Exposing Invisibile Business Risk (Water Footprints)

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  TONY MAAS“Water Footprints ~ Exposing invisible business risk” – this excerpt from Tony Maas’ article appeared in the Jan/Feb 2010 issue of Water Canada.

IMAGE3Safe, reliable freshwater and healthy, productive freshwater ecosystems are foundations for a strong economy and sustainable communities. But the collective impacts of producing more food and fuel and quenching the thirst of expanding cities and industry are taking their toll on the Earth’s rivers, lakes and wetlands – including Canada’s.

IMAGE2Canada’s Rivers at Risk: Environmental Flows and Canada’s Freshwater Future, a recent report by World Wildlife Fund (WW F), examined how these impacts are affecting 10 of the country’s most important rivers. It found that, despite our position as one of the world’s water wealthy nations, Canada’s rivers and the freshwater flowing through them are under growing pressure. The report highlighted the need to protect and restore the natural flow of freshwater as a foundation of water security. For solutions, we must also turn our attention to the flow of water through our IMAGE1economy and to how these two streams interact. Water footprinting provides an approach for understanding these interactions, and for business and industry to understand their exposure to risks related to water security.

Confronting water (in) security: ROB DE LOEAccording to Rob de Loë, professor and research chair in water policy and governance at the University of Waterloo, “Water security exists when sufficient water of good quality is available for social, economic and cultural uses while, at the same time, adequate water is available to sustain and enhance important ecosystem functions.” As climate change impacts intensify, demand for water grows and action to protect and restore nature’s water needs takes hold, business and industry around the world are coming to grips with growing issues of diminishing water security – often suddenly and unexpectedly.

FTA December 2009 article in the Financial Times warned, “Water shortages could affect agricultural production and manufacturing processes and regulation could increase prices and limit the volume of water available.” These things are already happening. Anglo American, MILLER BEERone of the world’s largest mining groups, has had some difficulty developing a rich seam of platinum in South due to a lack of fresh water. In  South Africa ABMiller, the world’s second largest beer retailer was forced to halt production at one of its plants in 2007 due to water shortages.

1-WATER FOOTPRINTS1Here in Canada, a moratorium has been placed on water withdrawals from a number of prairie rivers – the Bow, the Oldman and the South Saskatchewan – to protect them from drying up. And a new water management framework under development for the lower Athabasca River will place tighter limits on the amount of water that can be withdrawn from the river to support the world’s largest energy project, the Alberta oil sands.

Understanding water risk: The article in the Financial Times also noted that “[Water] is an issue on which businesses need farJPMORGAN greater levels of awareness and understanding.” Efforts on this front are also well underway. A chorus of reports and publications on water and business Pacific-Instituterisk have emerged over the past few years from groups such as JP Morgan, the Pacific Institute and WWF. All recognize WWF-logothat water risk is a multi-dimensional challenge involving physical, regulatory, reputational and financial risks.

WATER FOOTPRINT4Early efforts by business and industry to understand and assess these risks have tended to focus on their operational water footprint – on the implications of local or regional water issues for local production facilities. But in a world of globalized trade, supply chains for most products reach across continents and often stretch around the planet. The result is a complex web of global interdependence on water resources whereby businesses operating in one watershed—which may be water secure – are (often unknowingly) exposed to risks on the other side of the world. So a business operating in Calgary or Toronto may be exposed to “invisible” water risks that stem from water security problems in the fields, farms and factories around the world from which their inputs to production are sourced. This supply-chain water footprint is much more challenging to trace.

WATER FOOTPRINTExposing invisible water risk: This global interdependence on water resources highlights a critical and often overlooked difference between water and carbon GREEN HOUSE GASfootprints. In the same way that a carbon footprint quantifies the amount of greenhouse gas emissions caused by a product or organization, a water footprint quantifies the amount of water required – both directly in operations and indirectly along supply chains – to produce goods and services.

But there are important differences. When an individual or organization emits greenhouse gases, it adds to the growing global pool accumulating in the planet’s atmosphere – the impacts of IMAGE4which, while maybe different in nature and severity depending on location, are shared around the world. Not so for the impacts of water footprints. The availability of freshwater resources and impact on freshwater ecosystems are much more localized. To understand the full water footprint impacts of a business or product we have to look much closer to the ground – at the many regions or watersheds where a supply chain may touch down.

For example, as1.-tar-sands-in-hands upgrading and refining phases to produce usable product, its impacts on freshwater resources and ecosystems stretch across North America. Extraction processes withdraw and pollute water from the Athabasca River. As the bitumen moves to upgrading facilities near Edmonton, its impacts expand to include the waters of the North Saskatchewan River. And this upgraded product is refined in facilities across North America, including the Great Lakes Basin, further expanding the impacts to include the world’s largest freshwater ecosystem…

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Tony Maas is the director of WWF’s freshwater program.

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