NAVIGATING BUSINESS RISKS AND OPPORTUNITIES IN THE ERA OF WATER SCARCITY

“We are on the verge of a planetary water crisis” , announced He?di Sevestre at this year’s edition of Change NOW.?

At We Don't Need Roads we have been working with our experts, ahead of the market, on offers and methodologies to support the private sector in the integration of water as part of their mitigation strategies. Here is why:

Water, the essence of life, is becoming an increasingly scarce resource. Despite covering approximately 70% of the Earth's surface, only about 0.3% of the world's water is freshwater and accessible for human use in rivers and lakes (with snow and ice holding two thirds of freshwater in ice caps, ice mountains, sea ice…).?

Within that slight fraction of freshwater that is accessible, it is not distributed evenly across our world. Access to water is considered as a human right, and yet, currently, 1.1 billion people worldwide lack access to safe drinking water, while 2.7 billion face water scarcity for at least one month per year. If left unaddressed, these figures are projected to worsen, with two-thirds of the global population potentially facing water shortages by 2025. By 2030, it’s forecasted that water demand will exceed supply by 56%. ?

Not only is freshwater essential for vital domestic uses such as drinking, cooking, washing, and other household needs, freshwater ecosystems are vital to maintaining the entirety of our ecosystems on which we all depend, by supporting aquatic life and preserving biodiversity, providing habitats and serving as a water source for numerous species.?

Our water systems are crucial to sustain ecosystems in order to support the needs of our growing global population, and yet are increasingly stressed.?

• In April 2022, we exceeded the planetary boundary for freshwater use.?
• Our lakes, rivers and wetlands are drying up or are becoming too polluted to use.?
• Due to deforestation, trees can no longer absorb water through their roots, and release it through transpiration, leading to decreased rainfalls and altered precipitation patterns.?
• With urbanization, concrete and asphalt surfaces replace natural vegetation,? preventing water from infiltrating the ground, causing floods and erosion.
• Climate change’s rising temperatures lead to the melting of glaciers, increased evaporation and changing precipitation patterns, inducing extreme events such as droughts and floods.?
• And so on…

Our agricultural sector is the largest water consumer. We use about? 70% of the water available for agriculture and cattle feedstock. To produce one slice of bread, fourty litres of water are needed. For one cup of coffee, 140 litres. For one cup of rice,? 340 litres.?

Water is an essential component for the survival and success of any business, regardless of its sector of activity. 70% of the world’s freshwater use and pollution is directly linked with the food, chemicals, fashion, energy, industrial and mining industries. For instance, a pair of jeans requires 11,000 litres of water. That represents the equivalent of 3 weeks of water consumption for a family of four people.

?

The cost of inaction is greater than the cost of action. Water scarcity results in higher risk and potential financial losses for companies due to disruptions in operations and supply chains, as well as higher expenses and price fluctuations. According to CDP data, a significant majority (69% ) of publicly listed equities, acknowledge being exposed to water-related risks that have the potential to significantly impact their business operations. The estimated maximum value at risk due to these water risks amounts to a staggering US$225 billion.

?

Due to water shortages and scarcity, agricultural land is compromised. Farmers in water-stressed regions see their crop yields decreasing due to the lack of quantity of water or the quality of water being too poor for irrigation. According to the FAO , over 50% of crop and livestock production losses in Least Developed Countries and Middle-To-Low Income Countries are due to drought (34% of overall loss) and flooding (19% of overall loss).

?

Over the past 10 years the price of water has increased by over 60%. For companies which heavily rely on water in their value chains, such as the cosmetics industry for which products typically contain anywhere from 60% to 85% of water , this increase in price is quite significant, and may encourage some beauty brands to develop water-free products.

US water inflation over the past 10 years

Additionally, water scarcity may heavily limit the success of carbon credit systems. Droughts and water scarcity hinder the growth of vegetation, such as forests and other carbon sinks, which play a crucial role in sequestering carbon dioxide from the atmosphere. Limited water availability can lead to reduced photosynthesis and growth, ultimately impacting the carbon sequestration potential of ecosystems.

We have built our business models and production processes around the idea that water is an abundant and cheap resource. This hypothesis being challenged, business models will have to transform themselves. That is why, water management will have to be - and as of now - central and fully integrated to one’s business sustainable strategy for it to ensure its value chain resilience. There are many levers available; now, all you have to do is to decide to take action and pull them. By implementing proactive water management measures, businesses have the opportunity to restore their margins, save money and establish a robust groundwork for addressing future challenges.?

So what can we do ? How can companies rise to the challenge to reduce their water consumption ? To tackle the water crisis effectively, we believe companies must prioritize the following actions:

1. Educate yourself and your teams on the importance of water for yourselves as individuals, your business, and society as a whole
2. Calculate your water footprint to assess your impact and calculate your risks based on your reliance on water ecosystems.?
3. Find levers of improvement : areas of reduction and preservation?
4. Work collectively to build targets and action plans together?
5. Disclose your data : many regulations are increasingly requiring transparency on companies’ carbon footprint, but also their impact on biodiversity, and water ecosystems (CSRD).?

With a global deficit in water supply that is inevitably bound to increase, it becomes imperative for businesses to address water risks, and transition towards more water-resilient business models.?

WE’VE GOT YOU COVERED…

Methodologies and experts are still a rare thing on the market for businesses to address this water problem.

At We Don’t Need Roads, our team of experts provides valuable guidance throughout the process of water footprint assessment. We can evaluate the company's water footprint, assess its water usage & dependency, including direct and indirect sources, analyse any associated pollution (using standards like ISO 14046) and help the business set targets and comprehensive & pragmatic action plans to reach them.

Our innovation studio is even able to explore and ideate markets, trends, technologies, laws… to bring more ideas on the table: innovative concepts, alliances, partnerships…

Give us a call!