“Water scarcity” refers to the volumetric abundance, or lack thereof, of freshwater resources. ”Scarcity” is human-driven; it is a function of the volume of human water consumption relative to the volume of water resources in a given area. As such, an arid region with very little water, but no human water consumption would not be considered “scarce,” but rather “arid.” Water scarcity is a physical, objective reality that can be measured consistently across regions and over time. Water scarcity reflects the physical abundance of fresh water rather than whether that water is suitable for use. For instance, a region may have abundant water resources (and thus not be considered water scarce), but have such severe pollution that those supplies are unfit for human or ecological uses.
Tool developers and organizations differ on whether environmental water requirements should be included when assessing water scarcity. Water Footprint Network (WFN), for example, takes environmental water requirements into consideration when calculating water scarcity, whereas other organizations do not and rather opt to address environmental water requirements in their respective approaches to characterizing water stress.
“Water stress” refers to the ability, or lack thereof, to meet human and ecological demand for fresh water. Compared to scarcity, “water stress” is a more inclusive and broader concept. It considers several physical aspects related to water resources, including water availability, water quality, and the accessibility of water (i.e., whether people are able to make use of physically-available water supplies), which is often a function of the sufficiency of infrastructure and the affordability of water, among other things. Both water consumption and water withdrawals provide useful information that offers insight into relative water stress. There are a variety of physical pressures related to water, such as flooding, that are not included in the notion of water stress. Water stress has subjective elements and is assessed differently depending on societal values. For example, societies may have different thresholds for what constitutes sufficiently clean drinking water or the appropriate level of environmental water requirements to be afforded to freshwater ecosystems, and thus assess stress differently.
In contrast to other available water risk assessment tools, WFN’s Water Footprint Assessment Tool does not use the term “water stress”, but instead identifies water-challenged regions (sometimes referred to as “hot spots”) based on water scarcity, water pollution levels, benchmarks, (i.e., where the water consumption can be reduced or avoided for reasonable cost) and indicators of social equity. It can be understood that these hot spots are areas experiencing water stress.
“Water risk” refers to the possibility of an entity experiencing a water-related challenge (e.g., water scarcity, water stress, flooding, infrastructure decay, drought). The extent of risk is a function of the likelihood of a specific challenge occurring and the severity of the challenge’s impact. The severity of impact itself depends on the intensity of the challenge, as well as the vulnerability of the actor.
Water risk is felt differently by every sector of society and the organizations within them and thus is defined and interpreted differently (even when they experience the same degree of water-related challenges). That notwithstanding, many water-related challenges create risk for many different sectors and organizations simultaneously. This reality underpins the notion of what some refer to as “shared water risk” that suggests that different sectors of society have a common interest in understanding and addressing shared water-related challenges. However, some contest the appropriateness of this term on the basis that risk is felt uniquely and separately by individual entities and is typically not shared, per se.
“Water risk for businesses” refers to the ways in which water-related challenges potentially undermine business viability. It is commonly categorized into three inter-related types:
- Physical – Having too little water, too much water, water that is unfit for use, or inaccessible water
- Regulatory – Changing, ineffective, or poorly-implemented public water policy and/or regulations
- Reputational – Stakeholder perceptions that a company does not conduct business in a sustainable or responsible fashion with respect to water
“Water risk for businesses” is also sometimes divided into two categories that shed light on the source of that risk and therefore what types of mitigation responses will be most appropriate:
- Risk due to company operations, products, and services – A measure of the severity and likelihood of water challenges derived from the way in which a company or organization, and the suppliers from which it sources goods, operate and how its products and services affect people and ecosystems.
- Risk due to basin conditions – A measure of the severity and likelihood of water challenges derived from the watershed/basin context in which a company or organization and/or its suppliers from which it sources goods operate, which cannot be addressed through changes in its operations or its suppliers and requires engagement outside the fence.
If a company experiences a high degree of water-related risk due to company operations then it likely will seek to implement water efficiency, wastewater treatment, and other improvements in its own facilities or through its suppliers in response. However, if a company primarily experiences risk due to basin conditions then such operational measures would likely not sufficiently address this risk. Because of this, the company might instead seek to collaborate with other interests in the basin to advance an aspect of sustainable water management (e.g., by facilitating water use efficiency in other water users or supporting infrastructure improvements).
The Relationship Between These Terms
Water scarcity is an indicator of a problem with water availability where there is a high ratio of water consumption to water resources in a given area. Water availability, water quality, and water accessibility are the three components that are comprised by water stress. As such, water scarcity and additional indicators (e.g., biological oxygen demand, access to drinking water) can be used to assess water stress. Scarcity and stress both directly inform one’s understanding of risks due to basin conditions. Companies and organizations cannot gain robust insight into water risk unless they have a firm understanding of the various components of water stress (i.e., availability, quality, accessibility), as well as governance and other non-water-related-stress factors.