Volumetric Water Benefit Accounting: Helping to get to Water Positive
By Paul Reig 23 February, 2022
Key to delivering corporate water positive goals is measuring volumetric water benefits. We sat down with Bluerisk CEO Reig who helped develop the VWBA method to learn more
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Water neutral/ positive is a newly popular concept that various global companies have recently committed to including BP, Facebook, Gap Inc., Google, Heineken, Microsoft and PepsiCo. among others. Volumetric Water Benefit Accounting (VWBA) is used to measure progress and make claims towards meeting the volumetric component of these goals. We sat down with Paul Reig, CEO of Bluerisk, who is one of the creators of the method to learn more.
CWR: Thanks for sitting down with us, Paul. With the recent trend of companies setting water positive goals, we wanted to explore the concept and who better than with one of the creators of a method nearly all of the companies use to achieve the goal. But before we get into that, can you start us off with your thoughts on corporate water positive goals? The good / bad / ugly?
Paul Reig (PR): There’s been an influx of companies exploring water positive targets. This is in part because companies are interested in applying concepts they are familiar with (e.g., mostly from their work on carbon, such as net zero or carbon neutral), and in part because it provides a single target that sounds ambitious and can be communicated easily, both internally and externally.
The value of such a target, to a company and society more broadly, depends on three things:
- how is water positive being defined,
- where across the value chain is it being applied, and
- how is the target being met and maintained over time.
It provides a single ambitious sounding target that can be communicated easily, both internally & externally…
Similar to how companies and governments have set goals to limit GHG emissions, we need to limit impacts on water resources to within sustainable thresholds. However, unlike carbon, offsetting impacts on a global market doesn’t work. To address risks and limit their impacts, companies will need to act locally, within the watersheds they operate and/or source from.
To that end, one could argue that water positive goals and targets can be good if they are designed to:
- address shared water challenges, including quantity, quality and accessibility, with an ambition that is informed by the company’s impacts and scale within a watershed;
- address the most material risks and impact across the company value chain, which may include agricultural raw material sourcing, suppliers, operations and/or consumer markets; and
- drive interventions identified and implemented in collaboration with other watershed stakeholders that deliver watershed outcomes that are maintained over time.
The bad is typically associated with a lack of transparency on how targets are defined, poor stakeholder engagement, or targets that do not address the company’s most material contributions to shared water challenges. Engaging external stakeholders and subject-matter experts during the target setting process can go a long way in mitigating these risks.
…but until there is agreement on what it is & how it’s applied, will see the concept used inconsistently
Lastly, the lack of consistency and standardization in what constitutes a water positive goal is pretty ugly. Until we can agree on what it is and how it’s applied we will continue to see the concept used inconsistently, and in ways that may threaten a company’s reputation, and brand value.
CWR: Now onto the method, Volumetric Water Benefit Accounting (VWBA) that you along with others created in 2019. How does it fit with corporate water positive goals?
PR: As we know already, water is a key input into many business processes across corporate value chains, and is increasingly being reported as a financially material risks in many sectors. Because water challenges are shared with stakeholders across a catchment, reducing water-related risks requires investing in solutions not only within the company’s four walls, but also in the catchments the company depends on.
VWBA is most commonly used to measure progress & make claims towards meeting the volumetric component of water positive goals…
In order to reduce risk and secure long-term license to grow, more and more companies have been committing and allocating capital towards addressing shared water challenges and having a positive impact in the catchment.
Volumetric Water Benefit Accounting (VWBA) provides companies with a consistent approach and set of indicators to estimate and communicate volumetric benefits of any type of water stewardship activity. Because of that, VWBA is most commonly used to measure progress and make claims towards meeting the volumetric component of water positive goals and other water goals more broadly.
CWR: Can you explain what VWBA is exactly, what it does and why you created it?
PR: Sure, in terms of what it is, it’s a method to estimate volumetric water benefits (VWB). VWBs are the volume of water resulting from water stewardship activities, relative to a unit of time, that modify the hydrology in a beneficial way and/or help reduce shared water challenges, and improve water stewardship outcomes.
…specifically, VWBA provides companies with set indicators & calculation methods for each water stewardship activity
In terms of what it does, VWBA provides indicators and calculation methods for each water stewardship activity, communication guidelines, and a three-step process for implementation to help companies estimate VWBs for any project anywhere in the world in a consistent and comparable way. VWB can be applied to any project, from industrial water efficiency optimization and wastewater reuse, to nature-base solutions in the source watershed, to agricultural best management practices.
