suddenly, it will no longer take generations to change out practise.
The future belongs to young men taking care of their herds.
Supply chains & insurance: the secret levers to restore water - Stephanie Betts
Alpha Lo From Climate Water Project
To: me · Sun, Feb 1 at 4:24 PM
I met Stephanie Betts a couple of months ago and was struck by her charismatic energy. She had launched a pioneering, ambitious, and viable project to restoring the water cycle in a large scale systems way. Last week we sat down and talked about her project and her life.
Stephanie Betts had worked in law and investment banking and was leading meetings for the Bank of England and NGOs, looking at best practice governance for climate. Then came her first aha moment: the CEO of AXA, a major French multinational insurance company, told her that a world at plus four degrees would no longer be insurable. Insurance, she realized, wasn’t just a financial instrument. It was the key to dealing with climate change.
She pivoted into insurance, becoming Head of Climate Alliances, Coalitions & Reporting for Aon, a global insurance broker that matches clients with insurance agencies and counts major corporations and governments as clients.
Insurance, at its core, is about understanding and pricing risk. The industry runs on calculating probabilities and turning them into prices. Stephanie started looking at something more fundamental than individual premiums. She was seeing entire sectors, entire geographic regions, becoming uninsurable. When water systems fail, it’s not just one farm or one business that becomes too risky to cover. It’s everyone who depends on that watershed. The insurance industry had been tracking this for years through their payouts: floods and droughts accounted for a large proportion of their disaster claims. But what Stephanie realized was that this wasn’t just about paying out more claims. It was about approaching a threshold where the risk becomes so high, so unpredictable, that insurance itself breaks down. Whole classes of people, whole industries, would simply have no coverage available at any price. The system only works if risks are manageable and calculable. When water (the foundation everything depends on) becomes unreliable, the entire economic structure built on top of it becomes uninsurable.
Even before joining Aon, she had realized that water was important. But now it was getting clearer it was the fundamental risk underlying everything. Water runs through so many industries, from agriculture and technology to manufacturing and energy. It is the foundation of our society and the basis of our food security. As she puts it: “The risk isn’t just to the individual crop; it’s the dependency of our entire society on water. If the watershed fails, the entire economic system becomes uninsurable. We have to treat the water cycle as the ultimate infrastructure.” From within Aon, who initially just saw Stephanie’s interest in water as a hobby, she started to educate and convince the network around her of the importance of water.
Water wasn’t just one environmental issue among many. It was the master risk that everything else depended on.
Then came her next aha moment: she realized farming was key to the whole water issue. Agriculture uses a large percentage of our total water supply, and the water footprint of regenerative agriculture was much smaller than industrial farming. Regenerative agriculture was the way to deal with water. She began to focus intensely on this connection.
She saw that insurance could be a way to unlock investments, to get money flowing toward solutions. For the food industry, a switch to regenerative agriculture would make them less risky to insure. As she explains: “Insurance is the seed of resilience. By leveraging risk analytics, we can move from simply paying for a disaster to incentivizing the prevention of one. We are matching risk capital to the transition.”
In other words: instead of just writing checks after disasters happen, insurance companies could lower premiums for farmers who prevent disasters from happening in the first place. But more importantly, by fixing the underlying water risk, they could keep entire sectors and regions insurable.
The claims data said that regenerative farmers filed far fewer insurance claims than industrial farmers. They were more resilient. Through decades of heavy machinery and chemicals, industrial soil had become compacted and lifeless. When heavy rain hit, the ground acted like concrete. The water ran off, taking the topsoil and crops with it, leading to massive flood claims.
Regenerative farmers, using cover crops and avoiding tilling, had rebuilt the organic matter in their soil, creating a sponge effect. High-carbon, aerated soil can hold up to ten times its volume in water. In a flood, the soil sponge absorbs the excess. In a drought, that same sponge slowly releases stored moisture back to the plants. Regenerative crops often stay green for weeks longer than neighboring industrial crops during heatwaves.
For an insurer, it was key that a single farming practice lowered the probability of having to pay out claims on both ends of the extreme weather spectrum. Both floods and droughts. As Stephanie explains: “When we restore the soil sponge, we aren’t just fixing a farm; we are protecting the collateral. Healthy soil is an appreciating asset because it builds its own resilience against both flood and drought.”
