Geneva, 22 April 2008 - Everyone understands that water is essential to life. But many are only just now beginning to grasp how essential it is to everything in life � food, energy, transportation, nature, leisure, identity, culture, social norms, and virtually all the products used on a daily basis. But with population, per capita demand and, in many places, water pollution all growing rapidly, it is clear that water, already a critical issue, will become increasingly critical in the coming decades.
This fact challenges different businesses in different ways. But some general trends, observable today, suggest what more and more businesses will face in the future.
Scarcity usually encourages better management of resources. Water resources are getting scarcer due to both increasing demand and decreasing reserves, such as the melting of glaciers. It is inevitable that water use by all sectors will come under closer scrutiny as governments from local to national levels strengthen their water resource management. This will require companies to manage water better.
Businesses will need to measure all the dimensions of their water footprint, looking beyond the direct consumption of their own operations to the water dependency and impact of their supply chains, as well as those of the users of their products. In a water-constrained world, managing water-related risks becomes an imperative. Knowing the water footprint of the business is a first st ep toward identifying and quantifying those risks.
Knowing their water footprint can also help companies position products and services in response to the expectations of consumers, who are hearing more and more about water issues. And efforts are underway to give them the information they need to make �water wise� choices. The US Environmental Protection Agency recently launched its �WaterSense� program to promote water-efficiency through the market. Based on a labeling scheme, it helps consumers identify products and services that use less water while performing as well as or better than their less-efficient counterparts. The European Union, which has had an eco-label scheme in place since 1993, is studying a new approach to make water ratings as explicit as energy ratings.
Water is everybody�s business, and the principles of water management being promoted today reflect this. European water policy, for example, calls for the extension of public participation in river basin management to balance the interests of various groups.
In this context, businesses need to be prepared to engage with other stakeholders, whether business or non-business, including those who speak for ecosystems. To be credible and constructive participants in the setting of water policy, businesses need to thoroughly understand not only their own water footprint, but also the needs and priorities of others.
Another principle of water management that is receiving much attention is that of full cost recovery. While this is most often discussed in relation to water services, the concept applies to any water use, including industrial and agricultural. How should costs be calculated and who decides? How should the opportunity cost of specific uses be counted? For businesses that have located their operations to take advantage of cheap, abundant water, the emergence of such questions can have significant implications. Recognizing the economic value of water in an age when the balance between supply and demand is shifting will force many companies to reassess their models.
When it comes to water, businesses and all other sectors of society face the challenge of dealing with uncertainty, but some things are certain. One is climate change and the observed impacts on water resources. Martin Parry, co-chairman of the Intergovernmental Panel on Climate Change Working Group II, said in referring to the effect of climate change on animals, plants and water: �For the first time, we are no longer armwaving with models; this is empirical data, we can actually measure it.� But considerable uncertainty remains about where and when further water impacts will occur.
There is also a great deal of uncertainty about the capacity of various affected populations, as well as global systems, to adapt to changes in water availability and quality. Will we see significant changes in values and lifestyles? To what extent will global trade in virtual water compensate for local deficiencies in real water resources? How will human migration patterns change as water availability decreases in regions supplied by meltwater, where more than one-sixth of the world�s population currently lives?
There are a number of things besides climate change that are certain. One is that virtually all businesses will be affected either directly or indirectly by water-related issues over the next few decades. But how does a company effectively communicate this to get water higher up on its agenda? The WBCSD�s Water Project will be focusing more on advocacy and communications to help do exactly that.
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