In terms of why we created it, when we wrote VWBA more and more companies were making public commitments to balance their water use through watersheds and community investments. We saw an opportunity build on the methods that existed to create a common and unified method that was in line with new stakeholder expectations, including the need for activities that address current or projected shared water challenges; to assess the benefit of all types of activities in a consistent way; and ensure that activities contribute to public policy priorities and existing water stewardship initiatives when relevant.
Despite VWBA estimating only volumetric benefits, the approach is designed to ensure, as much as possible, that meaningful societal and watershed outcomes are delivered as well.
CWR: How does VWBA differ from other resources available to companies engaging in water stewardship? Can they be integrated?
PR: There are quite a few tools and resources to help companies screen for shared challenges where they operate and source from (e.g., Aqueduct Water Risk Atlas and WWF’s Water Risk Filter), measure a company’s dependency on water (e.g., Water Footprint Network; International Standard ISO 14046, evaluate water-risk management practices (e.g., Ceres Aqua Gauge), set targets (e.g., enterprise and site level guidance), and disclose water-related information (e.g., GRI 303, CDP Water).
However, VWBA is the only approach currently available to estimate volumetric water benefits in a consistent way. Therefore it’s different than the other resources available, and complements all of them by allowing companies to better understand how their water stewardship projects address shared water challenges and contribute volumetric benefits to the watershed, and ultimately track and communicate progress towards their goals.
CWR: Were there any significant challenges when developing VWBA? Are there any limitations one should know about?
PR: Yes, there were plenty of challenges when we developed VWBA, including many debates over how to consider water quality while using volumetric indicators and if volumetric indicators were appropriate for measuring the benefits of access to water, sanitation and hygiene initiatives.
VWBA cannot measure contributions to improvements in water quality & societal benefits…
…but these must not be ignored
In terms of limitations, there are a few worth flagging, perhaps most importantly that VWBA cannot measure contributions to improvements in water quality and falls short of estimating the societal (i.e. social, economic and environmental) impact of water stewardship. This can be problematic when evaluating investment opportunities solely using VWBs given that not all VWBs will deliver the same societal or business value.
For example, while investing in reducing irrigation water consumption may have larger volumetric benefits than investing in improving access to water or in strengthening local water governance, the latter may ultimately result in larger societal benefits and serve as a catalyst for longer-term and larger-scale watershed outcomes.
These considerations must not be ignored when applying VWBA and are often a focal point of our work with clients. We regularly develop and apply decision-support tools and methods to optimize investments in water stewardship to maximize societal benefits and drive long-term sustained watershed outcomes. Some of these are outlined in our publicly available guidance to implement water replenishment targets.
CWR: Are you able to give some real world examples of how VWBA is used?
PR: Of course, there are many companies using VWBA. For example, Cargill’s approach to setting enterprise water targets informed by local contexts references VWBA as the accounting guidance for tracking its target to restore 600 billion liters, which will ultimately help reducing both risks and impacts in their 25 priority watersheds. Similarly, Nestlé Waters uses VWBA to measure the volumetric benefit of all water stewardship projects and progress towards its goal to regenerate the ecosystems in the areas around each of Nestlé Waters’ 48 sites.
Nestlé Waters which invests US$130mn in their 100 water stewardship projects relies on VWBA
Nestlé Waters is investing USD 130 million to assist the implementation of more than 100 projects. Nestlé Waters relies on VWBA to estimate volumetric benefits and ensure projects reduce both physical and regulatory risk, while strengthening their relationships with local stakeholders and maximizing environmental and social co-benefits.
CWR: How would you like to see the water positive space grow? What’s next? What needs to happen given the urgent water challenges the world faces?
PR: To solve the world’s water problems we need to work hand-in-hand with the largest user and polluter of water – agriculture – to transition towards regenerative practices that help restore and protect natural resources and ultimately make our economy and society more resilient.
We’re working to make sure water positive is applied in ways that address shared water challenges
Moving forward we need goals and targets that help accelerate private sector investments in long-term catalytic activities and innovative business models that pave the way for long-term sustained benefits for both business, and society. I believe water positive commitments can help achieve that.
To help make it happen, we’re working to make sure water positive is defined and applied in ways that address shared water challenges, and their root cause, where it matters the most and drives collaborations with stakeholders on solutions that go beyond volumes to deliver meaningful societal impacts and watershed outcomes.
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