In financial terms, collateral is what backs up a loan. If a farmer borrows money to operate, the land is the collateral. If that land becomes degraded and can’t produce crops reliably, it becomes worthless as collateral. But healthy soil that can weather both floods and droughts? That becomes more valuable over time, not less.
Industrial plants had “tiny little roots” because they were “spoon-fed” fertilizers at the surface. They didn’t need to work for their food. During extreme weather events, these shallow-rooted plants were easily uprooted. In healthy soil, plants had to reach deep into the earth to find nutrients and interact with fungi. Some of these roots could be a meter long, creating a massive underground anchor system. When storms hit, these plants stayed put.
Industrial farming also created economic volatility. Wild swings in costs and income. It depends heavily on expensive, energy-intensive inputs like fertilizers and pesticides. If gas prices spiked or supply chains broke, the industrial farmer’s costs skyrocketed. If they couldn’t afford the inputs, the crop failed. Regenerative farmers used the soil’s natural biochemistry to provide nutrients, creating more stable, predictable business models. For an insurer, a farmer with lower, more stable costs is less likely to go bankrupt during a bad year.
Stephanie applied this to what she calls the earth’s “first mile.” The beginning of the supply chain, where raw materials are actually grown in the soil. Industrial farming had turned fields into a toxic cocktail of compacted dirt. “Industrial farming has created a toxic cocktail of soil degradation,” she says. “From a financial perspective, this turns the land into a depreciating asset. It’s essentially mining the future to pay for the present.”
A depreciating asset is something that loses value over time, like a car. Industrial farmland, stripped of its nutrients and ability to hold water, becomes less and less productive. It’s like slowly destroying the machine that makes your money.
When rain hit these degraded fields, it ran off like it would from a parking lot, causing the downstream floods that insurance programs struggled to cover. The realization was that they needed to pay farmers to deal with flood and food security. To fix the problem at its source.
Then came the next step: to shift this system, we needed to focus on supply chains.
To understand why this matters, you have to step back and look at the fundamental question: what are the levers for large-scale change to restore water on this planet? Economics is one of the fundamental driving forces of societal behavior. And supply chains (the networks that move commodities from soil to shelf) are the basis of how the economic system actually works. They’re not just logistics; they’re the invisible architecture that determines what gets grown, how it gets grown, and who profits from it. If you’re looking for an innovative leverage point to shift the whole system, supply chains provide exactly that. Change the rules at the chokepoints (the handful of massive companies that sit between millions of farmers and billions of consumers) and the entire system has to adapt.
A few key companies control the flow of massive amounts of commodities. Change the rules at those chokepoints, and the entire system shifts. A powerful real-world example of this is the Flood Re model in the UK. Historically, insurance companies viewed floodplains simply as high risk. But as one-in-a-hundred-year floods began happening every decade, the industry reached a breaking point. They realized they couldn’t just keep raising premiums or building higher concrete walls. They had to manage the risk at its source. This led to a key moment for the industry, where they became advocates for nature-based solutions, recognizing that floodplains act as natural relief valves.
For the food industry operating on just-in-time logistics (where ingredients arrive exactly when needed with no excess inventory), any break in the supply chain is a massive financial hit. A drought in Brazil means no cocoa. A flood in Vietnam means no rice. Studies show that during drought years, regenerative fields can maintain yields up to 90% better than conventional neighbors. For corporations, that would mean consistent raw materials and protection against the price spikes that happen when harvests fail.
As Stephanie points out: “Investors and banks are looking for stability. In a world of volatile climate ‘fat-tails,’ nature-based solutions aren’t just ‘nice to have.’ They are a strategic hedge against systemic collapse.” (Fat-tails refers to extreme events that are supposed to be rare but are becoming more common.)
She used this argument, showing insurance companies and investment banks how to lower their risk and depreciation, and enlightening food corporations how valuable regenerative agriculture could be for protecting their businesses, to begin building a global partnership. After leaving Aon, she’s launched a project which has been assembling major food corporations, investment banks, and insurance agencies to incentivize and help finance the shift from industrial agriculture to regenerative agriculture. Their goal is to redirect several billion a year to create this shift.
“De-risking the first mile of the supply chain will help scale food production sustainably to feed a growing global population, while limiting supply chains’ impact on nature,” she explains. “Producers will benefit from lower raw material volatility. They will also have access to crop data on a real-time basis, allowing for transparency, risk management, and reporting.” They are initially focusing on cocoa, coffee, cotton, soy, and palm oil, water-intensive crops, for which a switch to regenerative agriculture will have a huge impact on the global water and soil footprint.
