Understanding and Responding to Impacts on Watersheds, Ecosystems, and Communities



The actual social and environmental impacts associated with corporate water use/discharge
can differ drastically depending on the local water resource context (i.e., physical availability of water, in-stream flows, community access to water, etc.). A company using a certain amount of water per day in a large, water-abundant system will typically have less severe (if any) impacts on issues such as community access to water or ecosystem function than a company using the same amount of water in an arid region, or one where water is not equitably allocated to meet basic human and environmental needs. Impact assessments ultimately aim to understand and quantify the ways in which business activities may affect issues such as community access to water, human health, or the in-stream flows required for healthy ecosystems. A successful impact assessment provides companies with a factual basis for prioritizing management practices and tailoring mitigation/stewardship strategies to address the impacts deemed most important.


Limitations with water-related impact assessments

The process of understanding and quantifying a company’s water-related impacts is quite complex, primarily due to the many criteria that can comprise the local water resource context and the difficulty in quantifying some of them, particularly the social aspects. Corporate impact assessments might be thought of as having two main components: 1) measuring and assessing the local water resource context, 2) overlaying and normalizing corporate water use/discharge within that local context. Both are wrought with challenges.

Measuring and assessing the local water context
Determining the local water resource context can be complicated and in many instances is reliant on subjective evaluations/or priority setting. For instance, determining “water scarcity” requires accounting for not only the physical abundance of water in a watershed, but also the quality of that water, the environmental flow requirements of the system, and the ability of people to access and/or afford adequate water services, among other things. The phrase “social and economic water scarcity” has been coined in order to express the idea that water systems can be considered “scarce” even in the presence of abundant physical supplies due to inadequate potable water and/or wastewater infrastructure.

Examples of criteria used to assess local
water resource context include:

  • Total amount of water physically available for use in that system;
  • Total proportion of that physically available water currently being used;
  • Allocation of water being used and its ability to meet demands (i.e., basic human needs, the environmental flows);
  • Quality and safety of that water;
  • Ability of local communities to afford adequate water services.

Because of the range of criteria a company could use to assess local water context, the resulting impact assessments are highly variable. As such, developing a comprehensive, yet efficient, system for measuring the local water resource context (i.e. physical, social, and economic scarcity) is critical to assessing impacts; however, a harmonized and objective approach to doing so does not currently exist.

Overlaying corporate water use with local water context
Once criteria for assessing local water context are established and measured, companies must compare these data with their corporate water use/discharge in order to gauge associated impacts. In the process of quantifying impacts, corporate water use and discharge data are adjusted or “weighted” to reflect local physical, social, or even economic water conditions. These scores allow companies to compare the impacts of various water uses in different watersheds and thus prioritize which business activities, facilities, and production stages are addressed. For instance, such characterization allows 20,000 gallons of water from a water-scarce region to be quantitatively shown as having greater relevance than 20,000 gallons of water from a water-rich region.

This process of quantifying impacts inherently requires a high degree of subjectivity in determining what constitutes a negative impact. For instance, a methodology must determine what constitutes sufficient in-stream flows, what constitutes basic human water needs, or at what point water is polluted to the extent that it is not available for use. Further, companies sometimes wish to compare different types of impact categories (i.e. impacts to in-stream flows, basic human needs, water quality, etc.), which adds an additional layer of complexity and subjective determination. While such comparison can be quite useful in prioritizing management responses, they are not scientifically valid: comparing impact categories requires a subjective assessment of what types of environmental and social activities provide the most value.


Summary of Accounting Approaches to Water Use-Related Impacts


Click each box to learn more about each method’s approach to impacts

As discussed, the WFN’s corporate water footprint (WF) calculation itself does not attempt to account for the context of a watershed (e.g., water availability, allocation among users, etc.) or quantify or otherwise assess a company’s water-related impacts. That said, the green-blue distinction within the WF itself does provide important information on the context in which a certain volume of water is used and that can help inform a cursory understanding of impacts. However, without broader watershed context data, a company is unable to assess key issues such as where and how its WF may infringe on other uses.

The WF calculation has been intentionally developed to provide a volumetric, “real” WF number that avoids any impact characterization as an inherent component. However, acknowledging the usefulness of understanding how water use volumes affect the condition of a watershed and its users, the WFN includes a “water footprint sustainability assessment (WFSA)” as part of a broader WF assessment. Once practice matures, WFSAs will overlay water use data with indexes that reflect the local water resource context in order to assess the WF in terms of its environmental, social, and economic sustainability. WFSAs will consider not only the location of water use, but also the timing. Few WFSAs have been conducted in practice, however many companies have expressed the need for such a method to be further developed.

The WFN is currently in the early stages of developing the Water Footprint Decision Support System (WFDSS), which will be the primary tool through which companies can conduct WFSAs. The WFDSS will be an interactive, open-source-software-based system designed to help decision makers compile a range of raw data to identify and solve waterrelated problems. The WFDSS will allow entities conducting WFs to assess: 1) the condition of the watershed in question (i.e., local water resource context); 2) the impacts of the entity’s water use on that watershed; and 3) the appropriate response strategies to mitigate those impacts. WFN hopes such assessments will soon become a critical component of water footprint assessments worldwide.

Emerging company practice can already shed light on how companies are using WF to identify and manage water impacts. For example, some food and beverage companies have adopted the concept of “net green”* water—the difference between water evaporated from crops and the water that would have evaporated from naturally occurring vegetation. This allows companies to better understand their contribution to water stress in a particular area and how much water would be in the system if the company were not there. In particular, it highlights the opportunity costs associated with the company’s green and blue WFs as compared to other possible uses in the watershed.

