Is Water the New Carbon?

Is water the new carbon?

This question posed by an outstanding recent article in Sustainable Industries Journal:

Today, carbon trading...is estimated to be a nearly $790 billion marketplace with individual, corporate and government participants. Now at least one member of the Chicago Climate Exchange sees a similar future in solving a more immediate environmental challenge: water pollution and shortages.

“When I got involved in carbon offset development, it became obvious that water was potentially a bigger market than even carbon,” says John Regan. Regan founded the Environmental Credit Corp., a carbon-credit supplier on the Chicago Climate Exchange; he is also the chairman of Biofinancial Corp., a Santa Cruz, Calif.-based family of hedge funds.

“Carbon reduction is a relatively slow evolution,” Regan says. “It takes 25 to 50 years before you see the impact of what you do today. If you don’t solve the water impacts in five years, you’ll have a crisis on your hands.”

As I see it both globally and nationally, two major challenges for this type of market will be to buffer:

1. the loss of the glaciers that provide water for over 1 billion people around the world - and are predicted to disappear in the next few decades; and
2. the shrinking of snowpacks in the Sierra Nevada, Rocky, and Cascade Mountains, which poses a considerable threat to agricultural and drinking water supplies in the Western United States.

A major key will be to use proceeds from this type of market to reward landowners for implementing land management strategies that maximize the capacity of ecosystems to generate, store, and filter water.