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Corporate Strategy for Water and Green Economy

March 2013
Senior Research Fellow Takafumi Ikuta



As growing global population and economic activity bring about increasingly noticeable resource constraints and environmental issues, realizing “Green Economy”—the harmonization between environmental conservation and economic development—has become an international goal. One of the greatest constraints on achieving Green Economy is the worsening of water problems. Water problems, such as water supply-demand gaps, water-related natural disasters, access to safe drinking water and basic sanitation, water pollution, and ageing water distribution systems all vary in severity according to level of economic development and geographical characteristics, and finding solutions to these issues at the nexus of water, energy, and food security is extremely complicated. All over the world, water-related measures are being strengthened and market mechanisms are being used to conserve water: the EU emphasizes the management of water at watershed levels; the US is focused on water security; and Singapore is using technological development to deal with drought and increase its competitiveness.

Domestically, Japan does not suffer from serious water problems, but considering the entire value chain involved in business activities, Japanese companies must also deal with water problems openly and decisively. In order to deal with water problems strategically, companies must first share knowledge of the gravity of the issue and make available information on their efforts from the viewpoint of water, before dealing with risks in international competitiveness and searching for business opportunities. In addition to reducing costs and increasing brand value, properly dealing with water risk may provide opportunities for strengthening competitiveness through business proposals. Using ICT to solve problems in infrastructure, such as supply-demand control, leakage management, and measuring water quality and flood damage, business efficiency is taking hold not only in developed countries but emerging and developing countries, too. The global water business market alone, which is chiefly water and sewerage, is predicted to grow to ¥86.5 trillion by 2025, or 2.4 times its size in 2007. The Japanese government is also participating in overseas water business efforts through public-private partnerships, but, while Japan’s cutting-edge technology is highly praised, Japanese companies fall short of their Western counterparts in terms of capital and operational know-how, and it cannot compete with emerging companies in terms of price. If Japan wants to turn water business into a competitive growth industry, it must strategically consider water infrastructure business as well.

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