Rick Weddle: Welcome to Site Selection Matters, where we take a close look at the art and science of site selection decision-making. I’m your host, Rick Weddle, president of Site Selectors Guild. In each episode, we introduce you to leaders in the world of corporate site selection and economic development. We speak with members of the Site Selectors Guild or economic development partners and corporate decision-makers to provide you with deep insight into the best and next practices in our profession. In this episode, we have as our guest, Larry Gigerich, executive managing director with Ginovus, one of the nation’s leading site selection and location advisory firms. Today, Larry will talk with us about the importance of water resources in economic growth and development. Join me as we welcome Larry Gigerich to Site Selection Matters.
Larry, arguably, water has become the most important natural resource for communities and states. And the impact on economic development is significant. Take a minute if you will and unpack this a bit for our listeners. Why is it so important and why is it becoming so important now?
Larry Gigerich: Yeah, I think as you look at it, Rick, and you think about economic and community development in the U.S., and for that matter globally, you know, water and the ability to access water has become critically important, even more so than in the past. And I think maybe the best way to frame this issue up is to really divide it into two pieces. The first being water that is specifically required to support a company’s operations and the second part being water availability to support people living and working in the geographic area. They’re different, but yet connected. And I think as you think about it, you know, water is required for certain types of industrial primarily projects, as you think about it. So, things like food and beverage manufacturing, data centers, chemical productions, some steel and metal products, things like that where you have to have water as a part of your process.
And, you know, if you have an area that can’t meet those availability statistics or numbers, in particular, that’s an issue. And then the second piece is, and I think this is maybe one of the really interesting things that we’ve seen develop over the past couple of years is, the corporate decision-makers are really emphasizing ensuring that water is in available in those communities and states where they look to allocate tower. Where they’re going to put those resources of people because they want to make sure people living in that area are in a position, you know, whether it’s from a quality of place or just general everyday life, that they’re in a place where there’s water that’s available. Because I think that’s going to become even more important as we go forward and decision-makers are starting to look at that.
Rick: Two big reasons and we’ll jump into that. So, we get it now, really that water’s important. Obviously, without water we can’t exist and, of course, it’s important for, as you noted, many industrial processes. But now you’re suggesting the second point that corporate decision-makers are really beginning to look at it differently and considering the availability of water when looking at potential facility locations on a broader basis. Explain this if you will.
Larry: Absolutely. So, now, you know, with that second focus that has emerged, you know, again ensuring that when they put talent resources in different geographic areas, that water is available not only to meet the needs of that area today, but what it looks like, you know, what it looks like in the future. As I mentioned, you know, partly speaks to, you know, everyday life and quality of place, but also it speaks to being able to have a plan in place that really reflects the opportunity for that area to continue to flourish. Because, no company and certainly all of us as individuals, we don’t want to live in an area where there’s a risk or concerns that we don’t feel are either managed or being planned for as time goes forward. So, you know, we’re already seeing this, Rick, as you look at places in the south and west in particular that have you seeing, number one, an explosion of population growth and part of that is driven by economic development and more businesses locating and expanding operations in those areas. And then just, you know, again, general population growth that has taken place as people have chosen different types of environments they want to live in.
So, as we move forward, that issue is only going to become more acute. And, that’s why we’re seeing corporate decision-makers think more about this issue. Again, understanding that for those industrial processes where you have to have water well obviously, that’s a hurdle or a benchmark that you have to be able to check the box for. But that, again, that second piece that we’re talking about here really important where they think about where are we going to have talent placed in the future. And what does that area offer in terms of being able to demonstrate a managed plan, more of a manageable plan may be better said to help ensure water is available today and for the future. The other thing I would note, just kind of finally on that point is, you know, in the past, it used to be the cost factor of water. Again, as a resource for companies, you know, was maybe a bigger driver, you know, really now it’s about availability. And yes, it’s hard to be a cost outlier if you’re a very expensive place and you need water for industrial purposes, but really it’s the availability, being able to demonstrate if for the long-term you have water available for these two different components we’ve talked about thus far.
