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READING PASSAGE 1: For Want of a Drink

A WHEN the world water appears in print these days, crisis is rarely far behind. Water, as is said, is the new oil: a resource long squandered, now growing expensive and soon to be overwhelmed by insatiable demands. Aquifers are falling, glaciers vanishing, reservoirs drying up and rivers no longer flowing to the sea. Climate change threatens to make the problems worse. Everyone must use less water if famine, pestilence and mass migration are not to sweep the globe. As it is, wars are about to break out between countries squabbling over dams and rivers. The language is often overblown and the remedies are sometimes ill conceived, but the basic message is not wrong. Water is indeed scarce in many places, and will grow scarcer. Bringing supply and demand into equilibrium will be painful, and political disputes may increase in number and intensify in their capacity to cause trouble. To carry on with present practices would indeed be to invite disaster.

B The troubles start with the number of people using the stuff. When, 50 years ago, the world’s population was about 2.5 billion, worries about water supply affected relatively few people. Both drought and hunger existed, as they have throughout history, but most people could be fed without irrigated farming. Then the green revolution, in an inspired combination of new crop breeds, fertilisers and water, made possible a huge rise in the population. The number of people on Earth rose to 6 billion in 2000 and is heading for 9 billion in 2050. The area under irrigation has doubled and the amount of water drawn for farming has tripled. The proportion of people living in countries chronically short of water, which stood at 8% (500m) at the turn of the 21st century, is set to rise to 45% (4 billion) by 2050. And about 1 billion people go to bed hungry each night, partly for lack of water to grow food.

C People in temperate climates where the rain falls moderately all the year round may not realise how much water is needed for farming. In Britain farming takes only 3% of all water withdrawals. In the United States, by contrast, 41% goes for agriculture irrigation. For the world as a whole, agriculture accounts for almost 70%. Farmers’ increasing demand for water is caused not only by the growing number of mouths to be fed but also by people’s desire for better-tasting, more interesting food. Unfortunately, it takes nearly twice as much water to grow a kilo of peanuts as a kilo of soya beans, nearly four times as much to produce a kilo of beef as a kilo of chicken, and nearly five times as much to produce a glass of orange juice as a cup of tea. With 2 billion people around the world about to enter the middle class, the agricultural demands on water would increase even if the population stood still.

D Most of the Earth’s surface is sea, and the water below it over 97% of the total on Earth is salty. In principle the salt can be removed to increase the supply of fresh water, but at present desalination is expensive and uses lots of energy. Although costs have come down, no one expects it to provide wide-scale irrigation soon.

E Of the 2.5% of water that is not salty, about 70% is frozen, either at the poles, in glaciers or in permafrost. All living things, except those in the sea, have about 0.75% of the total to survive on. Most of this available water is underground, in aquifers or similar formations. The rest is falling as rain, sitting in lakes and reservoirs or flowing in rivers where it is, with luck, replaced by rainfall and melting snow and ice. There is also, to take note, water vapour in the atmosphere.

F Many of these conceptual difficulties arise from other unusual aspects of water. It is a commodity whose value varies according to locality, purpose and circumstance. Take locality first. Water is not evenly distributed – just nine countries account for 60% of all available fresh supplies and among them only Brazil, Canada, Colombia, Congo, Indonesia and Russia have an abundance. America is relatively well off, but China and India, with over a third of the world’s population between them, have less than 10% of its water.

G Even within countries the variations may be huge. The average annual rainfall in India’s northeast is 110 times that in its western desert. And many places have plenty of water, or even far too much, at some times of the year, but not nearly enough at others. Most of India’s crucial rain is brought by the summer monsoon, which falls, with luck, in just a few weeks between June and September. Flooding is routine, and may become more frequent and damaging with climate change.

H The water underground, once largely ignored, has come to be seen as especially valuable as the demands of farmers have outgrown their supplies of rain and surface water. Groundwater has come to the rescue as a miraculous solution: drill a borehole, pump the stuff up from below and in due course it will be replaced. In some places it is replenished if rain or surface water is available. In many places, however, the quantities being withdrawn exceed the annual recharge. This is serious for millions of people in many cities, who often depend on them for their drinking water.

