WATER GOVERNANCE — A LONG-TERM CHALLENGE FOR BUSINESS
As discussed in Water Security and Business (Part I of III in this package), businesses face many challenges when addressing water security including: safe access to water, health and sanitation; water quality and quantity; extreme weather events; and water governance. Water governance refers to the political, social, economic and administrative systems in place that influence water’s use and management. Essentially, who gets what water, when and how, and who has the right to water and related services, and their benefits.
While some challenges can be partially addressed unilaterally, effective water governance requires stakeholders within a basin to come together to create sustainable water management plans. One stakeholder cannot drive progress toward reaching a sustainable watershed unilaterally. Thus, any efforts to address water security at scale require multi-sector collaboration, involving the private and public sectors, and civil society.
“More than just a key resource for our business, water is a critical resource for the economic, social and environmental well-being of every community around the world. As the world’s leading brewer, we are committed to being a part of the solution to some of the growing water challenges in areas where we operate — but we know the scale of the global water challenge is bigger than any individual organization or sector, so engaging in collective action is a cornerstone of our approach.” -- Samantha Fahrbach, Global Director, Water & Sustainability Operations AB InBev
Collective action can further public sector priorities and minimize negative impact to watershed health. Collective action can take many forms, but one that is gaining momentum is the implementation of nature-based solutions. Nature-based solutions offer some of the most effective and sustainable ways to improve water security, and they frequently offer additional benefits for communities where they are implemented, including improved agriculture, job creation and climate resilience
UNFORTUNATELY, STRONG WATER GOVERNANCE IS OFTEN LACKING.
With only 10% of global water use destined for municipal consumption (World Water Council, 2014), and the remainder used by agriculture and industry, weak water governance affects all areas of society. Since the largest water users are agriculture and industry – where the private sector dominates – any efforts to address water security issues on a global scale will have to be multi-sector collaborations, with the private sector being a key partner.
Multi-sector collaborations have been pushed as a key response to weak water governance. The problem is that such collaborations are not only hard to create to begin with, but they are even harder to sustain effectively. The existing poor state of water governance in many countries reflects the complexity in addressing the problem.
Barriers to effective water governance include:
1. Lack of incentives to make changes to a complex system
2. Fragmented institutions involved (e.g. water, environment, agriculture, municipal authorities), which increases transaction and costs
3. Lack of political will and public awareness
4. Lack of funding and investment needed to address the scale of the problem
5. Limited or conflicting information on which solutions will truly solve the problem
6. Geographical scope misalignment (e.g. even a small municipality is likely to have a watershed that expands outside its boundaries, with many diverse actors playing a role in either protecting or damaging the available water resource)
7. Responsibility mismatch – those that benefit most from improved water security are not always those in a position to take direct actions to safeguard it
Despite these barriers, there is some good news. Although a World Resources Institute report states that it could only cost 1% of GDP to solve global water crisis and predicts an alarming rise in water stress, WRI also suggests that efficient water policies that overcome water governance challenges could actually contribute to enhanced GDP growth by 2050 (WRI, 2019).
COLLECTIVE ACTION IN PRACTICE
The evidence of successful collective action partnerships can be seen in the outcomes the partnerships produce. Take, for example, the World Bank Group’s 2030 Water Resources Group – a public, private, civil society partnership hosted by the World Bank Group that supports country-level collaboration designed to unite diverse groups with a common interest in the sustainable management of water resources. Check out 2030 WRG's 2020 Annual Report for more info on outcomes, including a cumulative 900 partners investing US $893 million in infrastructure and technology.
Another example is the Water Resilience Coalition, an industry-driven, CEO-led coalition of the UN Global Compact's CEO Water Mandate that aims to elevate global water stress to the top of the corporate agenda and preserve the world's freshwater resources through collective action in water-stressed basins and ambitious, quantifiable commitments. The Coalition has committed to having a net positive water impact, water-resilient value chains, and global leadership to raise the ambition of water resilience. See the Coalition's 2020 Annual Report to see progress made in the Coalition's first year of operating.
Another example is the World Business Council for Sustainable Development - a global, CEO-led organization of over 200 leading businesses working together to accelerate the transition to a sustainable world. It helps make their member companies (200) more successful and sustainable by focusing on the maximum positive impact for shareholders, the environment and societies. Within the water realm, WBCSD focuses on:
1. Valuing water - supporting more companies as they implement internal pricing of water in order to better inform project-level decision-making, and
2. Water stewardship - ensuring companies integrate water into their business strategy, set meaningful targets using suitable metrics, value water appropriately, collectively address shared water risks, raise awareness among their stakeholders, and contribute to policies that support business investments in water-smart solutions.
Learn more about WBCSD's targeted solutions to transform business here.
Companies Investing in Nature: PepsiCo's Protection and Replenishment of Freshwater Sources
Securing water and protecting watersheds in Arizona is a long-term commitment. With support from PepsiCo, The Nature Conservancy is working to find solutions that work for the environment and for farmers and communities.
Learn more about TNC and PepsiCo’s partnership here.
See “Collective Action and Water Funds" (Part III of III of this package) for a deeper look at how a Water Fund may help a stakeholder address collective action in their watershed.
BEYOND COLLECTIVE ACTION
While collective action is an important tool to consider using when addressing water security, it is not the only tool companies should consider. Companies should also look “inside the fence” to see where they can improve their water practices. By improving water efficiency and reducing water consumption, companies can improve their resiliency so that they are less susceptible to outside impacts. Collective action cannot prevent extreme weather events, like droughts. Therefore, if a company can reduce their overall water use, events such as droughts will not have as consequential of an impact on its operations, production and output. When looking “inside the fence,” companies should make their water targets context-based. See “Exploring the Case for Context-Based Water Targets” to explore what proactive, meaningful targets can look like.