Primary Functions:

  • Access actionable information to help businesses understand and quantify water-related risks in financial terms

Purpose: Measure & monitor (Operations) Understand water stress (Context) Water strategy (Strategy)
Scope: Corporate Facility / River Basin
Type: Tools

Resource Overview:

The current cost of water does not account for real and future risk, making it hard to rationalize business decisions to reduce use. By applying a risk-based premium to today’s water costs businesses can make more informed decisions to against constraints to growth. The Water Risk Monetizer is a publicly-available online tool that provides actionable information to help businesses around the world understand the impact of water scarcity to their business and quantify those risks in financial terms to inform decisions that enable growth.

The Water Risk Monetizer estimates the value of water scarcity in monetary terms. It looks at the amount of water available at a specific location, the amount of water used/needed by a facility, additional demands on the supply of water and the impact of a facility’s water use on the watershed. The result is a water risk premium that quantifies the full value of water scarcity to a facility in monetary terms.

The tool is designed for use by a range of business decision makers, including:

  • Business site decision makers (corporate level) – individuals and teams setting enterprise business strategy (supply chain, operations, quality, engineering, sustainability)
  • Facility and operations managers (site level) – individuals and teams responsible for improving performance at the site level
  • Business consultants – third party experts helping to shape corporate strategy and decision making
  • Nongovernmental organizations – organizations influencing global water stewardship practices

The information provided by the Water Risk Monetizer can be used to help businesses better understand water risks and the potential cost implications of water scarcity at a particular facility. The data provides valuable information to help assess different business models, determine how water costs or scarcity may affect growth plans and help inform business goals.

Introducing the Water Risk Monetizer

Update – August 2015: Revenue at Risk model

To calculate revenue at risk, this new assessment estimates the value of the revenue that could potentially be lost at a facility due to the impact of water scarcity on operations. The tool uses a revenue-at-risk model to estimate the amount of water available to the facility – its “share” of total water available to industry water users in the basin based on the facility’s contribution to the local economy.

Because water is a finite resource that is shared by many users in a water basin, the amount of water that should be available to a facility may be less than what a facility needs.

The amount available also could change over time, as water scarcity increases or as a local economy grows (the tool forecasts revenue at risk over three, five and ten years). The revenue-at-risk model compares the estimated amount of water a facility requires to generate revenue (cubic meter per USD of revenue) to the facility’s share of water in the basin if water were allocated among water users based on economic activity (contribution to basin-level GDP). If more water is required than the basin share of water allocated (as determined by the model), then a proportion of the facility’s revenue is potentially at risk.

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Developed by: Ecolab USA, Trucost