MEASURING WATER USE IN A GREEN ECONOMY - UNEP

Box 4.2 Added value of the water footprint: new dimensions for better water
management
Consumers: When considering water management, consumers usually focus on their direct
water footprint (i.e. home water use). However, a consumer’s indirect water footprint is
generally much larger and should therefore be the focus of analysis (Hoekstra et al., 2011).
Consumers can reduce their footprints by changing their consumption patterns or selecting
products that have a relatively low water footprint and small impacts. This requires, however,
that they have the information to make that choice. Since such information is generally
unavailable, it is important that consumers demand transparency from businesses and
regulation from governments.
Companies: Companies have traditionally focused on water use in their operations, not in their
supply chain. The water footprint takes an integrated approach, revealing that most companies
have a supply chain water footprint that is much larger than their operational water footprint. As
a result, companies may conclude that it is more cost-effective to shift investments from efforts
to reduce their operational water use to efforts to reduce their supply chain water footprint and
the associated risks (Hoekstra et al., 2011). Water footprint thinking encourages businesses to
incorporate a consumptive water-use perspective in parallel with conventional water withdrawal
indicators. It also shifts the focus from meeting emission or discharge standards to managing the
grey water footprint using ambient water quality standards from the ecosystem standpoint.
Investors: A business’s failure to manage its water footprint and formulate appropriate
responses may translate into various forms of business risk (Levinson et al., 2008; Pegram et al.,
2009; Morrison et al., 2009; Morrison and Schulte 2010; Barton, 2010): physical, reputational,
regulatory and financial. Risk can actually turn into opportunity for companies that proactively
respond to the challenge of global freshwater scarcity. Furthermore, addressing the issues of
freshwater scarcity and pollution should be seen as part of corporate social responsibility.
Governments: Traditionally, countries formulate national water plans by evaluating how best
to satisfy water users. Although countries consider options both to reduce water demand and
to increase supply, they generally do not include the global dimension of water management.
They therefore seldom consider explicitly options to save water by importing water-intensive
products. In addition, by focusing on domestic water use, most governments are unaware of
the sustainability of national consumption. Many countries have significantly externalised
their water footprint without determining whether imported products are the cause of water
depletion or pollution in the producing countries. Governments can and should engage with
consumers and businesses to work towards sustainable consumer products. National water
footprint accounting should be a standard component of national water statistics, supporting
the formulation of national water and river basin plans that are coherent with national policies
on, for example, the environment, agriculture, industry, energy, trade, foreign affairs and
international cooperation. Water footprint and virtual water trade accounts are a relevant
input into various governmental policy areas, such as national, state, river-basin or local water
policy; environment; agriculture; industry/economic policy; energy; trade; foreign policy and
development cooperation (Hoekstra et al., 2011).
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