Water Footprint: Why It Matters

By Woody Chan 20 April, 2017

CWR's Chan reviews the water footprint concept & gives 5 reasons why it is important despite criticisms

Economists & LCA scholars have criticised water footprint; but they misinterpret the concept & expect the wrong things
The concept highlights water as a global resource & reveals 'real' embedded water risks in imports & exports
It is policy-relevant: China is acting with consumption caps; water footprint also show some biz models need to change

It has been 15 years since the water footprint concept was conceived. Since then its usefulness and relevance have been widely recognised and from it a burgeoning research field has evolved. China, in particular, appears to have taken to the concept, having produced almost a fifth of water footprint-related research between 2006 and 2015. We have had an opportunity to sit down with the father of water footprint, Prof. Arjen Y. Hoekstra, to hear his views on the water footprint journey so far. See the interview here.
However, water footprint is not without its critics. In particular, economists do not see the need for including water footprint and virtual water in economic analyses, while life-cycle analysis (LCA) scholars mistake water footprint to be an indicator of water use impacts. Despite these criticisms, water footprint does matter and we offer five reasons why below. For Prof. Hoekstra’s own addressing of the concept’s criticisms, see his paper: “Water Footprint Assessment: Evolvement of a New Research Field

1. Water is a global resource

Water footprint urges us to think about indirect and embedded water consumption which may occur at distance. In that sense, water is no longer simply local; but dependent on the global market. In an increasingly interconnected yet water-scarce world, this view is particularly relevant. However, the idea of water as a global resource has received harsh criticism. Detractors argue that water scarcity and water quality are local issues, not global phenomena. Moreover, they maintain that consumers in one country neither should be responsible for, nor can alleviate water scarcity in another country.

More than 380 mn m3 of water is used annually to grow alfalfa in California for export to China

However, in a globalised world with water-intensive products traded internationally, Hoekstra argues that is short-sighted to say that problems should be solved where they occur. For instance, more than 380 million m3 of water is used annually to grow alfalfa in California for export to China as animal feed.  Should Californians be solely responsible for their water scarcity issues and frequent droughts?
Virtual water trade map (2)

China is one of the world’s largest virtual water exporters yet it is also water scarce

China is already looking at water as a global resource. It is one of the world’s largest virtual water exporters yet it is also water scarce (especially in Northern China) and developing rapidly. With such concerns, China is aiming to become more self-sufficient as indicated in its Made in China 2025 plan. Will China become a net importer of water? How will this impact water scarcity globally?

2. Water footprint can be relevant to policy

Another main criticism of water footprint is that the metric should provide an all-inclusive message that tells right way what action needs to be taken. But Hoekstra sees this as an unrealistic expectation. As he stresses, policy recommendations cannot be simply based on one water footprint number. Instead, water footprints need to be put into context and complex water considerations need to be embedded in wider analyses. As such, government policies and corporate strategies can be better informed by a full water footprint assessment; and not be based on one number alone.
As an example, the Dutch Environmental Agency has noted that instead of revealing their overall water footprint in their sustainability reports, companies would do better to report progress made in reducing the separate components of their water footprint in unsustainable hotspots. This way, a wide range of stakeholders can be involved in addressing water problems in hotspot areas.

Water footprint can be incorporated into policy in the form of water footprint caps & permits…

Water footprint can also be incorporated into policy in the form of water footprint caps and permits. A water footprint cap could be institutionalised at the basin or the country scale; which could then be translated into the maximum of water footprint permits to be issued. At a smaller scale, water footprint permits for processes and products could be set up, which would enable companies to formulate water footprint reduction targets for their operations and supply chains.

… China is working on a couple of pilots

Although no company has water footprint benchmarks or reduction targets yet, China is working on a couple of pilots. A water pollution discharge permit system, which can be thought of as a grey water footprint permit, has recently been set up. Water footprint clearly can inform policy when a full assessment and context are provided. See our related reviews below.

Balancing Water for Agri & Coal in ChinaNew Market Tools to Enforce Red LinesWater Permits In ChinaWater-nomics - Trade-offs Along the Yangtze

3. Virtual water transfers and water footprints are “real”

There has also been a philosophical discussion over whether virtual water trade and water footprints are “real” at all. Sceptics hold the view that trade is about real things and not about “embedded” or “virtual” things. This strict neoclassical economic perspective, however, arises because water scarcity is not factored into the price of commodities.
uk external water footprint

75% of the UK’s water footprint occurs outside the country’s borders due to imports

In fact, Hoekstra views virtual water trade and water footprint as vital to understanding the economy of a place. Take the UK as an example. 75% of the UK’s water footprint occurs outside the country’s borders due to imported commodities. Around half of this footprint is unsustainable. What if production from those countries became limited by water scarcity and exports to the UK ceased? Does the UK have enough water to produce these commodities itself? Add Brexit to this and virtual water trade and water footprint certainly become real issues. The “realness” of virtual water trade is further emphasised in “Water Flows In China’s Grid“. For more on trade in China see our reviews below.

Follow the UK & Import WaterTrade-offs Could Help China Manage WaterWater Pollution Could Lead to More TradeChina Water-nomics

4. Water footprint urges change in some business models

Water footprints shows that consumption models reliant on raw materials sourced from water scarce regions may need to change. This encourages companies, investors, governments and consumers to explore how to make their supply chains more sustainable in terms of water use. After all, relying on an unsustainable supply chain involves many risks and cannot last.

