Characterizing Water-Related Challenges and Identifying Collective Action Areas



This appendix details how to characterize your water-related challenges and identify the needed action areas. This characterization builds from exploring the following questions:

  • What are your priority water-related challenges, and how might they be changing over time?
  • What underlying deficiencies in the water management system have led to the challenges?
  • What additional drivers or factors, if any, contribute to the challenges?
  • Which collective action interventions (action areas) will best address the problems you have identified?


Question 1: What are your priority water-related challenges?

Your point of departure for this analysis will typically be an operational site or a group of sites in a specific water-supply area or catchment. Generally, you first delineate the geographic area of interest and identify the water challenges that will have the greatest impact on your production (or supply chains), whether they are directly related to the company or indirectly related through the neighboring community or ecosystems. You can distill the multitude of issues and concerns into generic types of water-related challenges potentially facing your company, your suppliers, or the local communities where you operate. Although the water-related challenges your company will face are unique, some common challenges are described below.

Water overallocation: An imbalance between the water available from rivers, aquifers, and impoundments and the requirements of users may manifest as physical limitations or conditions in a catchment or water system (and may be exacerbated by climate-hydrological variability). This imbalance can be due to inadequate governance in the regulation of water allocations, ineffective management in the control of water use, or poorly planned water resources infrastructure. The impact on your business (or suppliers) is that water supplies may be more prone to drought restrictions, competition between users may increase, the cost of supply may escalate, and longer-term allocations (licenses) may be reduced.

Water supply unreliability: Inadequate access to, unreliable provision of, or poor quality of water from a supply system stems primarily from inadequate development, poor maintenance, or an ineffective management of water storage, distribution, or treatment infrastructure. This is most often associated with a lack of financial or human resources in the water utility, municipality, or water district responsible for the water supply. The impact on your business is that the reliability of supply to you, your suppliers, or local communities will deteriorate or may even cease altogether, with periods of no or little water supply.

Water quality deterioration: Deterioration of the quality of surface water or groundwater associated with waste discharge or surface runoff from urban, industrial, or agricultural areas can pose significant environmental, social, or economic challenges to downstream users. This situation is primarily associated with a failing waste treatment infrastructure or the inadequate management (control) of waste loads. The impact on your business is that your water supply deteriorates to unacceptable levels, there are increased treatment requirements or costs associated with your discharge, or you (or your suppliers) may be targeted as a polluting industry.

Flood damage: Flooding can cause loss of life and damage to houses, factories, agriculture, mining, and supporting infrastructure (water, energy, transport, and telecommunications). Flooding is driven by hydrological variability exacerbated by changing climate, the degradation of natural ecosystems, insufficient infrastructure, or inadequate risk management response and recovery procedures. The impact on your business is that production and distribution may be disrupted by damage to your plants, your suppliers’ facilities, or the broader infrastructure upon which you depend.

Ecosystem degradation: Degradation of aquatic ecosystems (such as wetlands, riverbanks, and estuaries) in a catchment affects biodiversity and the flow attenuation and contaminant assimilation services that natural water resources provide. It may be caused by changing water flow and quality, as well as a direct mechanical disturbance of these systems. It is usually related to inadequate infrastructure planning and operation, the ineffective management of water use, or insufficient controls of land management practices. The impact on your business is that you may either be linked with activities that have an impact on ecosystems or be associated with a degraded catchment, which may have consequences for the perception of your business or the licensing of your activities.


Question 2: What underlying deficiencies in the water management system have led to the challenges?

Underlying your water-related challenges will be some deficiency in infrastructure management or financing, water program implementation (e.g., the enforcement of requirements), or catchment governance. These deficiencies are typically the focus of collective action efforts, requiring you to carefully characterize and understand the dimensions of these failures.

