again undermining

49:59

technological

50:01

innovation , at the same

50:04

time that it's posing a variety of other

50:06

problems .

50:07

Yeah , I think you're right on that count , that that

50:09

could take a whole episode . The

50:11

economics of water . I

50:14

think you're right on fragmentation and

50:17

I think

50:19

the number is that 20%

50:22

of America served

50:24

by a public utility . That

50:27

represents about 80%

50:30

of the community water systems in America . 80%

50:32

of those community water systems serve 20%

50:35

of America , which goes to your comment about . You

50:38

have all these small , fragmented systems all

50:40

over America serving 300 people

50:42

, 500 people , and

50:44

what does that mean for the future of water

50:47

, especially when they're

50:49

trying to innovate ? And

50:51

can they afford that innovation that businesses

50:54

are developing ? And

50:56

boy that . The rate

50:58

making issue is really certainly one that

51:00

could spend consumer or

51:02

the rest of our day . The

51:06

second policy recommendation

51:09

is rethinking

51:11

regulations and I know

51:13

that has a good

51:16

part and maybe a scary part

51:18

, but unpack that for us and tell us

51:20

what we need to do to rethink the

51:23

regulations and what that might look like in

51:25

the next 10 to 20 years .

51:28

Yeah , the bottom line

51:30

again this is a potentially

51:33

huge topic is

51:35

that we've really

51:37

never thought as

51:40

carefully as we should

51:42

in the water field about

51:44

how we can utilize

51:47

our regulatory process

51:50

in order to be able

51:52

to get more out

51:54

of the private

51:56

sector . And let's

51:58

just take as an example

52:01

again an example

52:03

of technological innovation in

52:07

the water field . We

52:11

can both use

52:13

more regulation and less

52:15

regulation in order to

52:17

encourage new technological

52:20

innovations . Start

52:22

with the more regulation

52:24

. If you look at the

52:27

energy sector , I mentioned earlier

52:30

that patents in the energy

52:32

sector really took off in the mid 2000s

52:34

, and I think there are two reasons why

52:36

it took off . First

52:39

of all , at the federal level

52:41

, we were investing a lot of money in

52:43

the development of new energy technologies

52:45

, and that's another subject , but we

52:48

invest virtually nothing in the United States

52:50

in the development of new water innovations

52:52

. But the

52:54

second aspect of it was

52:56

that we began adopting a

52:58

variety of regulations encouraging

53:01

energy suppliers to use new

53:03

technology . So

53:05

we in particular , have renewable

53:08

portfolio standards

53:10

that actually require

53:12

in many states in the United

53:15

States water I'm

53:17

sorry energy suppliers to

53:19

use solar

53:23

or wind or

53:26

any other type of a renewable

53:29

energy source , and that

53:31

regulation helps to

53:33

stimulate the

53:35

new technologies

53:38

. We actually did this in the water field

53:40

back in the 1970s with

53:42

passage of the Clean Water Act . Passage

53:44

of the Clean Water Act , which certainly

53:46

required companies to be installing

53:49

technologies

53:51

to reduce their water pollution , really

53:53

stimulated the water pollution technology

53:55

. We don't have anything

53:58

like that . I shouldn't say

54:00

that we have very few examples

54:02

of that type of regulation when

54:04

it comes to technologies designed

54:06

to encourage conservation , so

54:08

that's an example of needing

54:11

more technologies .

54:13

At the other side of it .

