Posts tagged ‘water’
This week NAEM’s Upper Midwest Local Networking Group met to discuss regional water management challenges and to explore best practices from around the world. We caught up with speaker David Crisman, Principal of EHS Management Associate LLC, to learn about his research on water management approaches in Australia.
GT: Why did you begin research water management approaches in Australia?
DC: In the case of Australia, what has been the most fascinating to me is the Murray-Darling River Basin. It’s 14 percent of the country area-wide, six percent of the water that falls on Australia falls in the basin. It’s something like half of all the agriculture comes from the basin. Just to give you an idea, 44 percent of the water consumed in Australia goes to agriculture, so you’ve got fairly substantial land area, not so big of an input (because the only input is rain) and a huge water take. And now even in a good year less than half of the water makes it to the ocean. So it’s like our Colorado River.
In Australia, the individual states control resources, so the federal government said, “Wait a second. We’ve got three major states drawing water and as the federal government, we need to say what is the environmental water needed just so it makes it to the ocean so we have aquatic habitat, we have tourism, we have those benefits that we don’t normally think about, rather than throwing it on a rice field.
I thought this was a really good example to look at because as industry people, we don’t think of water coming in; our requirements are always on the water going out. And in the industry, I used to work in (specialty chemicals), water quality was important. If you start taking too much water out of this area, you start having saline problems, you start having acidification problems. Even if I had a plant in this area, you could be saying, “Is it drinkable?” but also, “Is it even useful in a manufacturing setting?” We don’t think of the upstream side. We think of the wastewater side.
So I was really trying to get into that particular issue by taking a look at Murray Darling. I think the cutting-edge thought was what they came up with, which was to create a water market. They said, “The Basin has a finite amount of water and we’ve got to balance this whole water usage and it doesn’t matter if you’re taking it from a well or you’re taking it directly from the river, we’ve got to figure out that balance. It’s a commodity, there’s going to be years it’s in surplus, years that it’s deficient, so how do we, as Australia, buy water to lower the allocation within the Basin so there’s enough water for fish, for flow and all those other things?”
It’s a good technical problem.
GT: What are some of the guidelines of the water market Australia established?
DC: There’s permanent trades that going on – I can actually sell you my rights as a property owner—and there are allocation trades—I can sell you my annual take because it’s low this year. So if the tomato farmer decides it’s more worth his while to sell his allocation this year, he can give it to the guy who owns the vineyard. So what is the value of water? There are also regulations in place to ensure that the way you use the water on your land doesn’t impact others. So the legal framework is critical, too.
GT: How can those lessons be applied to water management in the Upper Midwest region?
DC: Everything has a yin and a yang. So the fact that we have constant supply is really great. We may never think about water coming into a facility, but when we turn the tap, we will have water. The negative is ‘Have I really been thinking of the cost?’ And will that price for water increase? And will it become a variable cost for me? Meaning that one year I will pay x, but two years later it may be 5x or something more. For businesses, it’s probably easier to plan on price than to deal with a disruption. So that’s probably an overall positive.
The next thing is quality. If I can get to a consistent quality grade it’s going to mean less disruption, less upset for my manufacturing process. But that again boils down to price. And then you start to see intangible benefits and impacts. People can’t come to work because their neighborhood is on fire. If you can have consistent supply, you can perhaps deal with drought situations. And of course there are lifestyle impacts in Australia because if you look up Australian water restrictions online you’ll see pages of instructions of when you can water your lawn, do your laundry. That’s at a more personal level but it could reach industry as well.
GT: How close do you think we are to seeing some of the approaches being used in Australia to be applied to the U.S.?
DC: It’s hard to say because it sometimes seems like if we want to focus on an issue, we need to have a crisis. Last year we were dealing with too much water. I think the question of quantity has to be driven by a drought. And certainly the Texas situation if it continues may end up pushing a lot of buttons because those Great Lakes look awfully tempting.
David Crisman is the Principal at EHS Management Associate. As the former EHS Director for a global, specialty chemical company, he is well-aware of the challenges facing today’s EHS managers. He continues to study trends to deal with water supply and quality issues throughout the world.
To learn more about NAEM’s Upper Midwest Local Networking Group, please visit http://www.naem.org/?LNG_Upper_Midwest
The good news for companies in the early process of embracing a corporate water strategy is that heightened awareness of the issue has resulted in greater availability of data, tools, and best practices.
Although much of the most innovative work continues to be guarded due to competitive advantage, there are many leading companies and/or sector examples to learn from. From my experience, I would point to the beverage industry and most notably the Beverage Industry Environmental Roundtable as a prime example.