By making regenerative agriculture the new standardized requirement for these commodities, she’s working to use the leverage of global supply chains. The transformation is similar to what happened with the palm oil industry. For decades, activists and governments struggled to stop deforestation through treaties and local laws, with little success. The real tipping point occurred when a handful of global traders (the chokepoint companies sitting between millions of farmers and billions of consumers) realized deforestation had become a massive financial and reputational liability. Almost overnight, companies representing nearly 90% of global refining capacity adopted “No Deforestation” policies. If a producer didn’t meet the standard, their product simply couldn’t get on the ship.
By proving to insurers, investment banks and corporations that regenerative agriculture protects their concerns of food stability and supply chain reliability, Stephanie's working to turn the insurance industry and global supply chains into engines for water restoration. The corporations care about consistent harvests and stable commodity flows. But achieving that stability requires restoring the water cycle. Healthy soil that acts as a sponge is a major part of this. She's found a way to align corporate self-interest with planetary need. By shifting to regenerative agriculture to ensure food security, we restore the water cycle. And by restoring water, we protect the foundation that our entire economic system depends on.
Below is edited version of segments our interview. In the full audio version, you might find the final third particularly intriguing if you are interested in finding out more about how supply chains can be such a leverage for restoring water and soil.
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Alpha: Hi, it’s great to be here. I have with me today Stephanie Betts. Welcome.
Stephanie: Thanks, Alpha, it is really nice to meet you again. I’m really excited to be on the podcast. A lot of people used to say water was my hobby. I’m glad to see that it’s not just mine. It’s a real topic that many people are spending a lot of time thinking about now, which is great.
Alpha: Yeah, great to have you. You’re going to bring a different dimension to this whole water topic that we don’t talk about as much, which is the insurance and some of the finance side.
Stephanie: Yes. My background is a bit different from a lot of people you’ve interviewed because I spent a bit of time looking at the archive to make sure we brought something that was a bit different. It’s not so much about the science of water and what happens—really gaining a deep understanding of the water cycle, which is fascinating and something we learn about all the time—but it’s really about how we move forward. It’s about solutions, action, and how we handle the risk that we’re facing now. We have increasing dependencies that we’re more aware of in terms of business and the global economies and the way they work.
In a way, that’s not linear. We’re facing risks that are starting to be multi-layered and nonlinear, and how do you deal with that? I think the goal is to think in systems because if you look at water, it’s a very layered system. You have transportation, rain, cloud seeding, plants, and roots—all sorts of ways in which water connects to other parts of the system. I think that if we want to address the large-scale problems we’re facing on the planetary level, we need to start thinking in layered systems as well.
On planet Earth we have enough water so far for most people to live comfortably (if we set aside the 2 billion plus people who actually do not have access to safe water already) means we’ve been lucky to have these “pale blue dots.” What do we do next to make sure we can stay, and that the next 50 years do not see us disappearing? Because if you run out of water, you run out of life. It’s a pretty urgent situation.
Alpha: I’m excited to dive into these solutions with you, but how about we first get into how you got into water and your background?
Stephanie: My background is actually law. I started as a disclosure lawyer working for a law firm called Sullivan & Cromwell, which is a well-known Wall Street law firm.
That had a profound influence on me because I’ve always had this idea that you need transparent information; investors need to make the right decision. If you do not have the right level of information, you cannot make the right decision and you end up with financial markets that are not working optimally.
From there, I went to investment banking and brokering for nearly 20 years where I worked for Lehman Brothers first, then JP Morgan and Citigroup. I’ve done my “tour of duty” in the big funds in the financial system.
From there, I set up a sustainable business which brought me a bit more forward as to what is happening outside of finance. I realized people didn’t know very much. I realized that finance knew enough to take action, but they were not yet taking the right action. So I decided after 10 years of setting up this business—which involved cotton, hence why the water footprint became important for me—to go back to the City like an activist hiding in plain sight, trying to find the levers for change.
I decided not to go back to my old world because I knew that investment banking world. I decided to go into asset management because they were my former clients and I wanted to see how people who manage huge amounts of money embed climate risk. I joined M&G for about four years, ended up working with the Bank of England and engaging with their climate unit to see how we could improve our practices as a firm to disclose more on climate.