I All humans, however, need a basic minimum of two litres of water in food or drink each day, and for this there is no substitute. No one survived in the ruins after a heavy earthquake unless they had access to some water-based food or drink. Many people believe water to be a human right, a necessity more basic than bread or a roof over the head. There is a widespread belief that no one should have to pay for water. Water often has a sacred or mystical quality. Throughout history, man’s dependence on water has made him live near it.

J Water has provided not just life and food but also a means of transport, a way of keeping clean, a mechanism for removing sewage, a home for fish and other animals, a medium with which to cook, in which to swim, on which to skate and sail, a thing of beauty to provide inspiration, to gaze upon and to enjoy. No wonder a commodity with so many qualities, uses and associations has proved so difficult to organise.

READING PASSAGE 2: THE WORLD TURNED UPSIDE DOWN

A Developing countries, the emerging world, are becoming hotbeds of business innovate. They are coming up with new products and services that are dramatically cheaper than their Western equivalents: $3,000 cars, $300 computers and $30 mobile phones. They are reinventing systems of production and distribution, and they are experimenting with entirely new business models. All the elements of modern business, from supply-chain management to recruitment, are being reinvented in this emerging market. Emerging-market champions have not only proved highly competitive in their own backyards, they are also going global themselves.

B Western multinationals now regard these emerging developing countries as sources of economic growth and high-quality brainpower, both of which they desperately need. Multinationals expect about 70% of the world’s growth over the next few years to come from emerging markets. They have also noted that China have been pouring resources into education over the past couple of decades. China produces 75,000 people with higher degrees in engineering or computer science every year. The world’s biggest multinationals are becoming increasingly happy to do their research and development in emerging markets. Companies in the Fortune 500 list have 98 R&D facilities in China and 63 in India. Some have more than one. Knowledge-intensive companies such as IT specialists and consultancies have hugely stepped up the number of people they employ in developing countries.

C Both Western and emerging-country companies have also realised that they need to try harder if they are to prosper in these markets. That means rethinking everything from products to distribution systems. Anil Gupta, of the University of Maryland at College Park, points out that these markets are among the toughest in the world. Distribution systems can be hopeless. Income streams can be unpredictable. Pollution can be lung-searing. Governments sometimes failed to provide basic services. Pirating can squeeze profit margins. And poverty is ubiquitous. The islands of success are surrounded by a sea of problems, which have defeated some doughty companies. E-Bay retreated from China, and Google too has recently backed out from the mainland of China and moved to Hong Kong. Black & Decker, America’s biggest tool maker, is almost invisible in India and China the world’s two biggest construction sites.

D However, the potential market is huge. The populations are already much bigger than in the developed world and growing much faster, and in both China and India hundreds of millions of people will enter the middle class in the coming decades. The economies are set to grow faster too. Brainpower is relatively cheap and abundant: in China over 5m people graduate every year and in India about 3m, respectively four times and three times the numbers a decade ago. No visitor to the emerging world can fail to be struck by its prevailing optimism. Large majorities in China and India say their country’s current economic situation is good and think their children will be better off than they are. This is a region that, to echo Churchill’s phrase, sees opportunities in every difficulty rather than difficulties in every opportunity.

E Until now it had been widely assumed that globalisation was driven by the West and imposed on the rest. Bosses in New York, London and Paris would control the process from their glass towers, and Western consumers would reap most of the benefits. This is changing fast. Embraer buys many of its component parts from the West and does the assembly work in Brazil. The emerging-market brainy ones are taking over office work. Consumers in developing countries are getting richer faster than their equivalents in the West.

F People in the West like to believe that their companies cook up new ideas in their laboratories at home and then export them to the developing world, which makes it easier to accept job losses in manufacturing. But this is proving less true by the day. Western companies are embracing “polycentric innovation” as they spread their R&D centres around the world. And non-Western companies are becoming powerhouses of innovation in everything from telecoms to computers.

G The very nature of innovation has to be rethought. Most people in the West equate it with technological breakthroughs, embodied in revolutionary new products that are taken up by the elites and eventually trickle down to the masses. The emerging developing countries are offering us many breakthrough innovations. For instance, it has already leapfrogged ahead of the West in areas such as mobile money (using mobile phones to make payments) and online games. Microsoft’s research laboratory in Beijing has produced clever programs that allow computers to recognise handwriting or turn photographs into cartoons. But the most exciting innovations are of the Wal-Mart and Dell variety: smarter ways of designing products and organising processes to reach the billions of consumers who are just entering the global market.

