Climate and water spare no one. Business leaders who don't get it now, will get it soon: Mridula Ramesh

Angel investor and founder of the Sundaram Climate Institute on her new book about India's water crisis and how to overcome it, the economics of managing water, and the role of industries, investors and startups

Divya J Shekhar
Published: Dec 20, 2021 12:46:04 PM IST
Updated: Dec 20, 2021 02:01:49 PM IST

Mridula Ramesh, angel investor and founder of the Sundaram Climate Institute talks about how water’s undoing has been because of its ubiquity and invisibility, how women and their workforce participation suffer more as a result of water shortage

Climate change is arguably the greatest disruption of our time, and it speaks through water, writes Mridula Ramesh in her recent book ‘Watershed: How We Destroyed India’s Water and How We Can Save It’. The Madurai-based founder of the Sundaram Climate Institute, who is an angel investor in over 15 startups focussed on cleantech and climate entrepreneurship, says there is no silver bullet to build India’s water resilience. But making our lakes vibrant, spurring the forest economy, creating micro-storage for farms and managing India’s sewage can create well over a million jobs.  

In an interview with Forbes India, she talks about how water’s undoing has been because of its ubiquity and invisibility, how women and their workforce participation suffer more as a result of water shortage compared to men, why most climate change talks are centred around carbon instead of water, and how startups, industry and investors are responding to the urgent need for water management and sustainable practices. Edited excerpts:

Q. You write that affluence is related to increasing water use, and by 2030, due to rising population, urbanisation and wealth, half our water needs will be unmet. How bad is the situation right now and how is this going to play out?

Throughout the history of India, climate has changed many times, and every time, the same patterns [repeat]. Even the Indus Valley Civilisation, where people were masters in managing their water and did almost everything right, just disbanded, so to speak. So the situation is bad, but going back to the unspoken nuance in your question, the situation is also unequal. Some suffer more than others. For the wealthy, even if they consume the most amount of water per capita, water is still peripheral. Water is not expensive for them. They probably have borewells, live in neighbourhoods that allow recharge of groundwater, and have access to technology that can help them cope. For those in the middle [middle-income group], during most of the year, water is not a big deal. It is not that they cannot afford water, but how they will manage until the tanker gets to their houses, or the borewell gets working again.  

For the poor, however, the situation is horrific, particularly the women among the poor who get affected the most. It is the question of women having to wake up in the night, push, jostle, fight for their bucket of water, collect it and carry it back home. You and I, if we do not get good sleep or are exhausted, we remain groggy and unproductive through the day. If women’s health and productivity continue taking a hit [due to more domestic and care responsibilities compared to well-rested male counterparts as a result of water issues], how effective are they going to be in the workforce?  

If you ask me what has caused this crisis, it is the fact that water has become invisible. There is only provision, no management. How many people have a water meter in their house? How many people know exactly how much water they consume? The poor and the economically vulnerable will know exactly how much water they have and how much they consume. When we did a survey among 2,000 households, the wealthier people had no clue how much water they used, but as we went down [the socioeconomic strata], people knew precisely how much water they were using, and they managed it well. But that is not the only scale at which water needs to be managed, it needs to be managed at the household-level across the spectrum.

You are going to see Day Zero creep up across cities and as that happens, there is no way to do anything other than to manage demand, meter water usage and collect more data around water.  

Q. Most climate-related talks are centred around coal and carbonisation. Why has not water not been front and centre?

That is the raison d’etre for writing this book! Climate is speaking very loudly through water, so how come water is not part of climate conversations? It is a question of approaching the dialogue from an Indian point of view. India is arguably one of the countries most vulnerable to climate, and water is speaking loudly, and harshly. Not having water as part of the conversation is not fighting one of the most definitive battles in climate change.  

India’s carbon emissions, I have always felt, are an easier battle, because India has a fairly high carbon price. Look at the taxes on petrol and diesel, which are in essence a carbon price. Electricity that industries use is quite expensive. Many [industries and companies] are looking at increasing the share of renewable energy, from a purely commercial standpoint, because it makes sense. But these powerful signals that carbon management has, water does not have.  



Q. Does it seem like we focus on water only when circumstances become too dire?

Let me put it this way. In carbon, action is happening now. Even though India is not that big of a cumulative carbon emitter, strong action is happening, which talks to the importance of signalling. I think it is possible that we can start managing water now, and the sooner you start to manage, the easier it will be. So while you still have some groundwater left is probably when you should start managing, before more climate migration starts to happen. Water is about management, and India’s water is a high-maintenance relationship. Will everyone get it? No. So you will see people who will get it, and they will move faster and be more resilient. And there will be people who will wait until their back is to the wall.  

Q. An important thread in your book is to put a price on water. How could we implement this across socioeconomic strata, and even for that matter, across geographies where water availability and access are not the same?

From Chankya onward, India has always had a water price, but it was a price paid in kind. The moment you paid the price in kind you automatically adjusted for seasons, and inter-annual [crop] variation, because if the crops were good, you paid more tax and if your crops were not good, you did not pay. That changed with the British. And when competition entered modern Indian electoral politics, it changed again. That has brought us to where we are, where if I say water should have a price, I am looked at as an evil capitalist. That is not really true. Because India has always paid a price [for water].