How are we going to hook financial systems to the right level of disclosure so we can get to the right outcomes? After that, I realized that finance is good, but it’s not really where the big lever is. I know it sounds odd, but actually what I found out is that it was insurance. I decided to join insurance just to get under the skin of it all, so I joined AON, the global insurance broker. That was phenomenal because there I had a first-hand view of what clients are thinking about when looking at risk, what kind of risk they are looking at, and what insurers are able or not able to do.
That was the beginning of my thinking around water, which led me to set up my own business about two years ago to tackle that problem. I’m happy to delve more into the issues we’ve seen and how we’ve designed a platform and a solution to hopefully start. It’s a complicated thing, but I’m thinking again in terms of engineering: how we kickstart change and make sure we can hook the best solutions that already exist to better outcomes. We do not have the time to reinvent the wheel. We do not have the time to totally change capitalism, but we can rewire certain areas of it and that alone will give us the levers to get better outcomes.
Alpha: Well, you have a fascinating background coming in from this with investment banking and the sustainable business side. A lot of people do think finance is the leverage and are worried about how economics and money fit together. It’s interesting that your insight was that it was insurance that was the lever. Do you want to explain a little bit more?
Stephanie: Yes, there were two levers. It was really interesting. I remember the precise moment. I was always concerned about climate. When I left the City 20 years ago and I told my clients, “Guys, I’m going to be away. I’m having children. I don’t know when I’m back, but watch out for clean air and clean water. We’re going to be running out of all of that, and keep an eye on commodities.” That was my farewell to them.
I could see that India and China were expanding and industrializing at a fast rate. In Europe—I’m speaking from England, but I’m French (and half Haitian, which is interesting for topics like water problems, erosion, and deforestation)—you could see it took the developed world 200 years to get there while China and India were doing this over 50 years. You can see the strain it brings on the systems and the entire population, which is exploding worldwide. We’ve gone from 5 or 7 billion to looking at 10 billion very shortly. Suddenly we’ve doubled the population, but the resources have shrunk. We need to manage that, and water is at the absolute nexus of all of that.
One day, I was sitting next to an elevator doing some research for a presentation, and I came across a quote from the then CEO of AXA who said that a world at +4 degrees would no longer be insurable. That was that. There was a before and after. As a lawyer, you think an uninsurable world is a very scary world. As a young adult, I did an internship in Haiti where the rule of law was non-existent. I could really see what an uninsurable world looks like. You buy a house and someone says it’s not your house. You try to sell it and they say no. People come and seize your property. You’re not insured for anything. If you cannot insure your car, you’re not going to get in your car. If you cannot insure a project, that project is not going ahead. Interestingly, you can have the money from finance, but if insurance doesn’t want to insure a program or an asset, your asset is now valueless. You’re starting to see that in pockets of California where people are struggling to get insurance for their homes. Insurance has a huge role to play as a lever.
Then a very good friend of mine, who was a very senior underwriter at Munich Re, and I used to chat about work. The more I talked about it, the more I thought what they were doing was interesting. They were insuring everything. I thought, “Is there anything you do not insure?” and he said, “No, because if the world has to go around, you need insurance.” When I put the two together, I knew I had to go into insurance. That’s when I went to AON. It was clear that for many clients, especially in the food and beverage area, climate change was the biggest issue. They didn’t necessarily know how to handle it and the long-term structural problems like yield attrition and lack of water.
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Alpha: Say more on AON.
Stephanie: AON is one of the largest brokers worldwide for insurance. They match risk and capital. They find companies that need insurance and find the right underwriters to insure that particular risk.
Alpha: Can you explain more about your perspective? You said as a lawyer you looked at this situation being uninsurable. What are the legal ramifications for that? My friends were trying to buy houses in California and had problems with insurance due to wildfires.
Stephanie: The problem is that a bank will only lend you money for a mortgage if they know they have an asset they can eventually repossess. That’s the guarantee. But if that asset is not insured—especially in a high-risk region like California—the banks can’t give you a mortgage. It’s that little grain of sand that can stop everything from moving.
Imagine you have a huge project and need to invest hundreds of millions in building infrastructure. Banks are not going to lend hundreds of millions for a big project unless it’s insured. And insurance is not going to play ball if they don’t have data that proves they’re not going to lose their shirt on that investment. Interestingly, large parts of the world like Africa are almost entirely uninsured. There is almost no insurance in Africa. Why? Because insurance doesn’t have enough data to be able to run the right calculations. Insurance is a numbers game.
