Is it time for a water tax in the apparel sector?

Imagine if you had in your hands an extremely precious resource. While you have lots of this resource, you only have a finite amount—it won’t last forever. But you decide to give away this resource and keep giving it away. You give it away even when you know that the people using it might not always be using it efficiently and taking care of it. And when you know that you are getting short of this resource, rather than rationing it, you simply carry on giving. It doesn’t make sense, does it?

And yet, this is how Bangladesh (and the world generally) appears to view water at times. Water is the world’s most precious resource, literally our lifeblood. Yet it’s strange how much we take it for granted and, in many cases, are so wasteful of it.

Water, as most readers will be aware, is also of critical importance in textile production. Growing cotton uses lots of water. Textile and leather processing uses huge amounts of water. In fact, at pretty much every step of the textile supply chain, we see water being used in abundance.

To offer one example, a staggering 5,196 litres of water are used in the lifecycle of a pair of jeans, according to the most comprehensive study of its kind which measured water consumption from cotton cultivation to the end consumer. The project, led by Brazilian business Vicunha, analysed the type of water used and divided it into different stages of the production lifecycle.

Consider that figure—5,196 litres! For a pair of jeans which, in many cases, will retail for less than 30 euros! Why is this precious resource of nature being so seriously undervalued?

Not only is water being undervalued, it is also being misused. Many factories take water from nature and pollute it. They add chemicals during wet processing and, in many cases, water is discarded back into the environment without being cleaned. By that, I mean, without being placed in an effluent treatment process using modern technology, which, in many cases, can remove the vast majority of impurities from water. Instead, water is often spewed out untreated by factories where it pollutes the local environment, often having a drastic impact on local farming and the water of local communities. There are countless examples of this globally.

The strange thing is, our readymade garment industry, which uses vast amounts of water, does not pay for this most precious of resources. Bangladesh is not alone on this issue, and in many ways there are justifications for providing one of our most important industries with this resource, without which it would not be able to operate.

However, whether we like it or not, sooner or later, somebody along the supply chain needs to begin paying a premium for water to reflect the fact that it is precious—and finite.

To offer some industry context, the textile industry in Bangladesh is one of the main contributors to the country’s water scarcity challenges. Most textile mills in Dhaka are completely dependent upon un-metered and un-priced self-supply groundwater from boreholes.

Some existing environmental performance challenges in the textile sector are: (i) average factory water consumption is much higher than global benchmarks; (ii) heavily polluting effluent discharge; (iii) potential water supply deficit in dry seasons; and (iv) increase in waste water generation with further growth.

Estimates suggest that groundwater in Dhaka is depleting by 2-3 metres per year, and soon there will be no water in the aquifer. What then?

There are many estimates on the use of water to produce clothing. Some suggest that textile mills use 250-300 litres of water per kg of fabric in Bangladesh, whereas global best practice is said to be around 50 litres per kg or less.

Thankfully, these figures are falling in many cases, and we are seeing huge progress by the industry as a whole to cut down on water use. In some cases, this is being led by the supply chain. Many factories have invested in water-saving technologies in recent years which, while costly (think hundreds of thousands of US dollars in some cases), does have a very quick return on investment. For factories that can afford the initial outlay, the latest and most up-to-date water-saving and recycling technology is an absolute imperative.

Another positive change is being driven by brands. A number of apparel brands have introduced lines in the past 18 months that have been dyed using techniques which dramatically cut down on water use. In the denim industry, we are seeing huge strides being taken to reduce water use, and technological development in this area is moving at a rapid pace of knots.

While all positive, none of this changes the fact that garment production remains an extremely “thirsty” industry and, certainly, the brand initiatives which have been introduced are still very niche.

There is also a broader picture here. It is widely accepted that the impacts of climate change will be felt mainly through the water cycle, with consequences that could be large and uneven across the globe. Bangladesh is one of a number of countries that are likely to be particularly impacted.

The World Bank has pointed out that water-related climate risks cascade through food, energy, urban, and environmental systems. Increasing populations, rising incomes, and expanding cities mean that the demand for water will continue to rise exponentially, while supply becomes more erratic—as evidenced, for instance, by the droughts we have seen in the year in countries such as India and Australia.

The point being made in all of this is that as an industry, textile needs to begin placing a much higher price on water. Textile manufacturers pay for dyes and chemicals, for instance, so why does water have to be free?

While not necessarily advocating for water to be charged here, there is a strong argument that the value of water somehow needs to be better reflected in the price of clothing. Some factories are using water-saving technologies at present, which is great. But in actual fact, they all need to be using it. Likewise, some clothing is dyed using water-saving techniques, but the whole industry needs to move towards such techniques. And I am not talking in 10 years’ time, I mean now. If the technology is there, why aren’t we all using it?

Well, the reason is that there is not always enough money along the supply chain to fund it, which means many factories operate inefficiently, and huge amounts of water are wasted.

Here’s a novel idea: how about a water tax on the end price of clothing? Every garment sold around the world could have a small addition to its price to reflect water use in the production process. This would need to be only a tiny amount, with the taxation passed along the supply chain to be used for the most up-to-date and sophisticated water-saving technologies currently in the market. This tax could be calculated as the cost for cleaning the water in order to make it reusable.

Or how about the government of Bangladesh, with many other governments globally, begins charging industry for water? Such an approach might well radically alter the way businesses view the resource of water and encourage them to introduce the latest water-saving technologies and techniques.

It sounds far-fetched, doesn’t it? A water tax—surely that will never happen, people might say.

The same people are probably saying the world will never run out of freshwater. Yet such a day might come far sooner than we think.

Mostafiz Uddin is the Managing Director of Denim Expert Limited. He is also the Founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE). He can be reached at mostafiz@denimexpert.com