Rick: You know, cost doesn’t matter if you don’t have it. I guess when you think about it, you have to have it for cost to come into play into that. You know, you mentioned the Southwest real quickly, a few years ago, I worked in Phoenix and in Arizona and obviously, it’s the desert water’s very important. But the original water system there was, you know, largely designed for to support cotton farming as they developed that. And so, there’s tremendous amount of land that was involved in cotton farming, which is very water-intensive. And as over the years as that land was transferred from cotton farming to residential development, you know, the water was simply available to be repurposed if you will, in that area. But that’s changing a little bit now as we get into kind of the limits of how much of that water supply or water reserve can be repurposed in the desert. Let me switch gears a little bit and ask the question about the corporate perspective. How does a company investigate this and examine and make a decision about an area as long-term competitiveness and positioning when it comes to water supply and availability? What are the metrics? How do they take a look at it?
Larry: It’s a great question. And probably, one of the most important questions when you look at the water issue in general. And the first area that we really dig into as we work with our clients, is understanding where does the area’s water come from? In other words, what is the source of that water? So, you know, is it coming from things like rivers, lakes, underground aquifers, reservoirs, you know, man-made reservoirs. And also, you know, in certain places now certainly in coastal areas where desalination of salt water is becoming more and more prominent and with some really interesting projects there, including one in Tampa, Florida, that has probably been the one that has been the largest, at least in scale thus far. So, again, looking at where the water comes from is really the first area to dig into because that gives you an idea of the availability and then what those different sources can provide.
Because, you know, obviously, there’s a lot of data that is tracked over a historical period of time to say, you know, here’s what the water levels have been, here’s how much has been drawn. And even in many cases in particular, in the Western U.S. where there are water compact agreements essentially in place where entities are allowed to take a certain amount of water from different sources with probably the Colorado River maybe being the, kind of the most recognized one out West, where there’s very specific rules about how much water can be taken by different states, in particular, that are along the Colorado River. That’s certainly one area that’s important. Another really important tool or area to look at, you know, again, if this exists for an area is to ask for a copy of a water resources plan. We’re seeing more and more communities, regions, and even some states that have put water resource plans in place. Indiana, as an example, is one state that has put one together in the last two years looking at water resources where they’re coming from, what future needs are going to look like when the population grows over an extended period of time 20 to 30 years, and beginning to plan today, if more effort needs to be done there.
And then the final thing is, many areas also have put water conservation plans in place that really tie into really resource management and future modeling of water consumption. And, you know, it’s kind of crazy to think about in today’s world, Rick, you look back in the past and whether it was energy, whether it was water, you know, the more you used, the more your rate was discounted. And, you know, we’re in a place now with energy and water, as we’re talking about here today, where conservation to help with that availability issue again, is more important than cost. And, we’re now starting to move away from, hey, more natural resources or utilities that you use doesn’t mean you’re going to have a lower price because of these issues. So, again, I think those are a couple of areas that are really important to dig into and places that can demonstrate they have a water resources plan, conservation efforts in place, things like that are really going to be very well positioned as we go forward.
Rick: So, that pricing model is really being inverted. It’s the old school of volume discount is being turned upside down. That’s very interesting because actually, so now you’re seeing examples, I guess, where companies then will be rewarded for not using so much of a precious or limited resource. Very Interesting.
Larry: Yeah. Absolutely.
Rick: Larry, in the old days, you mentioned out West a little bit in your commentary. In the old days, when we were settling this country and we watch all the Westerns in the history and we see that we had huge water wars, if you will, or battles over water rights. Who controlled the stream? Who controlled access to this? Do you see the possibility of similar kind of geographic conflicts in the future?
Larry: Absolutely. And I think it’s something that we’ve started to see come to light in the last few years. And I think we’re going to see more and more of it again for the reasons we’ve talked about thus far. And really thinking about the places that, again, are growing faster in terms of population. Again, largely driven in many ways by economic development activity, but also those areas that, you know, simply don’t have as many natural resources to tap into as it relates to water, the places that are more dry desert type clients. And in the West, we have, you know, a lot of high desert climates rather in place that make water more, you know, water resources more challenging. So, just like, you know, a couple of example, I touched on a little bit earlier Colorado river and the compact that’s in place there and has been for decades about how much water can be diverted from the Colorado river for different states along that mountain region down into the Southwest U.S.