54:15

We have a lot of regulations that

54:17

are in place

54:20

that protect existing

54:22

water technologies

54:25

at

54:28

the cost of new water technologies

54:30

. Recycling is a

54:32

good example of

54:34

that . We frequently , when we're

54:36

developing new regulations , develop

54:38

them for the technologies that we know and

54:41

then , when new technologies come along , frequently

54:43

doesn't fit and that can

54:45

be a

54:48

drag on the development of new technologies

54:50

. I'll just give you one again

54:53

just personal example

54:55

. At Stanford about 20 years

54:57

ago we built a new building for environmental

54:59

studies . It's called Y2E2

55:02

. And when we

55:04

built Y2E2 , we were

55:06

trying to build a building that minimized

55:09

energy use and minimized water use

55:11

, and one new technology

55:14

at the time was

55:16

waterless urinals

55:18

and

55:20

we thought , okay , we're going to put one of

55:22

those in , or we're

55:25

going to put those in all of the bathrooms

55:27

in the building . And

55:30

then we found out that no

55:32

, it actually violated county

55:34

regulations and

55:37

we negotiated with the

55:39

county and

55:41

finally we're able to get

55:43

the county to agree that we could put one

55:47

waterless urinal in each

55:50

bathroom . So

55:52

to this day in

55:55

Y2E2 , you go into the

55:57

men's bathroom and

55:59

you'll find four

56:02

regular urinals and

56:04

one waterless urinal . Right

56:08

, that's sort of regulatory barrier

56:11

that we need to remove

56:13

.

56:15

The government says you shall use water

56:17

and lots of

56:19

it , boy

56:21

. Lots of thoughts as you talk about that

56:23

. Lots of thoughts , I

56:26

think , even

56:29

one potential regulation

56:31

that's been kind of evolving . Let

56:34

me ask about two issues . One is there

56:36

is a movement I think it's

56:38

only in two states now , but there is a law

56:42

referred to as the Water Quality Accountability

56:45

Act and , among other things , it

56:47

requires water

56:50

utilities drinking water utilities to

56:52

adopt

56:54

asset management planning techniques

56:56

as well as providing

57:00

for cybersecurity protections

57:03

, and I'm being very broad here . But that

57:06

is an example where perhaps

57:09

government regulation , depending on where you

57:11

stand , could be a bad thing . But

57:13

it is driving innovation and

57:15

perhaps even back to your first policy

57:18

recommendation , it may be driving consolidation

57:20

, where some of these smaller systems are

57:23

probably saying , hey , I

57:25

don't think we have

57:28

the capacity to do this stuff , why

57:30

don't we just take our system and merge

57:33

with our neighbor or sell to a private

57:35

system ? So there's regulation

57:38

driving some

57:41

innovations in the marketplace

57:43

that may lead to some utilities saying we just

57:45

don't have the time and the money to do this , we're

57:48

going to maybe consolidate , and

57:50

so that's one example , but

57:53

the other might be connected

57:55

to the regulation concerning the human

57:58

right to water , which has some

58:00

surreptitious connections to

58:02

, perhaps , environmental justice . But

58:04

as this

58:07

notion of the human right to water gets

58:10

debated , discussed , it gets

58:12

adopted in certain jurisdictions across

58:14

America . That could be

58:16

both a

58:18

problem solver as

58:20

well as , maybe , a problem creator , as

58:22

we think about what in the world does

58:25

this regulation mean , if it's more

58:27

than just a policy ? But could this create

58:31

challenges where my new

58:33

plant may not be able

58:35

to be located in a particular area it

58:37

has to go somewhere else which increase the

58:39

costs of

58:41

constructing and operating that system , which

58:44

may be passed along to customers who

58:46

are struggling to pay their

58:48

water bills ? To begin with , is

58:50

that a fair , maybe unintended , consequence

58:52

of at least this human

58:56

right to water regulatory framework ?

