Brazils Business Woes - Essay Example

WATER SHORTAGE IN SAN PAULO al affiliation Water Shortage in San Paulo Introduction Ruth Costas narrates Brazil’s business woes through the story of a Sao Paulo businessperson. In her article ‘Sao Paulo water crisis adds to Brazil business woes’, she explains how the water shortage in Sao Paulo is affecting the social and economic lives of Brazilian citizens. The Brazilian businessperson owns a laundry business and says that despite previous problems his business has experienced, the water crisis has been the one that has made him consider closing his business (Costas 2015). Although there has been rainfall, it is not enough to mitigate the water problem created by the drought. The Sao Paulo districts administrators are considering the possibility of rationing water for five out of seven days in a week. According to the laundry business owner, Mr. Soares, this move will affect him and the six employees he has at the laundry because they will lose their source of income (Costas 2015). Other businesses such as hairdressers, car washes, and restaurants are also worried about the impact of such rationing on their businesses. Some have resulted to purchasing water storage tanks to prepare for the rationing while others such as restaurants have adapted the use of plastic plates and cups to reduce their consumption of water. Article’s Importance The article is important because it points out matters of concern on a national and global level. In recent times, climate change and water shortage have become a global issue. On the other hand, Brazil, which is one of the largest economies in South America, has gradually fallen into an economic crisis. Remarkably, the article quotes the chief economist of the largest private bank in Brazil who indicates that 2015 is projected to be a challenging year, and Brazil must tackle all its challenges as well as promoting growth strategies in 2016. Brazil’s economic situation is of global and local concern. In the past years, Brazil was constantly referred to as a stable and developing economy. The recent Brazil’s state affects global investors in addition to the citizen’s relying on the economy. Furthermore, the article is important because it touches on Brazil’s public services, which were subject to mass protests in 2013 and 2014 (World Bank 2015). The citizens demanded higher quality services and transparency from the public service providers. The article mentions that the water situation could be foreseen since last year. However, none of the major parties mentioned the matter during the campaign season for the October elections. These factors point to the continued lack of transparency by the Brazilian government and its poor planning which results in poor service delivery. Topic- Themes The article points to poor planning and climate change as the major causes of the water crisis in Sao Paulo. It also indicates that the country’s officials are facing the reality that the water crisis will affect employment, education, and electricity supply. Discussion and Verdict Climate Change and Water Shortage An image of the Cantareira reservoir is incorporated in the article. The reservoir supplies water to approximately six million Sao Paulo residents. The level of rainfall experienced in Brazil was less than usual resulting in the reservoirs reduction to five percent of its capacity. Items discarded in the reservoir and cars submerged a long time ago have become visible due to the reduce level of water. The rain in February managed to increase the reservoirs capacity to 7 percent, which is still below the demand of water in the city. Understanding the issue of climate change and water shortage starts by understanding water distribution across the planet. The planet consists of 98 percent salty water and 2 percent fresh water (Wetherly & Otter 2013). Seventy percent of the two percent is stored in the form of snow and ice whereas around 0.5 percent is surface water while 30 percent is groundwater. Climate changes have an impact on water on a global scale. A main impact of global warming is melting ice or glaziers on mountains and the poles into the sea, which serves to increase salty water and reduce potential fresh water. Global warming can also increase the amount of water held by the atmosphere, which in turns increases the amount of rain when the air condenses. Unfortunately, while heavier rainfall increases fresh water, it also increases the tendencies to have extreme floods and extreme droughts. It also reduces the ability to store and use water because water cycle from the atmosphere to the ocean and vice versa is increased. Planning the future involves managing pollution, as well as, encouraging water conservation. According to the 2014 U.N report, there are individuals already experiencing water shortages in different parts of the world (World Bank 2015). Although it does not specify Brazil, Sao Paulo is a good example of places experiencing water shortages. It is expected to increase as global warming persists and the population increases. This will lead to an increase in demand for water. Water as a Commodity Many people have equated the significance of water in the 21st century to oil in the 20th century (Barlow & Clarke 2005). Bottling companies and other food and beverage companies have increased their activities in the trade of water. The former C.E.O of Nestle roused a social media storm when he said that water was supposed to be treated like any other food commodity; an economic value should be attached to it. He criticized activists that proclaimed that water was a free commodity and a human right. He later attempted to repair his remarks by explaining that he meant that people should have access to water at a survival consumption level, for instance, hygiene and hydration. During this time, Nestle was packaging millions of liters of water that it fetched from a local lake without any charges. This along with the increased demand and supply for water illustrates the commoditization of water. The commoditization of water will only increase with the expected increase in demand for water. For instance, the shortage of water in Sao Paulo may demand the supply of water from outside sources. Additionally, it is projected that the increase in global population and the unstable climatic changes will demand an increase in agricultural production. This