Corporate Water-Energy Footprint: Critical Work for Risk Management

The notion that “water is the next carbon” has been around since at least 2008 when the phrase appeared in Britain’s Independent newspaper.  Still, companies have been slow to achieve a similar level of sophistication and transparency with water footprints as has been achieved with carbon. This is particularly ironic given what’s known as the water-energy nexus – the mutually reinforcing consumption of water and energy.

Indeed, in the big picture, carbon footprints and water footprints are actually related.  On one hand, the consumption of water drives energy consumption and in turn associated carbon dioxide emissions.  On the other hand, the consumption of energy drives water consumption in the overall system.  The result is a wicked sustainability challenge.

Given the planet’s sharply limited freshwater supplies with growing populations and economies, companies need to move rapidly to better understand and manage sustainability risks from water consumption.  Although water itself remains underpriced relative to present and future scarcities, the upswing in prices of energy resources in recent years reflects tightening supplies of energy.  By paying attention to water consumption, companies can save money by lowering water use –not because of high water costs (at least in the short-run), but because the energy required to pump, process and treat water is expensive.

Consider some examples of the water-energy nexus.

On the energy side, a great deal of water is consumed in producing energy, especially through evaporation in the generation of electricity from steam (e.g., fossil fuels, solar thermal, and nuclear sources).  Thus, studies show that electric vehicles charged on the grid –although greener in so many other respects –will use significantly more water throughout their life cycle than conventional gas-powered vehicles.

On the water side, a great deal of energy is required to treat and pump water –in the U.S. about 10 percent of energy use is dedicated to this purpose.  The consumption of energy may be even more pronounced in cases of water scarcity where considerable energy is required to pump diminishing groundwater reservoirs and transport water at great distances in aqueducts.  For example, in Southern California, the amount of energy required to deliver water to residential customers represents about one-third of total average household electric use.

University researchers have recently produced a number of studies and tools that may help companies better understand their water footprint, including the relationship of water consumption and energy use.  Recent studies allow for more complete benchmarking of water consumption in various forms of energy, and energy consumption for various forms of process water.  Water footprints, including benchmarks for exposure to risk in the water energy nexus, can now be created at the scale of facilities or for the wider supply chain.

The life cycle assessment community has also tackled the issue by measuring the impact of water consumption in the total life cycle of products.   Careful distinctions have been drawn between various water sources, as well as water consumption, water degradation, and water that is simply passed through a process and returned to nature.  A working group under the UNEP/SETAC Life Cycle Initiative has also given attention to defining appropriate impact end points for water consumption, including sufficiency of water for contemporary humans and existing ecosystems, as well as resource scarcity measures (especially relevant to groundwater aquifers).

Recent water footprint models for products in life cycle assessment also incorporate methods to make the local aspect of water consumption evident even if the consumption of water is distant from the consumer.  In these models, the impact of consumption in arid regions is weighted more heavily given the likely pressures on humans, ecosystems, and the potential for long-term depletion of groundwater aquifers.

Providing data for tracking water flows by process, facility and location for water footprint models is of course an on-going challenge.  However, companies that work internally and with suppliers to develop this data will benefit from a first-mover advantage in gaining insight into sustainability risks in water footprints.

There is manifest value for companies in better tracking of water footprints with attention to the water-energy nexus.  In the context of increasing water scarcity, a likely government and market response will be to raise the price of water to reflect the prospect of shortages.  Companies that have figured out how to save both energy and water will reap cost-saving benefits. With appropriate assessment, companies can identify hot spots for water-energy consumption internally and throughout their value chains.

With a deeper understanding of these hot spots, companies can articulate and act on strategies to save costs and bolster sustainability reputations.  For example, companies can develop a set of priorities for facilities or agricultural operations in which to make water conserving or water recycling investments. Also, new technologies and materials can be reviewed for water-energy related risks. For example, certain kinds of both bio-fuels and bio-based materials are likely to consume many times more water than their conventional counterparts.  Some of the very technologies and materials that we view as “green” may in fact carry significant water-energy related risks.

Several welcome developments herald a time of closer attention to water footprints and related energy risks in the corporate world. One positive step is the initiation and inaugural report of 175 companies in the CDP’s water disclosure program. Another significant step is the 2011 publication of a water footprint assessment manual by the water footprint network following extensive stakeholder consultation. Companies worldwide should seize the day with respect to engaging in water footprints and deepening their understanding of the water-energy nexus in their value chains.

Dr. Vos has more than 15 years of research experience in sustainability science and policy.  As Research Director for CLEAN Agency, Dr. Vos deploys industrial ecology tools to achieve transformative sustainability strategies for leading brands, including Fortune 500 companies. He holds a continuing appointment as Adjunct Professor of Research in the Spatial Sciences Institute at the University of Southern California (USC), and teaches Industrial Ecology in USC’s Department of Industrial and Systems Engineering.  He holds an interdisciplinary B.A. in urban environments with a M.A. and Ph.D. from USC in political science. He is a member of the International Society of Industrial Ecology. For more information about Dr. Vos, visit www.cleanagency.com.