And there has been litigation primarily as you’ve looked at places like Colorado and Arizona, both of those locations in particular because of growth, significant growth in cities, in particular, Denver and Phoenix, as we think about those two states, that has led to litigation and, you know, federal government regulatory involvement about water, it’s being again drawn from the Colorado river to support the population of those areas. Another one and probably most recently kind of an interesting one has been in the Southeast U.S. Again, as we’ve seen significant population growth and a couple of years ago, there was a legal battle that ensued between Georgia and Florida. And those two states were in litigation over the amount of water that was being drawn from Lake Lanier and the Chattahoochee River as that impacted Georgia and the Northern part of Florida. And in particular, obviously, Atlanta has grown so dramatically in population size and the number of businesses that have moved there that that was a major lawsuit.
And while there’s still some ongoing litigation there, that particular case went all the way to the Supreme Court to rule on a few issues related to that litigation. And, I think we’re likely to see more and more of this in the future. Again, when you’ve got fast-growing areas from a population standpoint, and many of those areas are already natural resource challenged when it comes to water, that is, you know, I think that’s a significant issue.
Another thing that really ties into this, Rick, that I think is interesting is also we’re beginning to see more regulatory issues around wells and people being able to utilize wells, whether that’s for residential or commercial purposes. And that’s going to be an issue that’s going to be important to watch. We’re also now starting to see some places regulate the collection of rainwater. You know, many people, including I do this at my home, collect rainwater, you know, use it for plants or other things that, you know, you may have in your yard. And we’re seeing some states out West starting to regulate the collection of rainwater because they want that rainwater to run into rivers and streams and lakes and reservoirs that tie into how they provide water to people living in that area. And then, the final piece is, which I’m excited about, we’re seeing more and more of our clients really wanting to understand how they can use gray water as a part of their operations.
Now, this ties more into processing and industrial operations maybe as compared certainly to drinking water and things like that. But ways to use gray water to help offset the usage of your normal tap water that these facilities would have. And I think there’s going to be some exciting technology things we see there. So, I know that’s a lot to unpack, but to your question specifically, we will see more litigation as we go forward. A lot of the places that are growing fast real quickly in the U.S. have or are already constrained by water resource issues. So, we need to look at some of these other things like rain water, gray water, as a way to help us manage that issue.
Rick: You know, one thing you mentioned a lot about wells and water extracted from groundwater, in that one thing that as we tend to take all that for granted, we don’t realize that that also relates over time to subsidence. Land subsidence, where it’s if you think about the land is kind of like a big sponge. If you take all the water out of it and pump it out, it tends to shrink in that regard. I know in the Southwest there’s areas where of development that are impacted by land subsidence. But then, more recently I worked in the Norfolk area, in the Hampton roads area, and where, there you have a twofold issue of sea-level rise and land subsidence due to water being pumped out over time. And it’s affecting, you know, few inches this way, few inches that way it makes a big difference in that regard. So, some of these things we’ve taken for granted over the years, can’t really be taken for granted anymore. One question real quickly, you mentioned gray water, and we’ve been talking about availability, but what about water quality? We take that for granted too. Don’t we? And yet that’s an issue that pops up in some of the older and more industrial areas.
Larry: That’s a great, great point, Rick. I mean, we’ve seen that issue really come to the fore here in the last few years. Obviously, you know, what happened in Flint, Michigan that received a lot of attention where you know, especially as you said, in a lot of these older industrial communities in particular, a lot of it in the Midwest and the Northeast U.S. where you have lead pipes, you know, that was what they used to put pipes in place, you know, 50 to 100 years ago in many places. And you have that, you know, you have that issue to manage. And you also have, again, the source of water and issues related to that. I mean, we, you know, it’s kind of that balance is you look at the U.S. were, you know, agriculture is very important because it helps support our population here and global population with food at the same time managing the runoff of agricultural chemicals from fields.
And that goes into rivers and streams and lakes that are sources of drinking water and what you have to do to treat that from a quality standpoint. And as you noted earlier, too, just the soil is a big sponge and things that go into underground aquifers. Where I live in Indiana, most of our water comes from underground aquifers. Well, things that end up in the soil and leach down into those aquifers you know, you have to be a good steward of that to make sure you’re in a good position. So, quality is important. It’s becoming more important of an issue. And it’s one, again, that we’re going to have to tackle whether it’s through infrastructure funding, or other things to help make sure quality and safety is there for people who use this water without doubt. Great point, Rick.