But what’s been fascinating recently is even the numbers game is changing. Right now, the problem is—and you’ll need a climatologist to tell you more about this—you have these fat-tailed risks that are coming more often than they used to. The calculation you had based on previous cycles is not necessarily applicable to the world going forward. That’s a big break for insurance. How do you handle that when the frequency and intensity of extreme weather events is accelerating?
If we don’t deal right now with the underlying cause of those extreme climate events, insurance is going to become irrelevant because premiums will become so expensive people can’t afford them, or there will be events that you can no longer insure for. We still have a window, but we need to move.
In Phoenix, Arizona, you can no longer build a development unless you can confirm you will have water supply for the next 100 years. It’s getting harder to prove. Local governments can’t issue permits if they think people will be stranded with no water. They’ve been relying on groundwater, but they have drought, hotter temperatures, and pressure on the Colorado River.
I see a conflict coming between finance and population. You have hedge funds saying water is “the next oil” or “the next gold” and buying water rights, and then you have farmers and populations. Finance, business, and industry all need access to water—from energy to data centers. Then you still have to feed the population. How do local governments allocate water to these different constituents? Phoenix is a huge hub for data centers, which use millions of gallons of water, creating competition with agriculture.
Alpha: You have a timeline of how you came to the realization of it. You were a lawyer, then in investment banking, then you had a realization about insurance. At what point did you have a realization about water and the soil?
Stephanie: Good question. I always have a visual moment of when the penny dropped. I was at Aon and I thought, “If insurers are grappling with these big problems, what do we do to calm things down and rewind a little bit? What is the lever of change?”
I realized the biggest issue was that in a warming world, we’re going to have less water available. Then I looked up the biggest influence on water. It was so simple: 70% of the world’s fresh water goes straight to agriculture. When you think about the water in your shower, that isn’t it. It’s what you eat and what you wear.
I knew that regenerative agriculture was able to reduce your needs in fresh water by about 50%. If on a global basis you could move from 70% to 35%, that gives you a huge margin. We can’t move the whole planet to regenerative systems right now, but we can try because that’s when we’re going to reduce the pressure on water.
Alpha: I don’t think a lot of people connect that. They realize agriculture uses a lot of water, but they don’t say the solution is “regen,” at least in the insurance business.
Stephanie: It’s coming. People are getting serious about this because it’s happening. We’ve seen the ground collapse in places like Turkey because people have taken too much water out of the ground. When yields are down by 50% because of drought and the soil is unable to cope, or when floods take away the topsoil, you realize you’re trapped in a negative loop.
For me, it was straightforward: we need to look at soil. A healthy soil is very open and aerated. You have the worms and the fungi interacting. When the rain comes, it acts like a sponge and can hold up to 10 times its volume in water. When you look at the roots of plants in healthy soil, they can be a meter long. But in poor soil, you have tiny little roots.
When an extreme weather event like a storm or flood arrives, the crops with short roots get pulled away because the topsoil gets washed away. The plants with deep roots don’t get pulled away because the soil is elastic. When the event is over, they recover and they have plenty of water because they are saving it. When the next event arrives, like a drought, they can access water deep under which the others can’t. What’s happened is over 50 years of intense agriculture with tractors compacting the soil, but also with a lot of fertilizers that have killed the unique biochemistry of the soil. All that good soil infrastructure has been lost. That is what regenerative farmers are trying to rebuild. People like Gabe Brown, for instance, are at the forefront of this. There is a massive movement in America and a “Groundswell”—which is also the name of an amazing conference here in the UK—of regenerative farming.
What gives me hope is that insurers are smart; they follow the money. In all these conversations, we need to follow the money, because that is the only way you get solutions that people will adopt and keep. Insurers are starting to notice they have two types of farmers. Traditional farmers who use heavy pesticides, chemicals, and heavy machinery are hit very hard by extreme weather events. They are always putting their hands up for a payout. The other pool—the regenerative farmers—actually don’t need payouts because their crops survive the events.
Suddenly, insurers are looking at these two pools much like they did with smokers and non-smokers in the 1980s. They are starting to give them very different insurance costs. It is becoming more financially beneficial to move to regenerative agriculture than to stay with existing protocols.