H In the past, emerging economic giants have tended to embrace new management systems as they tried to consolidate their progress. America adopted Henry Ford’s production line in the 1960s. In 1980 American car executives were so shaken to find that Japan had ‘replaced the United States as the world’s leading carmaker that they began to visit Japan to find out what was going on. The visitors discovered that the answer was not industrial policy or state subsidies, as they had expected, but business innovation.

READING PASSAGE 3: CHANGING THE CHANNEL

A The average person in the developed world spends three hours a day watching television, and the proportion is rising. In America, it is higher than that. The TV set sits at the heart of modern life, an electronic hearth around which the family gathers. For decades, it was a supremely passive piece of furniture, offering a limited choice of channels that had to be watched live. But that is changing fast. The television is beginning to resemble the computer. It is becoming interactive. It is linking up with the internet. And, most important, it is about to stop acting like a television. Viewers, rather than broadcasters, are increasingly deciding what to watch and when to watch it.

B The technological shift is being driven by the falling cost of storing and transmitting data. Digital broadcasts, delivered over cable, satellite, telephone lines or the air, are replacing analogue ones. Devices for storing films and television programmes are becoming cheaper. Mobile phones and portable media players are making it possible to watch video anywhere. The television itself is being connected to the internet, creating new possibilities for interactivity. Some people are now using their mobile phones while watching television.

C Distinctions between television sets, computers and mobile phones are gradually disappearing. Televisions’ monitors have double-sized and recently they became digital wireless connected with the internet. Now high-end televisions can obtain all sorts of things, from stock quotes to weather forecast. At the same time TV is moving beyond the living room. Many programmes can be viewed on computers, mobile phones and so on Video-streaming websites are becoming more professional meaning they are both better designed and contain more proper television programmes. Every media business that the internet has touched so far has come off badly. Recorded music sales have fallen steeply in value since Napster, a file-sharing website, appeared in 1999. The internet has drawn classified advertising away from local newspapers. Book publishers have watched helplessly as online retailers and e readers have driven down prices.

D The internet tends to decompose media products, breaking music albums into tracks and splitting magazines into their constituent articles. It also brings content directly to consumers, sometimes by means of piracy. Online, people can pick and choose the content that interests them without paying much for it. One of the most harmful things about the internet as it has evolved in the past few years, says Jeff Bewkes, the boss of Time Warner, is the assumption that charging for content is hostile to the consumer. As the saying goes, content wants to be free – or, at least, paid for only by advertising.

E In 1961 America had three broadcast networks, which operated on the principle that the least objectionable shows would draw the biggest audiences and the most advertising revenue. However competition improved matters. In the 1970s cable and satellite television began to spread. The result, beginning in the late 1990s and continuing today, has been a golden age for television. It can be argued that Hollywood makes less impressive films these days than it did in the 1970s (or the 1930s), but that is not true of television. Modern TV shows are so superior to what went before – so much better written, better acted and better shot — that they almost seem to belong to a different, medium.

F Howard Stringer, Sony’s boss, fears television will return to the wasteland. The danger is not lack of choice but a surfeit of choice. So much content will be available on so many digital platforms that audiences will become too small. In that case, broadcasters’ ad-revenues will fall and they will have less money to invest in high-quality shows.

G The television industry can stave off a return to the wasteland in two ways. The first is to move beyond mere programming to offer “experiences”—more like live football matches than ordinary sitcoms. The second, and more important, is to embrace the internet as a friend rather than a foe. The internet allows producers to reach audiences directly, without having to rely on expensive infrastructure, and to gather much more information about how their content is being consumed.

H The transition from analogue to digital broadcasting, which is either under way or complete in most of the developed world, will also help. By freeing up broadcasting spectrum, it will pave the way for a fourth generation of mobile technology, which will in turn encourage more people to watch television on their phones.

I The changing nature of television—from fixed-time, fixed-place, passive viewing to something more flexible and interactive—is creating new ways of making money. Some television companies are also experimenting with subscriptions. HBO, which has long charged a subscription fee, is a powerful argument for the principle that, if the content is good enough, people will pay for it. The proliferation of digital devices is also creating opportunities for companies that make set-top boxes, portable video players and software for delivering television content. With so much money to be made, the future of television will be worth watching.