58:59

So I think that

59:01

any

59:04

time that you

59:06

need to worry about

59:08

a new issue , it

59:12

can make the

59:14

traditional way in which you go about doing

59:17

things , or

59:19

even improvements designed

59:21

to accomplish a different goal , more difficult . Right

59:27

, so you know . I'll switch out of the

59:29

water field for a moment to the climate field . You

59:33

know there

59:35

are a variety of climate policies

59:38

which are made more challenging and

59:40

more difficult by the need

59:42

to consider environmental justice . Yeah

59:45

, and then that goes with

59:48

the issue , but it doesn't justify

59:50

saying , well

59:56

, okay , then we're not going to worry about environmental

59:58

justice or we're not going to worry

1:00:00

about the human right to water . Those

1:00:04

are key issues that we

1:00:06

just have to figure out how to

1:00:09

accomplish , even if it comes

1:00:11

at a cost to something

1:00:14

else . Yes , yeah , and

1:00:18

I think those can also lead to

1:00:23

, sometimes to innovations

1:00:25

. Yeah , yeah

1:00:29

, the need to meet the human right to

1:00:31

water can

1:00:33

encourage an

1:00:36

inclining

1:00:38

block rate

1:00:41

structure for water

1:00:43

. Where , as I mentioned earlier , what

1:00:45

Stanford does , where I get charged

1:00:48

more per gallon as

1:00:50

I use more and more water , yeah

1:00:53

, that helps address

1:00:56

the human right to water , because

1:00:58

, for

1:01:01

somebody who's not using very much water

1:01:03

, south Africa has an inclining

1:01:05

block rate structure in some

1:01:07

locations where the first amount of water

1:01:10

is free

1:01:12

, but

1:01:14

you still

1:01:16

have that inclining block rate , so

1:01:19

that people who are using a lot have a real incentive

1:01:21

to conserve . Well , that's an innovative

1:01:24

approach to structuring

1:01:27

water rates that , again

1:01:29

, the human right to water can help drive

1:01:31

.

1:01:33

In some scenarios , when

1:01:37

you think about the private water sector

1:01:39

, they may favor a

1:01:41

regulation as

1:01:43

opposed to a general policy recommendation

1:01:46

because it will require them under

1:01:50

civil penalties , threat of civil penalties

1:01:53

, to adopt certain requirements

1:01:58

, whether it be water quantity related

1:02:00

or water quality related , cybersecurity

1:02:02

related , and those costs then

1:02:04

, either from

1:02:07

an increasing rates in a municipality

1:02:09

or increasing rates through

1:02:13

a public utility commission for a private utility

1:02:15

, those costs can be justified

1:02:18

and then passed along to customers as

1:02:20

opposed to simply

1:02:22

adopting something that

1:02:24

is not prescribed by law

1:02:26

. So there's kind of that double-edged sword

1:02:29

there , because eventually

1:02:31

once you implement those innovations

1:02:33

, there's a cost to that . They

1:02:36

get put into the customer's bill and

1:02:38

sometimes those environmental

1:02:40

regulations etc take

1:02:42

time to adopt and implement

1:02:45

and customers sometimes forget about that , that

1:02:47

they voted for those things , they wanted those things

1:02:49

, and here it comes in the bill

1:02:51

another $5 a month because you voted

1:02:53

for this new water quality

1:02:56

regulation or such and

1:02:58

such . So I've

1:03:00

kind of seen that and experienced that myself and

1:03:02

sometimes be

1:03:05

careful , what you wish for you may get it . Sometimes

1:03:07

that can be both a good thing and a bad

1:03:09

thing . So often

1:03:12

it's tied to your kind of opening

1:03:14

comment , I believe , on

1:03:16

. Some people think water is free , and

1:03:18

that may not always be the case , so

1:03:24

the perception . But

1:03:26

I think your comments , though , regarding

1:03:29

the human right to water and its implications

1:03:31

really ties to your third policy recommendation

1:03:34

, which is what are

1:03:36

these current or even emerging

1:03:38

ethical obligations

1:03:40

of businesses , and are

1:03:43

they real ? Or is this what's the

1:03:46

term , greenwashing ? How

1:03:48

will these emerging ethical

1:03:50

obligations or commitments by the business

1:03:52

world help

1:03:55

us in the next 10 to 20

1:03:57

years in the world of water ? Will we see

1:03:59

opportunities , benefits , or is

1:04:02

this just a bunch of window dressing ? Your

1:04:04

thoughts .

