Based on the recently released Guidance on Assessing Freshwater Impacts developed by the WBCSD in the year 2021 (Guidance on the assessment of freshwater impacts by food and agriculture sector companies – World Business Council for Sustainable Development (WBCSD), we prepared this article for the CEBDS blog, listing the main tools and methodologies for greater knowledge and applicability by companies.
Businesses need practical tools to measure and value their impacts on freshwater. This guide provides a standardized path for companies to understand, value and manage their key freshwater impacts.
Companies have used freshwater impact assessment studies to inform long-term risks to their business, to develop their strategic planning, and to aid collective action strategies and engagement with their key stakeholders. One of the main barriers companies face in conducting a robust assessment of freshwater impacts is the lack of localized data and assessment or monetization factors.
Fair value – The lack of relevant water valuation research poses a challenge in determining a fair water valuation factor to verify the impact of water use. Impacts related to freshwater are difficult to value. Often, the real value of freshwater to different stakeholders is beyond what typical valuation measures can explain. Certain limitations, such as lack of accurate baseline data or uncertainty in measuring natural capital, can also limit the effectiveness of assessment methodologies and approaches.
The WBCSD Guide can support companies' decision-making, as well as being useful for investors to understand where the main impacts related to freshwater are on operations and supply chains. For companies, creating true value helps earn stakeholder trust, secure better financial returns, and maintain the social license to operate.
Methodology:
A process with 5 steps was created, where it becomes possible:
- measure the impact driver;
- measuring changes in the state of natural capital;
- verify value impacts;
- set goals;
- manage impacts
Key principles, data source, methodologies and key outputs are detailed in each of the 5 steps. A high level water impact pathway is provided for companies to use as a starting point for their assessment and which they can customize to their situation and needs.
To measure freshwater-related impact, companies should measure:
1- The volume of water consumed, to understand the impacts related to the amount of water
2- The amount of pollutant discharged, to understand the quality of water dispensed or impacts related to pollution.
Water consumption = total water withdrawal (from all sources) – wastewater discharged. These consumption rates vary significantly even within the same type of operation, depending on the technology used, local climate and other parameters. For example, water consumption rates associated with irrigation can vary significantly depending on the type of technology (drip, irrigation, field flooding, etc.) and climate.
Some specific water management tools are available for specific sectors or activities. Examples:
- Tool cool farm: developed by Cool Farm Alliance allows an estimation of the irrigation requirements and blue and green water footprints of a variety of crops grown in different geographies around the world.
– Beverage Industry Environmental Roundtable: Companies in the beverage sector can consult a water management methodology adapted to the beverage industry.
– Food and Agriculture Organization of the United Nations (FAO): Companies in the livestock sector can refer to FAO's leap guidelines for assessing water use in livestock production systems and supply chains.
– Volumetric Water Benefit Accounting (VWBA): method developed by WRI, LimnoTech, Quantis and Valuing Nature provides a set of practical methodologies that correlate companies' water savings with key indicators related to water impact that can lead to social, economic and environmental impacts. The methodologies determine in terms of volume how companies can reduce their impact and generate benefits for watersheds in which they operate through activities such as reducing water use or improving discharge practices.
WBCSD Guide Methodology Summary
1- Measure impact driver
Necessary data and information:
– Limits of the value chain
– Total water consumption/total water withdrawal
– Total water dispensed
Tools:
– Water Footprint Network
– Tool water metrics cool farm
– Water management methodology by Beverage Industry Environmental Roundtable
– FAO LEAP Guidelines
Outputs:
– Total water consumption
– Quantity of discharged effluents
2- Measure change in the status of natural capital
Required data and information:
– Total water consumption
– Quantity of discharged effluents
– Hydrological and geological information about the watershed
– Competing water users in the watershed
Tools:
Standardized life cycle inventories or hydrological models, such as:
– AWARE (Remaining available water)
– Water Scarcity Index
– MIT Shift Capital Toolkit – created by MIT Sloan School of Management Sustainability Initiative.
– Volumetric Water Benefit Accounting (VWBA) – method developed by WRI and partners Quantis, LimnoTech and Valuing Nature
Outputs:
– Change related to water quantity: change in environmental flow, surface water depletion, groundwater depletion, water scarcity
– Change related to water quality: eutrophication, algal growth, ecotoxicity
3- Value impacts
Required data and information:
– Measures of change in the state of natural capital
– Characterization factors for quantitative and monetary assessment of impacts
Tools:
– Life cycle assessments and specific monetary measures based on the type of impact
Outputs
– Monetary or economic value of impacts on ecosystem services, health and society
4- set goals
Required data and information:
– Other major water users and collective action projects in the watershed
– Measures of maximum allowable level of change in natural capital in the watershed
Tools:
– Science Based Targets Network guidance
Outputs:
– Maximum permitted consumption of water by the activity of the company/value chain
– Maximum discharge of effluents allowed by the activation company/value chain
5- manage impacts
Required data and information:
– Target values for water consumption and effluent discharge
– Impact of existing watershed management intervention
Tools:
– Science Based Targets Network guidance
Outputs:
– Main management actions that reduce impacts
– Monitoring and evaluation plan to track progress
Relevant remarks:
Natural Capital – companies should set targets for the impact driver based on a pre-determined level of change allowed in natural capital. The predetermined level of change in natural capital is the amount of pressure that freshwater abstraction can take while remaining in the desired state. Companies should follow this approach for both water quantity and quality indicators. For example, the company should define its target in terms of the volume of water it can withdraw while maintaining the minimum environmental flow requirements of the catchment.
SDG 6 – Technical guidance document number 2 for Sustainable Development Goal (SDG) 6.3.2 for Clean Water and Sanitation expands on the concept of target value for water quality and provides guidance on how to set meaningful water quality targets. Water quality depends on location and measurement conditions, and target values should take ecosystem and human health into account. The guidance document provides optional target values for key water quality parameters that are often close to the target values that countries report. For phosphorus, for example, the optional target value for rivers is 20 micrograms per liter for total phosphorus.
Author: Beatriz Sigaud
