Water scarcity and access to water: why is this important for business?

Water and its impact on business

Water scarcity and access to water: why is this important for business? 

Water is a finite resource that is now coming under threat from the demands of a growing global population and the effects of climate change. Availability of clean water is essential for the economic growth of all types of business, either directly or indirectly. Interruptions in water supply can lead to unexpected costs throughout the supply chain. A proactive approach, which assesses and manages these risks, can save business a great deal of time and money and can demonstrate a positive message to investors.

Water: essential for life…..and business
Water is a finite resource, and has often been referred to as “the oil of the twentieth century”. It is essential for transportation, agriculture and most industries, and it is embedded in mostly everything we see.
Products and services traded around the world contain embedded water from the countries where they were produced. In the UK we rely heavily on foreign imports, and for this reason many businesses are dependent either directly or indirectly on a global supply of water. We are, however, currently facing times of extreme water scarcity. The pressures imposed by a rapidly growing population, globalisation and the effects of climate change, are threatening global water supplies.

The United Nations recently estimated that by 2025, as much as two-thirds of the world’s population will be facing conditions of serious water shortage, one-third of which will be living in conditions of absolute water scarcity .

The problem of water scarcity has repercussions for all types of business.  Business will inevitably bear the additional costs associated with: disruptions in water supply, more stringent and expensive government regulation, and the increased infrastructure required to source and treat water. In contrast, many businesses may also suffer the consequences of an overabundance of water.

Recent extreme weather conditions have resulted in the occurrence of large scale flooding, recently seen in Haiti and the US, as well as in England last summer. Businesses need to be fully aware of the risks associated with too much or too little water and must adopt a more proactive approach that changes the way that it uses and invests in water supplies. This will not only facilitate regulatory compliance but also help to enhance the reputation of the company and generate goodwill among the communities they are associated with.

Embodied water
It is now common to think in terms of the embodied carbon associated with a product or service; however, it is less common to consider the embodied water. In addition to the tap water we use for drinking and washing, a large amount of water is also embedded in the products that we use on a daily basis. For example, it takes about 140 litres to grow one cup of coffee, about 11,000 litres to produce a pair of jeans, about 400,000 litres to build a car and 32 litres to manufacture a single microchip . This water may have been extracted from a local source, or it may have been extracted from a source thousands of miles away.

Many countries import a large amount of water through the international trade of products and services; this often means that the negative impacts associated with water extraction are not immediately obvious to the consumer. It also means that the amount of water contained even within similar products can vary significantly depending on geographically specific factors including the local climate, yield, crop species, technologies used, irrigation efficiency, level of local water pollution, to name but a few. Additionally, the type of water that is used, for example whether the water has been extracted directly from the soil (often referred to as “green” water) or from a surface or groundwater source such as a river (often referred to as “blue” water), makes a large difference to the impact that extraction will have on the local environment, and therefore the embodied water in products.

The importance of water footprinting for business
A comprehensive water footprint should not simply measure the amount of water used but also the type of water used (blue or green water) and the amount of polluted water discharged at the end of the process (grey water). All of this will, of course, depend on the geography of the sites from which the water has been extracted and to which excess water has been disposed. For example, the use of green or blue water depends on the availability of water in the soil, and the degree of wastewater treatment used will often depend on the legislation in the region where disposal is taking place.

Companies are being urged to consider their water footprint more seriously as we are faced with alarming statistics such as: “water use for human purposes has multiplied six-fold in the past 100 years….twice the rate of human population growth”  and “By 2025, quantities of industrial waste-water will have approximately doubled relative to today’s levels.  Furthermore, increasing evidence now suggests that climate change is responsible for altering the world’s hydrological cycles as well as causing other negative impacts such as increasing glacial runoff.

According to estimates by the Chinese Academy of Sciences, China’s highland glaciers are shrinking each year by an amount equivalent to all the water in the Yellow River . This will result in a significant reduction in the amount of glacial runoff and river flow during the summer months, which will mean severe water shortages for those who rely on this water source. Local people who depend on this water for survival will be acutely aware of the diminishing resources that they have at their disposal. Businesses that rely on the water in an indirect way, perhaps through their supply chain, may be less aware of the risks that this poses, and may therefore suffer losses due to unexpected water related problems, such as interruptions in supply, which may have a direct effect on their customers and investments.

Being proactive: Water stewardship
Companies are increasingly being encouraged to conduct thorough assessments of their total water footprint, taking into account upstream and downstream impacts. This will enable them to manage the risks and opportunities associated with water within their supply chain. Examples of companies already assessing their water stewardship include drinks companies Coca Cola and SAB Miller.

The Coca Cola Company consumes vast amounts of water and the success of their business is determined by an unbroken supply at their many sites around the world. Coca Cola emphasises the importance of water stewardship on its website and has set specific water efficiency targets, claiming that its “strategy is built on a comprehensive risk analysis of water resources in the Coca-Cola system…which enables business units to define and prioritize ways to reduce water risks, and allows us to track progress in water stewardship”.

SAB Miller also realises the impact of the water use associated with its business. As a result, it has committed to developing a view of its total water footprint and understanding its water consumption, not simply in terms of the water used during the brewing process but also covering use within its supply chain and use associated with the packaging process and post-consumer packaging management. By conducting these assessments, SAB Miller can then ensure continual improvement in its water resource management.

i Glass half full or half empty, UNEP
ii UNEP, Hidden water, 2007
iii WMO (World Meteorological Organization). (1997). Comprehensive assessment
of the freshwater resources of the world. Geneva: WMO, p. 9.
[Online]. Available: http://www.wri.org/trends/water.html [2004, August
iv Glass half full or half empty, UNEP
v Challenges of water scarcity, A business case for financial institutions, UNEP and SIWI.

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