Rick: You know, water is something we’ve taken for granted, but boy, is it a complicated, very complicated and getting more complicated issue. Larry, what advice would you give our listeners or economic development organizations about this issue? What can, and should they be doing to help lead their communities into maybe better policy outcomes and a more favorable competitive posture when companies go looking at water resource availability and capability?
Larry: Yeah, I think it’s an important, very important question, Rick, as you think about where we’re going and this becoming more and more of an important issue. So, clearly for economic development leaders in their communities, regions and states, it’s really important for them to dig into and understand how their area is approaching water management-related issues. You know, economic development professionals asking the question, you know, do we have a water resource management plan in place? You know, how are we managing the resources we have, being able to, because we’re seeing this question again, asked more and more, you know, where does your water come from? So, economic development professionals being able to answer that question. But I think now, again, because of the importance of this and its impact on the site selection decisions, you know, economic development leaders in communities, regions of the states being at the table when public policy issues are being discussed around water-related issues.
Again, as you said, a couple of times, Rick, we’ve always taken for granted that water is going to be there. We’re going to turn on the faucet and water’s going to come out. Well, we’re starting, you know, we’re starting to see that change in some places and being engaged is really important. And then, elected officials, you know, along the same lines, you know, need to emphasize the importance of this issue within their communities. You know, one, there’s an awareness issue, you know, your citizens about the importance of conservation efforts and it’s an important issue to the current and long-term success of an area. And for those elected officials also, to really be engaged with municipal and private water utilities. You know, in some places we see more municipal government-owned and run water utilities, and in other places we might see it being, you know, private, you know, private water companies. But making sure that there’s an engagement level there and there’s collaborative planning that’s going on.
And, you know, I think to kind of put the fine point on it is, you know, whether it’s economic development professionals, elected officials, community leaders, in general, you know, people who don’t prepare for not only how to answer the question about water management and sources of water for your community but also take that long-term view of how you plan for your community where it sits today, but even more importantly, 5, 10, 20, 50 years from now. That’s going to separate the places that are successful from the ones that are going to have more challenges as we go forward. So, I would say those are the main ways for those, again, those community leaders and economic development professionals to really engage on this issue.
Rick: And Larry, If you, think about it, if they don’t do that, if they don’t have a good plan, if they get themselves in a situation where the wheels come off and let’s say, for example, they have a moratorium, if you will, on development or growth or water usage, because they don’t have capacity, that can really affect communities image from an economic development standpoint for many years, can’t it?
Larry: Oh, absolutely. I mean, if you get into a situation where community says, hey, you know, we don’t have the ability to allow additional development to take place. You know, because of water issues we’re talking about here, the water availability, then, you know, not only are they going to miss opportunities in the short run, but it’s going to take them a while to recover from that. Because people are going to know that, hey, they have a major challenge in that area. And again, I think that’s why not only if you have a plan in place, but you are able to articulate what you’re doing is really important. And I mean, one kind of quick example that I’ll mention that’s exciting to see in the U.S. is a lot of the indoor farming that is taking place now. You know, it’s using 90%, less water, 95% less land to do that. And, that is something that will help these areas in particular that are more challenged around having water available. But without a doubt, places that are going to struggle in this area and certainly if you get to a point where you have moratorium on development because of the water issue in particular, that it’s going to take a while for places to recover from that.
Rick: It’s a big issue. Something that economic developers really have to pay a lot of attention to. Larry, you’ve given us a lot to think about in today’s conversation. What an interesting topic. But that’s all the time we have today. So, let me say now thanks to Larry Gigerich, executive managing director with Ginovus, for talking with us today on this episode of Site Selection Matters.
Larry: Thank you, Rick. It’s always great to spend time with you.
Rick: Thanks for listening to this episode of Site Selection Matters and a special thanks, to Larry Gigerich with Ginovus, for helping us get inside and better understand the importance of water resources and economic development. What an informative discussion we had today, and one that leaves us with a lot to think about. Again, I’m Rick Weddle, president of Site Selectors Guild. This podcast episode represents my views and the views of my guests, and they do not necessarily represent the views or opinions of the Site Selectors Guild or its membership. We hope you’ll subscribe to Site Selection Matters podcast on Apple Podcast, Stitcher, Spotify, or wherever you get your podcasts. We look forward to bringing you some great discussions in the year ahead. Until next time, good day.