means that more fresh water for farming will be needed. Industrial production for beverages and cooling processes will also require hydration (Barlow & Clarke 2005). The increased temperatures will also mean that people and animals will consume larger amounts of water. Unfortunately, the commoditization of water will strain the economic condition of the lower class individuals and the people that already live in places with water scarcity. If the Brazilian government and other governments in the undeveloped world continue to display such a mismanagement and disorganization, then many people will suffer unnecessarily. Governments must institute policies to prevent global warming and conserve the water in order to prevent water commoditization and unnecessary suffering among the masses. Brazil is an example of the countries that are performing poorly in the preparation for water shortage and global warming. Economic Situation Brazil enjoyed economic stability and growth between 2002 and 2008. Previously, Brazil had experienced economic difficulties (Crocitti & Vallance 2012). In 1994, it had to change its currency in order to stop the 2000 percent inflation, which was experienced in the early 1990s (Crocitti & Vallance 2012). Similarly, in 2002, the IMF had to intervene and rescue it from a deficit caused by its debts at the start of the century (Crocitti & Vallance 2012). It was also one of the countries to bounce back after the economic recession of 2008. During the time of its flourish, Brazil was a favored investment destination. Unfortunately, as plans started for Brazil to host the FIFA world cup, its economy was shaken because of spending too much over on the world cup project. During this time, demonstrations started in Sao Paulo after bus fare increased by 10 percent (Asefeso 2012). Although the transport cost was reduced after demonstration, riots continued. The demonstrations occurred in many cities across the country demanding an improvement in the quality of services and condemning the over expenditure in planning the World cup. Foreign investment had also decreased the start of 2014, which demonstrates that Brazil is gradually falling back to instability. Production Cost The water crisis is expected to increase the cost of electricity. Brazil mainly uses hydroelectric power, which implies that water shortage will drive the cost of electricity up; hence, increasing the cost of production. Foreign investors will have no interest in investing in the country with an increased cost of production. Economic Deterioration In the case where Mr. Soares closes the laundry due to the water crisis, his six employees will become unemployed. Similarly, the number of restaurants, hairdressers, car washes, and other businesses that close down will increase the number of unemployed people in Sao Paulo and Brazil in general. High levels of unemployment create a negative impact on a country’s economy (Wetherly & Otter 2013). It increases the level of poverty and crime. Additionally, people’s health deteriorates. Foreign investors are cautious about investing in such a country. Education Education is one of the elements that discourage foreign investors from investing in Brazil. According to the article, the University at Sao Paulo plans to shut down and send the students home if the water rationing is implemented. The population of Brazilians with college degrees is approximately 7 to 9 percent (Crocitti & Vallance 2012). This percentage is concentrated in cities like Rio de Janeiro, Sao Paulo, Santa Catarina, Minas Gerais and Parana. It is unwise to close down a university in Brazil; nonetheless, it is also difficult to keep it operational without water. This shows the extent to which the water crisis affects the core of business. Political Situation The political stability of a country hinges on the ability of its government to satisfy the needs of its people. Foreign investors do not invest in politically unstable countries (World Bank, 2015). Therefore, if the country fails to improve its public service, it is bound to lose more foreign investors. The politicization of matters in Brazil creates a major barrier in providing quality public services. For instance, during the election campaign the issue of the water crisis remained incognito to prevent it from affecting the re-election chances of the incumbents. Moreover, the government’s focus on poverty eradication fails to account for the impact of water shortage on its agenda. If Mr. Soares closes his business, his employees will be unemployed. This will counter the government’s efforts to eradicate poverty. Although, the new government’s agenda is poverty eradication it must tend to the water crisis, which threatens to worsen its economic and political stability (Wetherly & Otter 2013). Oppressed or unsatisfied citizens are a threat to political stability. As a result, foreign investors are unwilling to invest in the country. Conclusion The water shortage in Sao Paulo adds to the problems in Brazil, which is prospected to worsen the situation based on the premise that Brazil will experience a recession this in 2015 (World Bank 2015). Water is an important commodity for all. Rationing it will have a negative impact on the economic and political situation in the country. Being largest economy in South America, Brazil must set an example by solving the water problem as well as improving its water and environmental conservation management. The water crisis is a sign for greater problems at a local and international level. Reference List Crocitti, J. J., & Vallance, M., 2012, Brazil today: an encyclopedia of life in the republic, Santa Barbara, Calif, ABC-CLIO. Barlow, M., & Clarke, T., 2005, Blue gold the fight to stop the corporate theft of the worlds water, New York, New Press. http://public.eblib.com/choice/publicfullrecord.aspx?p=782079. Wetherly, P., & Otter, D, 2013, The business environment: themes and issues, Oxford : Oxford University Press, 2013. Asefeso, A., 2012, CEO Guide to Doing Business in Brazill, Swindon, AA Global Sourcing Ltd. World Bank, 2015, Global economic prospects, January 2015: having fiscal space and using it. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&A N=946063. COSTAS, R., 2015, Sao Paulo water crisis adds to Brazil business woes, BBC News Latin America and the Caribbean. http://www.bbc.com/news/world-latin-america-31419930 Read More