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Atlanta’s Credit Rating Threatened over Water Wars

| Wednesday June 15th, 2011 | 0 Comments

Fitch warns of credit score downgrade for metro Atlanta, Georgia over Lake Lanier waterWater scarcity has long been an issue for agricultural areas and dry regions in the western U.S. Now it has reached the boiling point in a rather unexpected part of the country: Atlanta, Georgia. According to a recent article in the Atlanta Journal Constitution, local governments in metro area Atlanta have received a report from the credit agency Fitch Ratings, warning that their credit scores may be downgraded depending on the outcome of a federal lawsuit over access to drinking water from Lake Lanier.  According to writer Chris Joyner, Fitch warns that water will “continue to be a primary rating driver,” given “the devastating effect any material reduction would have on the region.”

If there ever was a reminder that businesses need to be closely involved in their community’s water management and conservation issues, this is it. Should credit rating agencies follow through on the warning, the result could be higher taxes and service cuts. However, a report last year from the sustainable investor coalition Ceres indicates that many companies do not include comprehensive information on water scarcity or water risk in their financial filings.

Lake Lanier and Water Scarcity

The basics of the problem are unplanned growth and multiple demands on a finite water supply. Lake Lanier was created about fifty years ago by the U.S. Army Corps of Engineers. It was originally authorized only for hydropower, navigation (including recreation) and flood control. As metro Atlanta grew, water supply was unofficially added to the agenda. When the Corps  recommended making water supply a permanent addition, Florida and Alabama sued.

More Reservoirs Cannot Resolve Water Scarcity

At one time, building new reservoirs was the solution for water scarcity, so it’s no surprise that Georgia Governor Nathan Deal recently proposed doing just that. This worked pretty well in the past – New York City built a whole series of reservoirs over a period of about 100 years up to the 1960′s – but it’s not clear that this is a realistic solution in contemporary America. Finding the land to put new reservoirs and finding the money to pay for them are two problems that come to mind. In addition, new reservoirs are just a temporary solution. Adding more water supply simply encourages more use, unless rigorous conservation actions are applied.

A CSR Approach to Water Scarcity

Levi Strauss recently made headlines when CEO John Anderson proposed a radical step up in corporate responsibility, in which companies invest in actions that make a real difference in the lives of people in their host communities. While he was speaking of programs for underdeveloped areas, he could just as easily have been talking about communities facing water scarcity in the developed world. Major companies like DuPont are beginning to improve water conservation in their operations, but that is not sufficient. The Fitch report is a wake-up call that companies need to pay attention to local and regional water conservation as well.

Imate: Water faucet by joe shlabotnik on flickr.com.


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