Water Stress Is A Corporate Risk Multiplier — How Can Aquapreneurs Help?
Companies in industry have to pay more attention to the impact their operations have on water quality, its availability, and the protection of freshwater ecosystems. That’s the push coming from major companies’ investors and governing bodies. Water stress has significantly increased risk, yet, through proactive internal as well as collective action, businesses can combat the water crisis.
An emerging group of aquapreneurs — entrepreneurs in the water sector — is helping businesses to address their impact on water resources, starting with substantial amounts of data that show companies can no longer afford to ignore the risks.
Water, you see, is the climate change messenger.
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Water stress is a perennial problem and is projected to worsen with the climate crisis. Alone, it is a powerful risk with the potential to upend socioeconomic and ecological systems. When compounded with other risks, such as those related to food and energy systems, politics, and infrastructure, it becomes devastating.
All industries rely on water in some way. Many companies are just now explicitly acknowledging that water stress poses risks to both their profits and sustainability performance. According to a McKinsey Sustainability analysis, a company’s water footprint can be seen in 4 key areas of its value chain: raw materials, suppliers, direct operations, and product use. Businesses can step up to mitigate water stress and limit not just their own risk but also the risk of all stakeholders, especially when they turn to aquapreneurs for guidance.
A Case Study: Waterplan’s Business Case for Mitigating Water Risk
CleanTechnica has learned about one such aquapreneur, Waterplan, that is attempting to help businesses make a difference in viability through their water stress management. A startup founded in Argentina that is venture backed, Waterplan has helped companies from AWS and Meta to Colgate and Coca Cola to manage key issues around water wherever they operate. The company is very young but off to a fast start.
Water stress — whether too much or too little — is much like the canary in the climate change coal mine. Recognizing the confluence of water and cleantech, we were glad to have the chance to interview Waterplan co-founder and COO, Nicolas Wertheimer. Below is the Q&A.
Are companies as a whole becoming more climate conscious? Is the pressure of fulfilling investors’ positive return the primary rationale for companies to join Waterplan?
Yes. Investor push to more sustainable practices is one of the main drivers, but changes in regulations and business continuity also play a key role in these transitions. We can identify an increase in the water maturity of companies that are just starting on water stewardship and globally there is a clear traction on the water agenda, as the UN Water event (March, 2023) represents.
Please outline a typical (if there is one) risk scenario that a company faces in today’s climate pollution aware era.
One typical scenario is declining groundwater levels, which is a problem occurring globally due to overexploitation of the aquifers, lack of good data and governance, and changes in precipitation patterns that expose companies to disruptions in production capacities (ie. lost days of production and potential closure of operations). Last year, TMSC, the world’s largest manufacturer of semiconductors, had to throttle back chip production during a market shortage because Taiwan was suffering a major drought. They trucked water into the fab.
The Waterplan website describes how infrastructure analyses will indicate how a company’s own facilities are exposed to water risk. How do you guide these companies through negotiations with their suppliers, though, so that goodwill is maintained while the company becomes an advocate for water risk management?
Waterplan provides best available science for each one of the locations of their customers’ operations, and, as advocates, companies can use that information to inform various stakeholders to collaborate towards the best suitable solutions. As an example, users share Waterplan data with stakeholders operating on the same watershed to understand the local risk and act upon collective action solutions, such as investments in nature-based solutions to drive more impact.
How do you get in the door to talk to large companies which have spent years engaging in water management that has worked for them practically and financially?
Companies understand that freshwater challenges such as aridification, groundwater depletion, and changing regulations are accelerating and that being reactive to these challenges is no longer enough. They are eager to try innovative solutions with more integrated and granular data to make better decisions and proactively adapt to the continuously increasing risk.
The Waterplan website says your company will accelerate their transition to a world where companies are incentivized to save more water, abate the discharge of polluting effluents, conserve watersheds, and preserve shared value. What kinds of incentives do you explicitly outline to them?
Reduce the risk of business disruptions, operations closure, growth constraints, etc. According to cdp.net, the cost of being reactive to water risk can be up to 5 times higher than the cost of proactively addressing it.
The Waterplan platform combines operational and local basin data to precisely quantify water risk and a company’s exposure to it. The Waterplan website says the company measures value at risk, using continuously updated models for food and beverage, materials, energy, and other water intensive industries. How do you frame the concept of “exposure” so that a potential client sees participating in Waterplan with long term positive effects?
Waterplan centralizes and streamlines the water data collection process using remote sensing technologies and local data from academic research, company reports, NGO, and government publications.
Waterplan combines data from companies operations regarding their water use (withdrawal, consumption & discharges, costs and revenue related to water) with high resolution data from the watershed, centralized in the Waterplan platform. It provides financial scenarios associated with the most likely water risk scenarios that a potential company might be exposed to based on real cases and models.
With the value at risk quantification, a user can relate potential adaptation responses with specific investments and ROI, and they can continuously monitor the performance of each solution and its impact on the operations and the watershed.
Does this kind of data collection process require specialized software engineers? Because you look for local data, is there a place for local knowledge in addition to academic reports, etc.?
No, it does not require software engineers. We have a data science team.
On top of the fully automated remote sensing risk framework, hydrologic modeling, and facility data integration, Waterplan collects and tags historical data from scientific, watershed authority, utility, industry, agricultural, and government reports of the area. This data varies from area to area and is collected and structured on a continuously updated basis to enhance Waterplan’s risk assessments.
When companies start to see a continuously updated dashboard that measures climate water risks and water footprint, how do they react? To what degree is there an epiphany? Are there indications that companies were aware of risks previously and held off until no alternatives were available?
Epiphany: The WOW moment that a lot of our users experience is when companies can see for the first time their relation to water in a clear and automated way from understanding the risk to the responses. They can see how water is declining on their operational sites, the value at risk indicator showing tens of millions of dollars at risk, and the response’s performance in relation to each risk (ie. how their reforestation efforts to increase aquifers recharge relates to protecting business continuity).
How does using science-backed data and global standards assuage concerns that new clients have when they come on board? What are some features of a Water Security report that might interest the techies in our CleanTechnica audience?
Waterplan platform uses a multi data source approach for its continuously-updated water risk platform.
Waterplan has built a proprietary Risk Framework to track multiple indicators around different types of water-related risk worldwide. The Risk Framework ultimately combines several standard sources like existing flood and drought indices, and importantly, key novel methodologies for analyzing and interpreting like those from NASA satellites such as GRACE.
Large-scale view aquifer indicators, like GRACE, are really monitoring what is known as hydroclimatology (longer timescale changes, like ice melting, groundwater depletion and regional scale flooding and drought) over large regions, and not hydrometeorology (faster timescales, like seconds to weeks, and finer resolution, like meters to kilometers).
By adding higher resolution indicators, such as those for soil moisture, rainfall, and meteorological data, the Risk Framework is setting a new industry standard for science-based risk monitoring.
On top of this, data is collected, structured, and processed on a regional and local scale, to leverage existing reports, scientific and authority studies on topics such as regulations, water recharge, and demand by sector.
Lastly, media articles are collected and classified by topic and negativity tone, to process how the water security theme is being both reported and perceived on the region under analysis.
Final Thoughts
Thanks to Waterplan co-founder and COO, Nicolas Wertheimer for these thoughtful and deliberate responses to our CleanTechnica inquiries.
The future of water is tenuous. More individuals than ever are fighting to strengthen the authority of states, territories, and Tribes to protect their vital water resources. When companies rise up and accept their responsibility for the impact their production processes have on aquatic systems, we make (albeit small) progress toward mitigating the climate crisis.
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