Veolia has developed the “True Cost of Water”, a tool that combines traditional CAPEX and OPEX calculations with analysis of water risks and their financial implications.
Over the coming decades, projected population and economic growth levels will, locally, push the stress on water resources to the limit. Freshwater availability could become the main growth limitation factor for cities and industries.
The development of water footprint indicators, such as Veolia’s Water Impact Index, has provided insight into the vulnerability of an activity in relation to water resource management. In the current economic context, decision-makers are looking at an even more pragmatic and straightforward metric: dollars.
The True Cost of Water tool takes into account:
- Direct water costs: Capital & Operational Expenditures of water infrastructures,
- Indirect water costs: existing costs that are usually not attributed to water, e.g. water-related legal costs,
- Financial implications of water risks: costs arising during the lifetime of a plant that were not anticipated
These elements are organized in four categories: operational (such as water shortages), financial (such as increase in cost of capital), regulatory (such as obligations to meet ecological standards) and reputational (such as temporary loss of license to operate).