Then there is the nutrient element. I tell my children, “I’m trying to save your bacon here.” Most food in shops is made using products that weren’t “good enough to get in my car,” because fertilizers are often toxic byproducts of the chemical industry. People naively think pesticides just mean bigger fruit; they don’t realize that what goes into the soil goes into the plant, then the animal, and eventually into us. That is why we have escalating issues with chronic illnesses. We need to make good food accessible to all, but that requires a major system change.
People often ask, “How can we be running out of water when it rains so much and there are floods?” I tell them, “Do you want to drink the water on the road?” That water damages aging infrastructure and carries topsoil runoff. A friend of mine farming in Devon recently had a “one-in-a-hundred-year” flood. Farms all around them were wiped away, but because they have practiced regenerative farming on their estate for years, their water was running clear. The water sank into the ground, and they didn’t lose any crops. It’s very concrete.
If we can harness governments and insurance to move to regenerative practices at scale, it will make a massive difference. Our supply chains were set up 200 years ago for a very different world. We are operating under different constraints now. A big part of preserving water is looking at your diet—the water footprint of your food. I looked up the footprint of a simple lunch sandwich: it’s about 200 gallons. If you add a bag of chips, it gets “spicy.” The water used to irrigate the potato is one thing, but then it goes to a factory to be washed, processed, and packaged. Each step adds to the water and carbon footprint.
In my perfect world, you eat flavorful, seasonal food from a regenerative supply chain. We need to make people dream about this possibility, not just scare them. A brilliant example is Louise Mabulo and The Cacao Project in the Philippines. She created the “Napa Valley of Cacao” by helping farmers move to regenerative practices. These farmers are now making money, buying cars, and improving their lives.
We have a planetary problem, so we need a planetary solution. I decided to focus on five “worst” supply chains: cacao, coffee, palm, rice, and cotton. Cacao, coffee, and palm are linked to deforestation that disrupts the water cycle, while rice and cotton use extreme amounts of water. Our project creates a “plug-and-play” program for corporates to transform their supply chains from depleted to regenerative.
Supply chains are engines that go all around the world. Instead of making them engines of destruction, we make them engines of regeneration. We’ve brought insurance and finance into the mix, creating a big insurance pool for each commodity. We’re working with partners like Aon, ERM, and Fauna & Flora.
Alpha: Are your working with all insurance companies?
Stephanie: It’s a mix of insurance, finance, and organizations that work on the ground with farmers. If you are a company like Nestlé or Mars and you want to ensure your beans are free from deforestation, how do you know? There is a massive gap between the head office in Switzerland or the US and the “first mile” of the supply chain.
We are bridging that gap with technology. Five years ago, it didn’t exist, but now with AI and satellite data, we have transparency. You can see a chicken run from space! But data isn’t enough; you need infrastructure on the ground. You need agronomy, village champions, and investment in tools. We are giving corporates a “sweetener” with insurance to work across the entire arc of the supply chain. This creates better livelihoods for farmers, lower volatility for corporates, and higher GDP for governments.
Alpha: You saw that agriculture is the key thing, and that regenerative agriculture is more resilient to “fat-tail” risks. You’re leveraging the companies downstream that have the money to help the farmers upstream switch. It’s a key to the whole system.
Stephanie: Exactly. We are losing between 25 and 75 billion tons of fertile topsoil every year. It takes 100 to 1,000 years to rebuild just one centimeter of that soil. At this rate, 90% of the world’s soil will be degraded by 2050. It’s like an office where nine out of ten employees don’t show up for work; nature is hanging on by a thread.
Indigenous populations have this right; 80% of remaining biodiversity is under their control. We need to go back to that old wisdom. It’s not a corporation’s job to worry about planetary boundaries—their job is to make chocolate or coffee. That’s why we stepped in. We are running pilots in Africa and Latin America to “test the plumbing” of this architecture. Once we are up and running, we are talking about a billion dollars at work in each supply chain.
It isn’t even that expensive because, once engineered properly, the program pays for itself. If you take a tiny sliver of the $500 billion coffee trade and invest it in a concerted way, the impact is enormous. AI enables us to exchange information and monitor protocols across different landscapes. There is a small window of time, but a massive opportunity.
Alpha: This is mind-blowing. In finance and insurance, everything is about incentives. You started with insurance because they have a direct incentive to address water risk.
