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Schwarzenegger, Mycoskie and White say finance a factor in solving water crisis

3 min read

Modern Money

Access to capital – in both large and small amounts – plays a huge role in the global water crisis. If you don’t believe that, then go ask the Terminator.

Actor and former California Governor Arnold Schwarzenegger took the stage at CME Group’s 8th annual Global Financial Leadership Conference this week and ticked off numerous examples of how a lack of political will and the accompanying infrastructure capital is stifling efforts to solve the water crisis affecting California and other regions around the world.

“We need our leaders to develop the political will to invest in projects that won’t be ready for photo ops or the next election cycle, but will be ready for the next generation,” Schwarzenegger said.

Schwarzenegger said the way California infrastructure is designed to deal with rain water is one example of outdated infrastructure that can’t be updated without capital commitments. Right now, the system is designed to funnel water back into the ocean. “The one place that doesn’t need more water is the ocean,” Schwarzenegger explained. Yet a new system that would collect rain water and store it for future use would be a massive infrastructure project with a hefty price tag.

However, not every aspect of the water crisis requires a multi-billion dollar solution. Schwarzenegger’s speech at the event was followed by a panel discussion where he was joined by CEO and co-founder Gary White and TOMS Founder Blake Mycoskie. White and Mycoskie help lead initiatives in developing parts of the world where access to water is a daily challenge.

In some places, the poor have little choice but to pay the local “water mafia” small fees every day for access to water sources.

“It is expensive to be poor,” White noted. “You can afford a dollar a day to the ‘water mafia’ but can’t afford the $200 to install toilet.”

This is where small amounts of capital, also known as microfinance, can make a huge difference in safe and sound access to water. White added that the ability to “unleash the capital markets” can compliment the work of charities and “nudge” the expansion of microfinance initiatives.

When most people think of the “water crisis,” they think of water access and security as developing countries. However, all three panelists addressed the pricing of water in the developed world also contributes to the crisis. If water is cheap, people will use more of it. Schwarzenegger explained that water is twice as expensive in Sydney, Australia as it is in San Diego, California. Not surprisingly, people in San Diego use more water per capita than their peers in Sydney.

Solving the water crisis might mean charging more for water in places where it is already readily accessible.

“It is a question of whether we are going to pay more now, or a lot more later,” Mycoskie said.