Water-related risks are increasing around the world with growing urgency driven by the pressures of population and economic growth and extreme weather. The urgency is reflected in the strengthening of water-related polices and reporting standards.
Policy initiatives and reporting standards
A key example is the European Union’s (EU) January 2025 launch of its Water Resilience Strategy whose aim is to strengthen water security across the union by ensuring access to water for citizens, nature and the economy, while also tackling catastrophic flooding and water shortages (Water Europe 2025).
Another example is Blue Peace Central Asia 2.0, a regional initiative to improve transboundary water cooperation between Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan with aims to enhance water resources collaboration and management across the region (Blue Peace Central Asia). A further example is the World Bank-led Cooperation in International Waters in Africa (CIWA) programme whose aim is to address water insecurity, climate impacts, biodiversity loss, poverty, cross-border tensions and gender inequality across Sub-Saharan Africa. There are other initiatives around the world to improve resilience against water risks through international cooperation.
CDP Water has had a significant influence in persuading companies to address water stewardship more comprehensively. Water is also an important component of new regulatory sustainability reporting standards: European Sustainability Reporting Standards (ESRS) and those of the International Sustainability Standards Board (ISSB).
Water-related risks
The principal physical risks are scarcity, pollution and flooding. Regulatory and reputational risk can also be important. It is essential to know whether a site is vulnerable to one or more of these risks and what should be done to remove or mitigate them.
Risk assessment is not only about knowing if you have a problem today, but to be forewarned and prepared for approaching risks.
An operational site must address two main components of risk:
Risks TO its own business
Risks FROM its activities that may impact the surrounding nature or communities
The main geographical area of interest is the surface water catchment, most commonly based on the river basin. The groundwater catchment is often also important, especially for groundwater users. Surface and groundwater catchments interconnect to varying degrees. Knowing how much they do is important to the risk assessment.
Extending water knowledge to the catchment is known as going ‘beyond the fence’.
The priority is to understand the risks TO the site. A limitation on water volumes or quality, may prevent business growth, and at worst, will lead to closure. Floods can be very costly and at worst can destroy a business.
Water stewardship principles require a business to know what water-related risks it presents to other water users, communities and nature. The drivers for this are:
‘Doing the right thing’ as a good corporate citizen.
Complying with regulations to protect water resources and nature
Sustainability reporting requirements (voluntary and/or regulated) requiring examples of positive actions.
Sustainability scoring and ratings from external organizations (eg. CDP Water) whose results can impact on ranking in sustainability indices (eg. Dow Jones Sustainability Index), customer/consumer confidence and business value (share price).
Reputation – linked to all of the above
Water Scarcity
Water scarcity is commonly the most challenging and potentially most limiting risk. Mitigation measures include using less water through efficiency and re-cycling. Finding alternative water sources may be an option, such as drilling new water wells or relying more on municipal supply.
However, there may come a point where a catchment has no more capacity due to collective over-abstraction and/or climate-driven scarcity. This problem can rarely be ‘fixed’, except by very expensive, and often environmentally controversial, inter-basin water transfer schemes.
Examples of water scarcity risk:
Long-term: Total annual water withdrawals from a catchment exceed the natural recharge so that river flows and groundwater levels continually decline.
Periodic Drought: A period of below average rainfall – sometimes multi-year - whereby water resources become temporarily but seriously depleted.
Seasonal: A significant dry season occurs each year, which can be critical to farmers or businesses without seasonal adaptability.
Economic scarcity: A country or region suffers from underinvestment in water supply infrastructure whereby supply is under capacity and/or unreliable. This can occur even in water abundant regions with poor governance and investment.
Water Quality
Water quality can be a risk anywhere and often the greater risk in regions of water abundance.
For most industrial uses, poor quality water can be treated to meet requirements however strict they may be. The exception is natural mineral waters and springs waters, which under European regulations (and in many other regions) must be naturally safe to drink without treatment.
Poorer quality source water requires a higher level of treatment at greater cost. A gradual deterioration in quality results in increasing treatment costs.
Source water quality must be regularly measured to detect any gradual or sudden changes that could breach the treatment system. This is especially important for food and beverage manufacturers where any contamination of product could impact consumer safety, result in prosecution, costly product recalls and a damaged reputation.
Those with private water sources should be aware of activities nearby that present a potential pollution risk in the event of a leak or spillage, such as fuel filling stations and chemical manufacturers.
Regarding risks FROM a site (to nature and communities), operations must ensure wastewater is treated and managed responsibly, and that fuels and chemicals are stored and transported with protection against spillage and leakage. The site also needs to be aware of risks from potentially contaminated run-off and drainage.
Surface water bodies are most vulnerable to sudden contamination from pollution events. Groundwater is less vulnerable to sudden events but once polluted is much more difficult and slower to be cleaned – if even possible.
Examples of water quality risk:
Surface water or groundwater contaminated by a spill of chemicals or oils
Groundwater contaminated by agricultural chemicals (pesticides and fertilizers) flushed through the soil into underlying aquifers
Heavy rains wash oils, chemicals and tyre rubber off roads into rivers and streams
Untreated (or inadequately treated) wastewater is discharged into rivers or allowed to seep into groundwater. Many regions still have poor or non-existant wastewater regulations or inadequate enforcement of them.
Sewage. Old and poorly maintained sewer collection systems leak into underlying groundwater.
Saltwater intrusion. High pumping rates pull seawater into coastal aquifers or pull deep saline water up to overlying freshwater aquifers.
Some aquifers have naturally high levels of harmful minerals such as arsenic, cadmium, fluoride or NORMs (naturally occurring radioactive minerals).
Floods
Floods can directly impact a business premises. In addition to human safety, they can put a business out of action for long periods or even permanently. The cost of repair can be high. Where a site is not directly impacted, floods can still impact business continuity by interrupting the movement of goods and employees and by damaging infrastructure of roads, bridges, power supply, etc. Floods may also cause pollution of water sources, including groundwater when water wells are flooded..
We cannot control the weather that causes floods. But humans can influence their impacts, mostly through changes in land use, as in the examples below. Any site on a river’s natural flood plain is at risk.
Examples of flood risk:
Building on natural flood plains pushes flood waters to other areas – upstream or downstream – previously at low risk.
Channeling and straightening rivers removes the slowing effect of meandering bends.
Removal of woodland and other vegetation in the upper catchment results in higher run-off rates, thus filling the rivers more quickly.
Hard surfacing. The roads, car parks and buildings of urbanization remove the infiltration capacity of the ground resulting in higher run-off rates into drains and rivers to increase flood flows.
In summary
Around the world we face increasing pressures on the three principal physical water risks of scarcity, quality and flood. Water risks are mostly locally relevant with the river basin or catchment as the main geographic scope. Addressing these pressures will require collaboration and partnership between businesses and other catchment stakeholders. Responsible water stewardship requires a business to address not only the risks to itself but to understand and proactively mitigate the risks it may impose on others in the catchment including other business, communities, agriculture and the natural environment. Effective water risk management starts with commitment and knowledge followed by context based actions, ideally through partnerships, to remove and mitigate risks with a view to achieving a water secure world.
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