1:04:07

Yeah . So the third recommendation

1:04:09

of my book , as

1:04:12

you know , is to

1:04:14

really encourage all

1:04:16

the companies that have a significant

1:04:18

role in water management

1:04:21

to number

1:04:24

one , adopt

1:04:26

a set of

1:04:28

policies designed

1:04:30

to protect

1:04:34

the public interest in water

1:04:36

and not only to

1:04:38

adopt those policies but

1:04:40

then to implement

1:04:43

those policies and the notion

1:04:46

and maybe

1:04:48

I'm naive here , but

1:04:51

it's that the private sector does

1:04:53

have a really

1:04:55

important role to play

1:04:59

in water management but

1:05:01

that if you are a company

1:05:04

or you're thinking about starting a new

1:05:06

company in the water

1:05:09

field and you want to be successful

1:05:11

, you have to recognize that

1:05:13

you are operating in a

1:05:15

sector vested with significant

1:05:18

public interest . And

1:05:20

if you don't do that , that is

1:05:22

going to make your business

1:05:25

more challenging and

1:05:27

you are much less likely to

1:05:30

be successful

1:05:33

. So to some degree

1:05:35

it's a plea to

1:05:38

all the business people

1:05:40

reading the book to

1:05:42

really take the public

1:05:44

interest in water seriously

1:05:48

Now I recognize that

1:05:51

the profit motivation

1:05:54

can sometimes lead companies

1:05:57

to go astray , and I'm sure there's a variety

1:05:59

of

1:06:01

a number of your listeners who

1:06:04

are thinking right now Lee and Slym will go astray

1:06:06

a lot . But at

1:06:09

least what I talked

1:06:11

to the people in the private sector

1:06:13

these are people who , yeah

1:06:16

, they want to be able to make a living out of what they're

1:06:18

doing , but in addition to that , they really

1:06:20

want to make a difference in the water

1:06:22

field , just like the public managers

1:06:25

want to make a difference in

1:06:27

the public field . There's

1:06:30

a growing number of B-corp

1:06:34

, so benefit corporations in

1:06:37

the water field or water companies that are

1:06:39

now qualifying

1:06:41

themselves in

1:06:44

as B-corp

1:06:46

. So I

1:06:49

think that the water

1:06:51

sector can meet

1:06:54

this need . But

1:06:57

I recognize , yeah

1:06:59

, it's sometimes difficult and

1:07:02

that's why , going back to the regulatory

1:07:04

point , we do

1:07:06

need government to be

1:07:08

in there regulating

1:07:10

businesses .

1:07:12

Yeah , I think you make a good point . When I think

1:07:15

about ethical obligations first

1:07:17

, I think it's probably one of the most significant

1:07:19

policy recommendations you have . That's

1:07:23

my opinion . But

1:07:25

what happens when people say

1:07:27

, well , who's ethics right ? Or

1:07:31

many in our culture might say , well , that's

1:07:33

your truth . What are

1:07:35

the ethical obligations of business ? I

1:07:38

think that it could

1:07:41

be just public water

1:07:43

utilities , private water utilities signing up for

1:07:45

, say , the CEO water mandate , as you highlight

1:07:47

in your book . What

1:07:49

about the water entrepreneurs

1:07:51

or the water investors ? Are

1:07:53

they going to be signatories or

1:07:56

adopters of these and other future ethical

1:07:59

frameworks ? Will

1:08:02

it become a situation

1:08:04

where there

1:08:06

really isn't much traction or the

1:08:09

ethical precepts aren't

1:08:11

really adopted by people because

1:08:13

they don't really view some

1:08:16

of these precepts as an

1:08:18

ethical framework they share ? And so now you're

1:08:21

back to your other

1:08:23

policy recommendation , which is more government regulation

1:08:25

. Well , if we can't all decide on what's

1:08:27

true and what's ethical , well

1:08:30

, we'll have the government establish those

1:08:32

elements and

1:08:35

require it , and

1:08:37

I think that's what I heard you discuss

1:08:40

a bit about this . I

1:08:43

see that , perhaps with

1:08:46

the Securities and Exchange Commission and other federal

1:08:49

administrative agencies putting ethical

1:08:52

frameworks into proposed regulations

1:08:55

, and perhaps that might be a future of water

1:08:57

, where we see more and more federal

1:09:00

regulation , not just on a technical side

1:09:03

but on some other more

1:09:06

leadership and management , governance elements

1:09:08

that maybe we're not considering

1:09:10

today , but in 20 years they may become

1:09:13

the

1:09:15

talking points that we're really addressing . Is

1:09:18

that fair ?

