Valuing Water

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March 2011

Special Report

Valuing Water: HoW
Can Businesses Manage
tHe CoMing sCarCity?

http://environment.wharton.upenn.edu • http://knowledge.wharton.upenn.edu

sponsors
The Initiative for Global Environmental Leadership (IGEL) and Knowledge@ Wharton have partnered to create this special report on business and the environment. We are most grateful to the Xerox Foundation for supporting collaboration and funding of this edition.

Contents
Valuing Water: How Can Businesses Manage the Coming
Scarcity?
Water is a paradoxical commodity: It seems free and plentiful, yet its supply is under tremendous strain. Use of fresh water has more than doubled over the past 50 years, and many fear that we are coming close to a frightening breaking point, a world where chronic water shortages for farmers, businesses and people is the norm. Some experts even see international conflict emerging over access to dwindling supplies. Recognizing these concerns, companies are undertaking major programs to realign their water use with core business and humanitarian interests. But while objectives like being “water neutral” and using “footprinting” — tracking the use of water throughout the supply chain — are ambitious, what is being done to achieve them? Are these goals realistic, and will they have enough impact? This special report addresses these questions.

In a Water-stressed World, Corporations Conserve

1

Global water requirements will outstrip supply in the years ahead. According to one report, a third of the world’s population will live where the deficit is greater than 50% just 20 years from now. Multinational corporations are taking notice of the compelling business and humanitarian reasons for having a proactive approach to water issues.

Water Neutrality: A Controversial Concept That Can Spark Innovation

6

With water use a potential deal breaker to doing business in certain regions, waterintensive corporations are increasingly working to achieve “water neutrality” — the offsetting of water use through conservation, recycling, replenishment and community projects. Although criticized by some, such efforts are helping companies identify and reduce water use while educating the public about water scarcity.

Thirsty Power: Confronting the Energy-water Nexus

10

Water is a great hidden cost in energy generation. The reality of water-dependent energy means that any holistic impact analysis must take water consumption into account — and include impacts on water quality. Looking at water and energy together may in some cases solve two problems at once, experts say.

Contents

(continued)

Water Footprinting: Getting Serious about Water Risks to Business

15

Companies face substantial business risks related to water, and investors require them to be forthcoming. For companies concerned about these risks, water footprinting — measuring fresh water used to produce a product over a full supply chain — is a logical next step. But footprinting can’t be undertaken simply to bolster a corporate image: How well companies succeed in managing water use will be the true measure of footprinting’s importance.

In a Water-stressed World, Corporations Conserve
We live on a water-stressed planet.
As the Alliance for Water Stewardship points out,
“Current demand for water from cities, agriculture
and industry is already unsustainable in many
regions, yet is projected to increase significantly
in coming years. According to a report by the

2030 Water Resources Group (“Charting Our Water
Future”), just 20 years from now, global water
requirements will be “a full 40% above the current
accessible, reliable supply. The report concludes

that a third of the world’s population will live in
places where this deficit is larger than 50%.
The facts underlying these projections are sobering.
We all learned in school that we live on a watery
planet. But over 97% of that water is salty; less
than 3%...
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