It is a myth that the poor do not pay a price. It is so obvious from our studies. In certain small hamlets of Rajasthan adjoining the desert, for instance, people pay Rs1,000 a month per household for water. So the poor do pay the highest price for water—through money, health and dignity. 



To go back to your question on how it [water pricing] should be managed. First, do not fight battles that you do not have to fight. Do it in dry places where people are probably paying a fairly high price for water. Do it in the aftermath of a drought, where public support for something like this [putting a price on water] will be at its highest. Second, have a seasonably variable price, say, for pre-summer and summer-months, which might also be politically-feasible. Let’s not go by the British again. Our water is seasonal. Let’s work with that.  

Third, again respecting our history, we should have a progressive price for water. People who use more should pay more. And have different prices. Those who use recycled sewage water pay less, those who access super high quality pay more, and then pay a different price for untreated water. Also, this price certainly cannot be uniform everywhere, because if you are floating on water, you cannot charge for it.  

Q. In industries like thermal power, steel, engineering and textiles that guzzle water, is there a mindset shift in terms of investing in sustainability?

In industries that use water, there is a K-shaped shift. Larger, formal companies are beginning to understand that customers really are pricing sustainability in the products they buy and the companies they work for, particularly youngsters. Investors are seeing the same thing, courts are not willing to look the other way, which is hopeful. So businesses, at least some of them, are going sustainable. And how much extra does it cost? Say, [in the case of textiles], probably around Rs6 more for a T-shirt? Anyone shopping in a branded store will be willing to pay that much more if they are assured that it is actually paid forward to the person who manages the water.  

Coming back to a K-shaped change, big brands are cognisant of the need to comply and manage water, but when you come down to the SME segment, price is supreme and there is not a lot of emphasis on sustainability from the buyers. So in that case, compliance on sustainability is going to be harder. Laws about polluting industries are there, but it is about uneven implementation. That is where you see this K-shaped pattern, where larger, formalised industries are moving toward sustainability, while the other group finds that pricing pressure is making it harder.

Q. So given this K-shaped pattern in adopting sustainable practices, how do we incentivise smaller industries to manage water?

That is where strong signalling for water management is important, but doing it at an all-India level is going to be challenging. People get it, political leadership gets it, but India is so diverse that it is difficult to drive change like this. So only fight the battle wherever you have to. Chennai, for instance, is equivalent to three Singapores. If you take a third of the city and start implementing the regulation that is required and go all out, then that is enough to start a wave of regulation. So the smaller you break it and decentralise, the easier it is to manage, convince, handhold, all of that. Again, we come back to price. If water had a meaningful price, could certain industries function in dry areas? No. Would you cut down forests? No. Would you manage your water and treat your sewage? Yes. Would you reuse grey water? Yes. So you need that strong signalling.  

Q. While more companies are making climate-related disclosures, they are not very forthcoming about how climate change has impacted them or how climate-resilient their strategies have been. Do you see this changing?
Again, there is a spectrum. Some business leaders get it, some are ostriches with their head deeply embedded in the sand. The good thing about climate and water is that nobody is going to be spared. If business leaders don’t get that now, they will get it soon. Those who act now will have the first-mover advantage. There is always a credibility attached to doing something good that you do not necessarily have to. Both customers and investors are savvy enough to reward businesses that are “visionary”, so to say. That is why I say, people who do not adapt will be left in the recycle bin. For formalised businesses, it is a no-brainer, and they are in a much stronger position to do business responsibly and sustainably. It also has to start with customers paying for sustainability. It is not very expensive, but it is not free either.



Q. Do you see investors being more conscious about investing in companies that adopt sustainable practices?
Absolutely. You see the speed at which renewable energy and solar ventures are becoming large companies. When it comes to startups working in water and waste sectors, there are a handful of us investing. But it is nowhere close to investments in renewable energy or energy management. That is why the signalling is important, which will unleash a wave of innovation and create millions of decentralised jobs in these sectors.  

You cannot scale these startups [in waste and water sectors] in the way renewables scale. This is my abiding problem in angel investment groups. You cannot force-fit a tech model in this. You will not only kill the startup, but also not solve any problem. When I see terms like blockchain technologies brought into this [waste and water sectors], I get worried. Half our problems have come because we have tried to impose a European mindset to managing Indian water. So I tell my startups to not ask for venture valuations. Figure out the problem you are trying to solve, figure out the strategy and then bring a financial model appropriate to that strategy.  

Q. What do you look for in startups as an angel investor?

First, I do not invest in anything outside climate-related startups, typically agritech, mobility, water and waste. I do not see as many water startups as I would like to, but with Day Zero becoming ever more present in our cities, they are beginning to come up. Second, I look at the entrepreneur and their understanding of the problem at hand, and if they have a financial model that works for their strategy. Climate-tech investments in India today are all [focussed on] carbon! I hope people look at water as well. When I started investing, I said I will do clean-tech, but not renewable energy. And people thought I was nuts! But I think this is what is required for India. I think climate tech is still largely going to be about renewable energy, but if there is the necessary signalling that managing water will be rewarded, it will soon trickle down to entrepreneurs.


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