Stephanie: The main game for me is water. Nobody wants to pay for water because it’s a common good—the “tragedy of the commons.” But if you hook it to a value people do care about, like a smooth supply chain or protecting their assets and bonuses, you hook it to capitalism. Depleted supply chains work for no one. Once farmers make money through these practices, they become a brand new market for insurance. Remember, the protection gap is 70% worldwide. Insurance has 70% to gain by helping the world become more resilient.
Stephanie: There is plenty of room to grow, but we need to do a few steps first. You have to make sure people have better livelihoods so they do the right thing to support those livelihoods. It’s all about how you hook it and how you organize it. Depleted supply chains serve no one, but regenerative supply chains serve everybody. They serve the head office, the customers, the farmers, the government, and the insurers.
The challenge was moving from depleted to regenerative. That transformation is difficult because no company can do it on its own. But if you do it at the supply chain and country level, with the support of government and policy, it suddenly becomes a new norm. Think about seatbelts. Nobody cared about seatbelts in the 70s; kids were just driving around. Then, suddenly, you had to have them, and now everybody wears one. You needed policy for that.
Things like that can happen overnight, but we don’t have policy at the planetary level yet. So, we had to go via the market. Once it happens in the market and people see the benefits, we’re hoping other supply chains will have “FOMO”—they’ll want to do the same.
Alpha: This is a really interesting point. Last year, we were looking for the trigger points to tip the water cycle into better systems. We talked about different places to push, but none of us were thinking about supply chains. It’s a foundational economic idea. Since supply chains are the engine of the whole system, revamping them shifts the incentives to align with the water cycle.
Stephanie: To get there, we just need a shift in those supply chains because they are the only things big enough and efficient enough to give us the fast transformation we need. Policy is one thing, but if policy isn’t moving, we go to the market. When I was a kid, I remember Superman going around the globe so many times you could see the lines of his travel. That’s how I see supply chains in my mind. They are “Supermanning” the globe in cars and trucks; they are everywhere and impacting everything. If we can make them supportive of a better life and water, we win.
Water is my real mission—my not-so-secret mission. But we needed to embed it into something financially relevant for companies. That’s how you hook it to insurance and the financial system to create a chain reaction.
Alpha: How much is the idea of water discussed in the insurance and finance sectors right now?
Stephanie: I’ll be honest with you: water and insurance is a complicated one. The Green Climate Fund has a smart water expert who is looking at infrastructure projects worth $12 billion a year. But water is challenging because it’s a common good. That’s why you see people buying land for water rights and digging deeper to grab more water. You see it in California with thirsty crops like almonds; a farm turns on the tap and nothing comes out because a hedge fund next door had the money to dig deeper.
Alpha: You’re pushing the economic side, which influences policy. If a corporation is whispering to the government that they need to restore the water cycle, policy becomes easier.
Stephanie: And they’ll want a reward for it! When they show investors they are looking after nature, it’s a benefit. We also have sovereign wealth funds like Norges Bank and the Japanese pension funds making big moves. Norges Bank issued a report stating that 96% of their assets were exposed to “nature risk.” They told companies: “If you do not report on your impact on nature and show us a direction of travel, we will dump the stock.” These are funds worth six trillion dollars.
I think the next step is the stock exchange requiring disclosure on nature. Nature underpins our financial system; everything we trade, eat, or fly comes from the ground. If the ground is depleted, we cannot continue to create economic growth.
There was an enormous report by the CFTC (Commodities Futures Trading Commission) called How to Manage Climate Risk in the U.S. Financial System. They said the prices in the options market are no longer real because nobody knows how climate will affect the “underlying asset.” We have no idea what orange prices will be in five years. We are working on very thin ice, and that is a “zone of danger” for the global financial system.
Once you ask people to disclose a risk, they naturally start to manage it. Managing it means reducing our footprint on natural capital and water. It’s about resilience—not just because I love beavers and keystone species, but because the resilience of our financial system is intricately linked to nature.
Alpha: This has been amazing—seeing how to use supply chains for a massive shift in regen ag to help the water cycle. Any closing words?
Stephanie: Just thank you for listening and for your interest in water. People often forget they have agency. As citizens and communities, we have the power to buy the right products and support the right supply chains. Never forget you’ve got agency—whether you work in policy, investment, or just as a consumer. We have the power.
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