1:09:20

Yeah , I think that's all of that's

1:09:22

fair . And again , I believe

1:09:25

that we're going to see an evolution

1:09:27

, a revolution in this area

1:09:30

, where private

1:09:32

companies are going

1:09:35

to see that taking

1:09:38

ethical obligations in the waterfield

1:09:41

seriously is not only

1:09:43

the right thing to do , but it's also

1:09:45

the business

1:09:47

thing to do . If you are

1:09:49

a private

1:09:52

water supplier

1:09:54

and you want to . You

1:10:00

want a particular city to

1:10:03

enter into a contract with you where you're

1:10:05

supplying water to that city . If

1:10:08

you're not willing

1:10:11

to show that you

1:10:14

are going an extra mile to meet

1:10:18

the human right to water , I

1:10:21

think you're going to be a lot less likely in the future

1:10:23

to get a contract with

1:10:26

that city . And

1:10:28

so I see all of these things coming together

1:10:30

in a way which will

1:10:33

motivate businesses to

1:10:35

do what they should be doing .

1:10:37

Yeah , comes down to trust

1:10:39

and your brand and your reputation

1:10:41

. Are you customer-centric

1:10:44

? Final

1:10:47

policy recommendation is the

1:10:49

need for a stronger public private

1:10:52

collaboration . And

1:10:56

tell me what you mean by that and

1:10:58

give me one idea

1:11:02

that you have on what will be the most significant

1:11:04

public private collaboration in the

1:11:06

next 10 to 20 years .

1:11:11

So what

1:11:14

I've meant and it's

1:11:16

sort of a global

1:11:20

recommendation if

1:11:23

you talk to the private businesses

1:11:26

that are

1:11:28

successful today in

1:11:31

the water field

1:11:33

, they will tell you that

1:11:35

they are successful in

1:11:38

significant part

1:11:40

because they have worked

1:11:42

actively with the

1:11:45

public sector . And

1:11:47

it's the ones that assume

1:11:50

that a private business

1:11:52

can

1:11:54

take its innovation

1:11:57

and its efficiency and

1:12:00

go out there and be

1:12:02

successful all by itself

1:12:04

. Those are the ones that don't succeed

1:12:06

. And so the last part of

1:12:08

it is really that if you are

1:12:10

a private company in the water field

1:12:13

, you need to collaborate actively

1:12:15

with the government to be successful

1:12:17

, and that , looked at

1:12:20

on the other side , if

1:12:22

you are a public entity

1:12:24

, you need to recognize

1:12:27

all of the potential

1:12:30

innovation and efficiencies

1:12:32

that you can gain from the private

1:12:34

sector and collaborate

1:12:36

with the private sector , because if you are

1:12:38

a public for example , water supplier

1:12:42

and you don't work actively

1:12:46

with the private companies , you are losing out on

1:12:49

a lot of opportunities . So

1:12:51

it's really just

1:12:53

a straightforward statement to

1:12:55

both the public sector and the private sector

1:12:58

you folks do

1:13:00

, and if you do , you can solve the crisis

1:13:02

. If you don't work together , you are not going

1:13:04

to solve the water

1:13:07

crisis .

1:13:09

And you're not just merely talking about

1:13:11

private water utility working with the

1:13:13

local community . You're talking about the entrepreneurs

1:13:15

and innovators that are making the

1:13:17

new widgets or the new software

1:13:20

, even the investors who may

1:13:22

offer unique products to communities

1:13:25

in need . That's across the board . Is that fair

1:13:27

?

1:13:28

That's absolutely right . So there's

1:13:33

a water recycling

1:13:36

company in the San

1:13:38

Francisco Bay Area , a great

1:13:40

company called Epic

1:13:45

Clean Tech , and

1:13:48

what they do is they design

1:13:50

water

1:13:52

recycling for large

1:13:55

buildings , large apartment

1:13:57

complexes , large commercial

1:13:59

complexes . And

1:14:03

if you talk

1:14:05

to them , they will say they've

1:14:07

been successful because they've gone in and worked

1:14:10

with the cities and

1:14:13

talked to the cities about , okay , how

1:14:16

do we work in this particular sector in

1:14:18

New York City in order to be successful and

1:14:20

what do you think we should be doing ? And

1:14:23

it's that type of collaboration

1:14:27

where , if you're a technology company , you're

1:14:29

asking for the advice

1:14:31

of those

1:14:34

public water suppliers

1:14:36

, or you are going in and

1:14:38

talking to the

1:14:41

local planners , or

1:14:44

you're talking to the state about

1:14:47

its

1:14:49

technological regulations

1:14:52

. You need to have

1:14:55

those types of connections

1:14:57

in order to be successful .

