2. 1975 2000 2025 2025 Worsening scarcity m3/person/year Extreme Scarcity <500 Scarcity 500-1,000 Stress 1,000-1,700 Adequate 1,700-4,000 Abundant 4,000-10,000 Surplus >10,000 Ocean/ Inland Water No Data Data and maps by
3. Water risks Product use Production process Supply chain Point of impact: Type of risk: Physical Commodity price spikes Regulatory (+ litigation) Water quality standards constraining power generation Reputation Competition with social uses
4. Why AQUEDUCT? 1 1 1 1 1 1 1 To create public-private action for more efficient and sustainable water management Water prices too low to signal scarcity & encourage investment, conservation Better information required to act strategically on water risks Water resources poorly governed
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6. United Technologies (UTC)Sector Sponsors Lead Sponsors Data by
First image: prices don’t reflect scarcitySecond image: Governor Sonny Perdue of Georgia “praying up a storm” at the end of 2007 when the Southeast was hit by a long droughtThird image: existing and future power plants in India increasingly exposed to water scarcity. Differences between NTPC, Tata and Reliance. Caution: actual exposure depends on (fresh) water dependency and regulatory framework too!
Best possible consortium of funders, with undisputed leaders of key sectors: Goldman Sachs as arguably the world’s savviest manager of financial risk GE as a pre-eminent provider of solutions to the emerging water crisis Coca Cola as the frontrunner on measuring and mapping business water-related risk, as well as the owner of what probably is the best water risk database Bloomberg as the dominant market information platformWe invite other companies to join as sector sponsors or supporters. In addition, we will mobilize a variety of organizations to participate in the working groups for the further development and validation of Aqueduct. These partners need not be funders although we expect them to be credible and active contributors of water and sector expertise. Funders in the “gold” and “silver” categories will be recognized as lead and sector sponsors with their logo. “Bronze” supporters and partners will be acknowledged with their names.
The Framework – these are the risk indicators that Aqueduct aggregates to create a comprehensive picture of water risk that goes beyond physicalAccess & GrowthCost RisksDisruption potential
Aqueduct is essentially a vast database with local and localized data, all from official, public sources. The water risk database will be protected but in the public domain.The raw data are normalized and converted to risk scores.
The Tool – the prototype we’ve developed uses the local information in the database to create high-resolution water risk maps.Since different audiences have different priorities/risk profiles, the user has a set of sliders that can adjust the weights of the indicators in the framework. To aide with comparability, there are also pre-determined weighting profiles for specific sectors or users. The red highlight indicates that that particular indicator is exceptionally high-risk for the area selected.
The aqueduct tool calculates overall risk scores based on the data points for each indicator, and the weights assigned to the indicator by the user, and uses that to generate a high-res risk map of relative water risk levels.Users can input facility or project locations and get all of the specific data Aqueduct used to generate the risk calculation for that spot.
Any time you aggregate data, there is a risk that you are actually losing information instead of adding it. Aqueduct addresses this through transparency – the user can create maps that aggregate all the indicators, or choose to map a customized sub-set of indicators, or even an individual indicator. This is a map of just a single indicator – in this case the water reuse index, which estimates how many times water is used and discharged to estimate pollutant levels and the need for treatment.
Aqueduct is a massive investment in water-related information to the extent that it has a bearing on financial and/or economic performance. The chief output of that effort – an online, interactive database and mapping tool– will be available to all. Companies can use the information to target investments to reduce their water dependency. However at one point the proper response to water risk is not one of inside-the-fence improvements of water use efficiency, but rather of outside-the-fence efforts at improving water security. Being efficient just doesn’t cut it when the river runs dry. Improving water security – through better water policies, smart planning and infrastructure investments – is by definition a collective effort, and one in which industrial water users have a big stake because of the economic value they derive from a reliable, efficient and sustainable supply of water. Business also has a critical contribution to make as to the development and deployment of “hydro-smart” technologies and business models, in addition to its financing of the necessary investments. One example: in parts of the world – the Yellow River being one of them – new industrial plants are required to free up their own water demands, and invest in efficient irrigation technologies. The key in moving from private interest to public good is the broad definition of financial and economic water risk, encompassing “soft” socio-economic and governance factors. Although success is not guaranteed, the premise is that bringing to the table a “new” constituency with an inclusive view on “water risk” is a powerful lever to meaningful water policies and prices that at least reflect the increasing scarcity of the indispensable resource.
Aqueduct is NOT for facility-level water management or project finance. It is a database and suite of tools for strategic and portfolio-level decision making (more on that later).Valid question: isn’t Aqueduct too crude for “real” decisions while too complicated for portfolio decision making? Valid answer: for site-specific risk assessments there’s a ton of tools already (e.g. EIA, GEMI). What has been missing is information and tools to elevate environmental risks and opportunities from the micro to the macro level in a way that is both credible and transparent. Aqueduct is a response to the big challenge of how to make environmental risk matter for portfolio decision-making by company management, asset managers, governments.As for its complexity: Aqueduct works at different levels of aggregation, from single-metric, top-level water risk to 20+ individual risk drivers. Thus it can hide complexity where it’s not needed, without losing information for those who need to know what exactly drives water risk in a particular region.
As above: improving internal water use efficiency (at increasingly high costs) won’t cut it if the river runs dry. Then it’s external engagement with competing water users and water management authorities and stakeholders that matters just as much, if not more.
Many models produce one-off snapshots. Aqueduct includes climate change and economic growth in its hydrological model (up to 2030), and tracks and extrapolates regulatory and socio-economic trends for the next 5 years. It is this forward-looking quality of Aqueduct that makes it useful to company strategists and investors.
This is the question most asked about Aqueduct: who will use it and to what intended effect?Again, it is important to emphasize the strategic /portfolio use of the database and applications by companies, investors and governments, as indicated.