Having accepted water as a core business issue, how do companies develop a corporate water strategy given the fact that comprehensive, standardized methodologies may be years away? Successful companies have followed a common process:
Step 1: Know your water sources, use, consumption and discharge for all operations. Benchmark operations, set targets and drive efficiency. “Walking-the-walk” is a prerequisite for a successful corporate water strategy.
Step 2: Establish a cross-functional water team to define a viable three-to-five-year water stewardship vision that is measurable and aligned with overall business goals.
Step 3: Complete a baseline water risk assessment to understand and compare local watershed conditions beyond the four walls of each facility. Examine risks and opportunities including physical, regulatory and reputational.
Step 4: Develop, implement and maintain local water management plans (e.g., location or site specific) based upon Step 3 results. Incorporate performance monitoring systems and issue escalation processes.
Step 5: Engage with supply chain partners to understand your company’s broader water footprint, impact and opportunities.
Step 6: Strategically engage with external stakeholders through partnerships, reporting and other related efforts.
A word of caution: Water issues are highly localized and dynamic. Successful companies have addressed the following types of questions to apply their resources to greatest advantage:
- Are your facilities among the largest water users in a given community? How does your efficiency compare to peers and other local industries?
- Can water issues limit growth aspirations?
- Could individual sites face water restrictions in the next 5, 10, or 15 years? If so, are there viable back-up supply and/or treatment options?
- Can you meet current and future regulatory limits? What level of investment may be required and when?
- How intense is media or political attention to water in communities where you operate?
- Can you justify water-related business expenditures and strategically allocate resources?
Water risks are a reality for every business. What are some of the questions you think companies should ask in developing their water management strategy?
Nick Martin is an Associate with Antea Group. He will discuss ideas for developing a water strategy during NAEM’s webinar on “Water Risk Management” on June 21.
The message from stakeholders and investors is clear: Companies are expected to govern and begin disclosing water-related business risks. Historically, most companies have been able to simply acknowledge water as one of many important business issues. Much has changed in the past few years, with water positioned as a competitive issue and expectations trending towards quantification of water-related financial liability.
However, growing disclosure pressure isn’t the same as providing pragmatic “how to” for characterizing and quantifying water-related business risks. Moreover, characterizing the risk is only the beginning. The real challenge for companies is how to strategically prioritize risks and opportunities, build necessary competencies, and drive local water management plans. Why is water such a challenging, and potentially paralyzing, business issue you ask? Consider these factors:
- Nearly every activity, product, or business transaction uses water in some form – yet, there is no substitute;
- Water is both a local and temporal issue with potentially widely varying conditions (e.g., floods and droughts can occur in nearly the same location);
- Water, in general, is difficult to bound, measure, transport, and define access rights;
- It’s challenging to justify water-related strategic or capital investments based upon traditional ROI calculations;
- Cross-functional participation and solutions are required, including engagement up/down a company’s supply (value) chain; and,
- It is widely considered a human right, placing it in the sweet spot for media, political, and stakeholder attention.
What does this mean for companies that have yet to fully embrace water as a core business issue? There are two basic options:
- Start or accelerate a water strategy soon and possibly stay “ahead of the curve” thus determining your own pace of implementation; or
- Do the Basics – hedge your bets that water will not directly impact your company and expectations will stagnate. Given that water appears to be a resilient issue, companies that hedge could face monumental leaps to catch up to peers and meet stakeholder expectations in the near future, especially given the complexity and location-specific aspects. The cost of inaction could be significantly higher than self-paced implementation.
So, the first question many companies ask is how fast do they need to move? Well, the direct impact of water issues on any given company depends upon a range of variables including sector, size, brand recognition, and public image. First, let’s look at what we are seeing:
- Publications – recently published materials appear to be trending towards standardized buckets of water risk: Physical; Regulatory; Reputation; Investment. This has translated the business risks into simplified, real world concepts for a wide-range of stakeholders and investors to more easily comprehend and formulate inquires.
- Surveys – increasing number of non-governmental and supply chain surveys, including the second annual CDP Water Disclosure Project questionnaire, have significantly increased transparency of existing corporate strategies and knowledge gaps.
- Corporate Reporting – more companies are reporting water metrics, as well as water footprints, product life cycle assessments, and intensity indicators.
- Initiatives – water-focused NGOs and collective action partnerships have increased exponentially in recent years ranging from advocacy to standard development.
Collectively, these actions have provided investors and stakeholders with confirmation that 1) water is in fact a real business and investment risk; 2) a majority of companies are not proactively addressing the issue; and 3) water can be effectively managed, quantified, and reported on as demonstrated by the small number of corporate leaders in this space.
Nick Martin is an Associate with Antea Group. He will present ideas for developing a water strategy during NAEM’s webinar on “Water Risk Management” on June 21.