The current drought of Sao Paulo, Brazil, is one of it’s worse in more than eight years. It’s impact on local businesses is far-reaching. Solvay SA’s Rhodia, a chemical producer in Brazil, has had to halt some of its unit production since the water shortage – further widening the list of companies affected by the drought.
Rhodia shut four of its 22 output units at its Paulinia plant in Sao Paulo because the river is drying up where it collects water, according to Spokesman, Roberto Custodio.
From restaurants to factories – businesses are facing cuts to supplies – threatening economic growth in a state that’s responsible for a third of Brazil’s gross domestic product. Pulp producer, Fibria Celulose SA, is working on a contingency plan should its water be cut completely, and sugar association, Unica, is warning mills to come up with a backup plan. Textile group, Abit, said its members are already experiencing water shortages.
“Given its importance, anything that happens in Sao Paulo affects Brazil’s economic growth,” said Leonardo Dutra, sustainability consultant director of Ernst & Young LLP. “This lack of water can slow the country’s economic recovery,” says Dutra.
Brazil’s economy slipped into a recession from January to June for the first time since 2009. With 40 million people residing across 96,000 square miles (250,000 square kilometers), Sao Paulo is geographically bigger than the U.K. 70 of the 645 cities in the state are already facing water shortages and 38 have begun rationing.