Infrastructure management, operation, and funding: The adequate construction and effective operation of water infrastructure are critical for water supply and waste disposal, both for companies and local communities. The typical challenges are growth rates that outstrip the system capacity in the short to medium term; financial mechanisms for the capital development and ongoing operational costs of the infrastructure; the technical capacity to support the planning, operation, and maintenance of the infrastructure; and the awareness of maintenance requirements to ensure effective operation in the long term.

Water planning, management, and pricing: Proactive management of water resources—in terms of their protection, use, development, conservation, and pricing—is critical to the equitable and sustainable use of these resources for businesses, communities, and ecosystems. Deficiencies in this area may result from: 1) inappropriate planning, 2) inadequate financial resources, 3) a limited human capacity to conduct activities such as technical assistance and inspections, 4) unreliable or insufficient information to support decision making, 5) a lack of awareness on the part of water users about their impacts, or 6) ineffective or perverse incentives to guide the actions of people and businesses.

Water governance and regulation: The policy, legal, and regulatory framework, together with the political will and institutional arrangements governing water management and stakeholder engagement, are critical to the equitable and sustainable management of water resources and water services delivery. Poor governance manifests in corrupt, inconsistent, or unpredictable decision making around the use of water and the management of natural resources. Deficiencies in this area can include inadequate resource protection requirements (e.g., a lack of water quality standards), insufficient user allocation schemes, or a lack of administrative procedural requirements assuring equitable access to decision making.


Question 3: What additional drivers or factors, if any, contribute to the challenges?

Water system pressures that translate into direct company or community water challenges can emerge from a mix of drivers that affect underlying natural resource systems. When you are fortunate enough to have a well-functioning water system active in your catchment, natural resource system impacts will be avoided or managed in a manner consistent with economic and societal requirements. Deficiencies in the system, however, allow these impacts to become direct water-related challenges. Identifying the drivers of natural resource changes is critical to your ability to establish clarity within your company and with potential collective action participants as to the nature of the water challenges you collectively face.Although the drivers of natural resource system changes can be quite complex and highly interrelated, they can be simplified under most circumstances into four key areas.

Rapidly changing economic development: Increases in economic development activity in a catchment—whether it be industrial, commercial, or agricultural—can place additional demands on existing water resources, or create ecosystem or direct water quality impacts. These activities create a shift in the balance of water resource quantity and quality that may strain the time, quality, and quantity aspects of existing and new water user requirements.

Shifting demographic patterns: Population growth or changes in preferences for living contexts can affect the demand for water supply, the locations where water infrastructure can be built or operated, and the consumer base available to support infrastructure development and maintenance. These shifts can lead to increased competition among water users for available supply, place substantial additional demands on existing infrastructure, or—in the case of out-migration—leave infrastructure stranded without an adequate fee base.

Climate variability: Water infrastructure capital assets are long-lived, and therefore typically built within the context of long-term demand and supply analyses. These analyses have depended substantially on historical trends and future expectations. Increased climate variability places pressure on the assumptions used for infrastructure development and operation—sufficient alterations in underlying water resource conditions to make existing supply arrangements and infrastructure may prove inadequate to meet existing or anticipated demands.

Shifting social norms and expectations: The goals of water resource management have evolved over time, and these changes have tended to create greater pressure on underlying water resources. Increased expectations for ecosystems and species maintenance, higher levels of ambient water quality, and greater accessibility to supply have asked more of both the underlying water resource quality and quantity, and of the water resource management system.


Question 4: Which collective action areas will best address the problems you have identified?

The preceding assessment of water-related challenges, water system deficiencies, and underlying natural resource challenges should indicate the types of collective action areas that you may want to consider in managing your water risk or proposing your stewardship intent. The figure below embeds the list of 12 CEO Water Mandate Water Action Hub collective action areas into the context of water-related challenges and water resource management system deficiencies. As you can see, certain collective action areas will tend to be responsive in specific contexts, while others apply more broadly across water challenges and water system deficiencies.

Connecting Action Areas to Challenges and Underlying Failures

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