Microplastics, lead and security of the water supplyMarch 13, 2020By John MillerVP and ESG Senior Research Analyst, Calvert Research and ManagementWashington - In the second of our two-part series, we continue our discussion on emerging ESG risks in the US water utility space, including microplastics, lead and security of supply. Microplastics, lead pipe replacement and security of supply all sit within the wider $34 billion storage and sourcing opportunity.1MicroplasticsWhile no common definition for microplastics exists, the term generally refers to plastic microparticles that are less than 5 millimeters in size. Primary microplastics are specifically manufactured at a small size for abrasive or microbead utilization, while secondary microplastics are generated through the fragmentation of larger plastic items. The World Health Organization (WHO) has found that microplastics are "ubiquitous in the environment and have been detected in marine water, wastewater, freshwater, food, air and drinking water, both bottled and tap water."2Negative human health effects associated with the long term consumption of microplastics in drinking water remains unclear.3 Laboratory testing related to microplastics health risks are currently ongoing. These tests are focusing in on health risks specifically related to the size and shape, along with the underlying chemical components of the microplastic. Additionally, microplastics are known to accelerate the growth of biofilms, which are microorganisms such as bacteria and fungi. In accelerating the growth of biofilms, microplastics increase the risk of introducing further contaminates into water supply systems.4Lead -- an ongoing problemLead pipe, solder, service lines and plumbing components have been banned from the US drinking water system since 1986. However, it is estimated that up to six million lead service lines continue to exist.5 Lead enters the drinking water system through corrosion of lead-containing pipes and fixtures. Corrosion rates are accelerated when the underlying water "has high acidity or low mineral content."6The negative health effects of lead consumption are well documented, with acute developmental risks for children and pregnant women. In children, even "low levels of exposure have been linked to damage to the central and peripheral nervous system, learning disabilities, shorter stature, impaired hearing, and impaired formation and function of blood cells."7Security of supplyWater stress across the US is growing, driven by population growth, agricultural and industrial demands. Western states, including California, New Mexico, Arizona and Colorado are most at risk.8 The Colorado River and its tributaries alone provide water to "40 million people for municipal use, supply water to irrigate nearly 5.5 million acres of land, and is the lifeblood for at least 22 federally recognized tribes." Demand for water from the Colorado River is currently "overallocated," meaning states are withdrawing more water than replenished annually through snow melt and precipitation. Overallocation along the Colorado River has been managed to date through optimization of the river's reservoir system and improved hydrologic conditions, but this has not mitigated continued population growth - and the associated water volume calls on the river system.9 Bottom line: Microplastics contamination can be treated through membrane filtration, while lead contaminate risk is mitigated or eliminated through the replacement of lead-based pipe infrastructure. Security of supply, however, carries no single cure and requires conservation, efficiency, planning and infrastructure development. As in our discussion in part one, these challenges present investment opportunities for water utilities and contaminate mitigation technology developers who successfully manage financially material ESG risks.