1:15:00

Yeah , it's not simply

1:15:02

. Here's my solution . Let

1:15:04

me push it down to you . It's

1:15:07

let me get to know you , let me get to understand

1:15:09

your particular needs and

1:15:12

let's see if I have a solution that

1:15:14

I can craft to

1:15:16

help you reduce that pain .

1:15:18

Fair enough , Absolutely

1:15:20

, and you know the reason

1:15:23

why I think I focused on that

1:15:26

is not only is that probably the

1:15:28

ultimate message

1:15:30

of liquid asset , but

1:15:33

if you look at what

1:15:35

I think is one of the most successful examples

1:15:38

of this type of collaboration

1:15:40

out there , it's in Singapore , where

1:15:43

Singapore , which has

1:15:45

only a very small native

1:15:47

water supply system

1:15:49

, really actively embraced

1:15:51

the private sector to

1:15:55

help develop the technologies that

1:15:57

Singapore needs in order

1:15:59

to meet its water

1:16:02

needs , and

1:16:05

in the process , they've created

1:16:07

a huge water sector which

1:16:10

now , if I remember

1:16:12

correctly , it

1:16:15

supplies about $2

1:16:17

billion revenue

1:16:20

to the city of Singapore , the nation

1:16:23

of Singapore , and employs like 14,000

1:16:25

people . So there you had , this great public

1:16:28

private partnership that

1:16:31

helped Singapore meet its needs

1:16:33

and created this vibrant

1:16:35

technology sector , which

1:16:37

not only helps Singapore but is

1:16:39

now helping the rest of the world .

1:16:44

Liquid asset . How business

1:16:47

and government can partner to solve the freshwater

1:16:49

crisis . Professor Thompson , your

1:16:52

book is highly regarded . I

1:16:54

encourage everyone to pick up a copy , review

1:16:57

it carefully and engage

1:16:59

meaningfully in not

1:17:02

just each chapter , but also the four policy

1:17:05

recommendations that you outline

1:17:07

in your book . I think it will be

1:17:10

good fodder for how

1:17:13

we envision a better future

1:17:15

of water over the next 10 to 20 years

1:17:17

and certainly how the

1:17:20

business world and the government can

1:17:22

collaborate meaningfully concerning

1:17:26

solutions that will provide

1:17:28

adequate supplies of

1:17:30

clean drinking water for our

1:17:33

homes and our businesses . Professor

1:17:35

Thompson , I want to thank you for being a guest today

1:17:37

on the Water Foresight podcast , and how

1:17:41

can folks reach you if they have questions

1:17:44

or even they want to pick up a copy

1:17:46

of your book ? How can they do that ?

1:17:48

Now picking up the copy of the book is probably

1:17:50

the easiest thing

1:17:52

. It's sold everywhere

1:17:55

and , in terms

1:17:57

of getting in touch with me , I

1:18:00

always welcome emails

1:18:03

. My Stanford email is

1:18:05

buzztvzzt at stanfordedu

1:18:08

. And , matt , I just want

1:18:10

to say it has been a pleasure being

1:18:13

on your show .

1:18:14

Well , it's a privilege to have

1:18:16

the opportunity to talk to you , and your

1:18:18

wisdom is something that everyone

1:18:20

should consider as they think about

1:18:22

the future of water . Thank

1:18:25

you for listening to the Water Foresight podcast

1:18:27

powered by the Aqualars Group . For

1:18:29

more information , please visit us at aqualarascom

1:18:32

or follow us on LinkedIn

1:18:34

and Twitter .