Corporate Water Accounting: An Analysis of Methods and Tools for ...

30
leum, mining, and forestry industry sectors,
among others. With regard to agricultural
production, blue water essentially is comprised
of irrigated water (whether groundwater
or surface water), while green water is
comprised of the evapotranspiration of water
naturally occurring in the soil from precipitation.
Though evapotranspiration occurs in
the absence of human intervention, it varies
greatly depending on the type of land use
(e.g., fields, orchards, pasture, forest) which
humans frequently modify for agricultural
purposes.
The green-blue distinction is helpful
because these two types of water use create
substantially different potential risks and
have different impacts on the surrounding
hydrologic region. Blue water use directly
depletes aquifers and surface waters, thereby
potentially contributing to water scarcity,
destruction of ecosystems, and/or reduced
access among human communities, among
other things. There is often competition for
blue water among users, sometimes leading
to business risks when corporate water use
hinders, or is perceived to hinder, other uses.
In contrast, green water use does not deplete
aquifers or surface waters, but rather uses
water trapped in the soil. This typically does
not create risks in and of itself, but can pose
risks when it relates to changes in land use,
for instance converting forest to agricultural
land. Such land-use changes can impact biota
and ecosystem functions.
The distinction between green and blue
water is also perceived as useful in its capacity
to assess long-term risks related to climate
change. Climate change is predicted to have
significant impacts on regional hydrologic
cycles and the availability of water for human
uses. Precipitation patterns will change on a
regional basis, with rainfall often becoming
less or more frequent and more concentrated
depending on the location. This has many
implications for blue water resources (e.g.
infrastructure’s ability to cope with longer
droughts), but it particularly presents risks
for operations in those regions heavily reliant
on green water. Less frequent rainfall will
ultimately mean less water stored in the soil.
Because of this, those relying solely on green
water use (namely agricultural growers in
the Global South who do not have access to
irrigation infrastructure) will simply not be
able to sustain crop production through long
droughts. This of course poses business risks
for companies that rely on those growers as
suppliers or that use large amounts of blue
water in those same regions. For this reason,
the green-blue water distinction in conjunction
with climate change models can help
companies better assess which of their water
uses may be most susceptible to climate
disruptions.
Life Cycle Assessment
LCA is not typically characterized by companies
and/or LCA practitioners as a water risk
assessment tool, but rather a management
decision support tool. Here, a distinction can
be made between the different ways in which
water accounting methods and tools define
and address “risk.” In some instances (i.e.,
WBCSD Global Water Tool), the focus is solely
on business risks—how local water conditions
might potentially damage a company’s
short-term or long-term viability, reputation,
or profitability. However, a company’s water
use/discharge may pose risks in a number
of ways: it can lead to an inefficient use of
resources and therefore money and it can
negatively impact the ecosystems and communities
in which it or its suppliers operate,
thereby creating potential regulatory and
reputational risks.
A key characteristic of LCA is its emphasis
on science-based environmental or human
health impact assessment, which in turn can
serve as an entry point for companies seeking
to identify and understand water-related business
risk. Such LCA assessments are typically
carried out using complex fate-transport
modeling and other relatively sophisticated
modeling techniques. While distinct from
direct business risks, these potential impacts
to ecosystems and communities may ultimately
have severe implications for business
viability. In this sense, to the degree to which
companies with significant water impacts will
be subject to corollary business risks, LCA can
help identify operational “hotspots” whereby
product design and technical improvements
can be seen as risk mitigation efforts.
WBCSD Global Water Tool
As with water footprinting, the WBCSD
Global Water Tool appears effective at identifying
water risk “hotspots.” However, where
WF delves into the nature of company water
use to help identify and characterize risks,
the WBCSD Tool emphasizes geographic
location as the primary basis for a qualitative