The blue and green dimensions of a company’s WF also provide direction on how impacts can be managed. To mitigate blue water impacts and associated risks, companies might improve their water use efficiency or engage with affected parties to improve their access to water services. In contrast, the impacts and mitigation strategies for green water use are typically related to land use change rather than infringement upon other water uses. These land use changes—for instance the conversion of forests to arable lands—clearly affect ecosystem function (e.g., habitat and biodiversity), as well as communities’ access to resources (e.g., timber). As such, companies may consider the distinction between green and blue water useful in helping them understand the types of impacts their production system might have on surrounding ecosystems and communities. However, at present, the WF community offers no guidance on how to interpret or value the different impacts of green and blue water use.

The handful of companies interviewed for this analysis indicated that while the individual WF components (especially the blue and green WF) were quite useful for informing management decisions, the total WF—the blue, green, and gray components aggregated into one number—is not as meaningful a number in terms of understanding a company’s impact on water resources. This is based on the notion that there are substantially different types and severity of impacts associated with the blue and green WF and the fact that the gray WF, which is a theoretical rather than actual measured volume, should not be aggregated with the other two.

Several LCA studies have been published that use inventory data as the basis for evaluating the impact of water usage. These impact assessments are calculated by overlaying corporate water use and discharge data with characterization factors that reflect the local context (e.g., the respective water availability/ scarcity and degree of human capacity to access water for each watershed).

There is currently a flowering of techniques for water-related impact assessment within the LCA community. The Swiss Ecological Scarcity Method 2006 developed by Frischknecht et al. was among the first to use regional conditions (i.e., relative water stress) as a characterization factor, thus allowing for water use to be assessed within a local context. The relative water stress levels—as determined by the percentage of the total renewable water resources consumed—were each given a weighting factor that could be used to characterize water use volumes, thereby serving as a rough proxy for relative impact.

Mila I Canals et al. (2009) identified two primary pathways through which freshwater use can impact available supply: 1) freshwater ecosystem impact and 2) freshwater depletion, in order to determine which water uses need quantification. They suggest surface and groundwater evaporative uses, land use changes, and fossil water as the critical water flows to be measured within the inventory phase.

Pfister et al. (2009) further developed methods for assessing the impacts caused by freshwater consumption. This study assessed impacts to: 1) human health (i.e., lack of water for drinking, hygiene, and irrigation); 2) ecosystem quality (i.e., damages to ecosystem functioning and biodiversity); and 3) resource availability (i.e., depleting water stocks) using a further-developed water stress index similar to that used by Frischknecht et al.

Most recent studies have been facilitated by the work of Pfister, who has produced global maps of water scarcity at the 0.5 minute scale (approximately the 1 km scale). The scale runs from 0 to 1 and includes both the effects of precipitation/evapotranspiration (the equivalent of WFN’s “green” water footprint) and the effect of human withdrawals (approximating the “blue” water component).

Ridoutt and Pfister (2010) have introduced the concept of “liters H20-equivalent” which can be likened to the CO2 -equivalents seen in carbon footprinting. This enables a consumer to quantitatively compare the pressure exerted on freshwater systems through consumption of a product depending on local water context.

On top of this analysis, different authors have added:

  • Human health impacts due to drought/malnutrition, in units of DALYs per liter of water;
  • Socio-economic impacts due to the local ability to pay for water quality improvement;
  • Biodiversity loss at dams and due to groundwater extraction.

A summary of the different methods can be seen at Kounina et al. (2009). In addition, a handful of LCA studies have now been published that attempt to use the volumetric measurements provided by water footprinting (i.e., blue-green WF) as the basis for an impact assessment. In doing so, a number of LCA authors have suggested redefining/augmenting the WF from a purely volumetric measure to a weighted index that results from multiplying volumes by impact characterization factors (Pfister et al. 2009; Ridoutt et al. 2009). While such a result allows for regionalized assessments and company evaluation of issues that may inform product design, WFN argues that such weighted and aggregated single numbers are not useful from a WRM perspective, as they can obscure temporally and spatially explicit data and also because the functional unit-relative results no longer provide data in real volumes. WFN believes it is useful to keep the volumetric measurement and characterization steps separate so as to accommodate the different (i.e., noncorporate-focused) applications of the WF methodology.

One limit to the utility-of-impact assessment within LCA lies in the lack of harmonization regarding models with which to evaluate available data, though better consensus is expected as the science of LCA continues to advance.

The WBCSD Tool in no way attempts to assess how corporate water use in a particular watershed or country may lead to social or environment impacts, thus it not considered an impact assessment tool. To the degree to which the Tool helps companies identify water-stressed regions, it can serve as a rough proxy pointing companies toward regions where they are likely having their most significant impacts.

Both GEMI Water Sustainability Tool and Planner provide a set of qualitative questions and information that is meant to help companies identify, characterize, and prioritize potential water related impacts, particularly those caused by wastewater discharge/pollution. They do not provide a methodology through which companies can quantify impacts, but rather a compilation of information that can help them better understand what those impacts may be and how they might eliminate them. The Planner does so by directing companies to assess the degree to which changes to external supply and management could affect their access to this water and the impacts of their uses. The Tool focuses primarily on building corporate understanding of their sources of water (e.g. their relative water stress) and the ways the company impacts those sources.

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