Water footprints shows that consumption models reliant on raw materials sourced from water scarce regions may need to change

Business models therefore need to change. Take China’s textiles industry as an example. According to the Made in China 2025 plan, textiles is not of a strategic importance and the industry’s contribution to China’s GDP is decreasing. To remain competitive, brands are taking action with new circular technologies and business innovations to close the loop and reduce their water footprint. A recent ICMM/IFC report has shown that even mining companies are addressing their water use beyond the factory fence. We have written extensively about water risk impacts in various industries. See our reviews on this below.

Buying Electronics Can Pollute Our FutureCan We Build A Clean & Smart Future On Toxic Rare EarthsCan Chinas Milk-Ways ContinueStill Exposed - Fashion Materials in China

5. Water footprint is not limited by LCA approach

Water footprint has also been adopted by certain life cycle analysis (LCA) scholars. With the purpose of integrating water footprint in life cycle assessment of products, LCA scholars have proposed to weight water footprint by water scarcity in a catchment, thus obtaining a water-scarcity weighted water footprint that reflects the potential local environmental impact of water consumption.
Hoekstra believes that this approach is very narrow and product-focused. By trying to include an “environmental impact” element into the water footprint number, water scarcity and consumption issues beyond the catchment level are neglected. LCA scholars’ search for a one-size-fits-all number to determine whether a product is “green” is therefore misleading.
This is not to say water footprint cannot say something about the environmental impact; but it should not be done in just one number. Instead water footprint assessments can consider environmental impact in a sustainability assessment stage that follows the accounting stage. In this stage, other issues such as efficiency of water use and water dependency can be discussed. See more about this in Hoekstra’s paper: “A critique on the water-scarcity weighted water footprint in LCA

Water footprint clearly matters

Despite criticisms, water footprint has certainly proven to be a useful concept and it is heartening to see the continued growth of water footprint research. Water footprint matters and China appears to have recognised this and is looking to reduce its virtual water dependency. Action includes water consumption caps and water permit trading systems. While these do not align exactly with Hoekstra’s suggestions the progress is encouraging.

Stakeholders at all levels can help tackle global water scarcity

Clearly, tackling global water scarcity needs to go beyond research and academic debate. As Hoekstra emphasised in a recent JC-WISE talk in Hong Kong, stakeholders at all levels – from governments to consumers – should all share responsibility. Water footprint matters and we can all take action!

Prof. Hoekstra recommends:
  • Governments need to act by implementing water footprint caps for basins and water footprint benchmarks for products
  • Corporates need to change their business practices and monitor their supply chains
  • Investors can demand better water disclosure and product transparency
  • Consumers can also make a difference by altering their diets


Further Reading

  • Water Footprint: The Road Ahead – Prof. Arjen Hoekstra, the creator of the water footprint concept, talks to China Water Risk about hard truths on the challenges ahead over virtual water trade, water scarcity & over-consumption
  • Fast Fashion: Sucking Aquifers Dry? – Groundwater is over-extracted to grow cotton. As the world’s largest importer of cotton, is it China’s fault? Or is fast fashion to blame? China Water Risk’s Tan explores trends in the growth across major brands, China’s imports & global cotton production
  • Water Flows In China’s Grid – Embedded water is everywhere and that includes electricity. China Water Risk’s Hubert Thieriot on recent findings that show how and where virtual water flows through the grid. Will this change how China’s grid develops?
  • China’s Increasing Use Of Public Environmental Data – China is trying to develop a green credit rating system. Dr Guo Peiyuan, a member of China Financial Association’s Green Finance Expert Committee, expands on publicly available environmental data & how it can help
  • FreshWater Watch: Citizen Science At Work – Earthwatch Institute’s Benita Chick explores how the public can work with scientists to fast-track 11 years worth of water research. Find out what local and global impacts such programmes can make
  • Securing Water For Hong Kong’s Future – The Jockey Club Water Initiative on Sustainability & Engagement (JC-WISE) aims to secure long-term water sustainability for Hong Kong. CWR sat down with Dr Frederick Lee of the University of Hong Kong
  • China’s Hidden Water Flows – Prof Hubacek & Dr. Feng contributing authors of ”Virtual Scarce Water in China” share key findings. Find out why developed but water-scarce regions like Beijing, Tianjin and Shanghai are contributing to the country’s water depletion
  • Water In: Beer, Crisps & Chocolate – Food & drink help create a festive atmosphere in Christmas but how much water do they use? China Water Risk’s Woody Chan looks into the water footprints of beer, chocolate & crisps, the impact on China & potential solutions
  • Water: Habits & Actions – What are your water habits? Even giving up chocolate for one week can positively impact our waters as Patricia Dwyer, Founder & Director of The Purpose Business Group, tells us. See what other changes you can make
Woody Chan
Author: Woody Chan
Woody Chan leads corporate social responsibility and sustainability initiatives at foodpanda, strengthening its commitment to grow sustainably with its ecosystem of riders, merchants, and consumers. As an advocate for environmental sustainability, Woody has also participated in various speaking engagements, from TEDx talks and university seminars to industry forums and panels.
Read more from Woody Chan →