The hidden value of water
What is water really worth? In his master’s thesis, Logan Whitall investigates how industries can make smarter decisions about water use and investment. His research proposes a so called "shadow price" for water that accounts not only for its direct cost, but also for factors such as water scarcity and supply risks.
EGI student Logan Whitall’s master’s thesis, “Shadow Pricing to Evaluate Investment in Industrial Water Resilience,” has been awarded second place among the nominees for the Sustainable Finance Lab Award for Best Industry Master Thesis.
How does it feel to receive this award?
"I am very honored to receive this award. I've cared about sustainability for a long time, and last summer I got my first experience in sustainable finance through an internship with SEB Water. Being recognized in this field means a great deal" says Logan.
What is your thesis about?
"My thesis develops a "shadow price" for industrial water, an estimate of its true value that goes beyond the low tariffs most industries pay. Conventional water prices rarely reflect scarcity or the cost of supply disruption, so companies have little reason to invest in efficiency measures like recycling and reuse. By adding a scarcity premium and the opportunity cost of disruption to the price, the shadow price gives companies a way to judge whether water resilience investments are worth making. I apply the framework to three industries: semiconductor manufacturing, food and beverage, and mining."
Why is it important?
"Many water-intensive operations draw more water than their local watersheds can sustainably supply, but the price they pay gives little to no signal of that scarcity. The framework puts the real value of water into financial terms, so companies can justify resilience investments that today's pricing makes look unattractive."
What does it mean to get this recognition?
"It means a lot. I am currently studying energy engineering, but I have focused on industrial water projects since my internship at SEB Water last summer. My industrial supervisor for the thesis was Christopher Flensborg, Head of SEB Water, so I had the privilege of learning from pioneers at the forefront of water finance. I also had great guidance from my KTH supervisor, Salvatore Guccione. It is encouraging to earn recognition in a field I care so much about."
Have you plans on how to spend the money?
"I plan to use the prize 10 000 SEK into my startup, Laguna, a AI-driven platform that connects water technology companies with water-intensive industries facing physical and regulatory water risks. It includes a shadow price calculator built on my thesis methodology", concludes Logan.
Text: Rita Nõu