According to a new report, the $65 billion U.S. corn industry faces a range of water-related risks that could disrupt production. Other countries face similar threats. In fact, one-third of the world’s corn production occurs in highly or extremely highly water-stressed regions.
Years of Living Dangerously, a new Showtime series about climate change, turned its lens on how drought devastated the small town of Plainview, Texas in its first episode. In Plainview—and every other drought-stricken place across the United States—a precipitous drop in rainfall is only part of a much broader story. Underlying water stress is one important piece of that complicated puzzle. When drought strikes where baseline water stress is high, it exacerbates regions’ water woes.
As California lawmakers move forward with potential solutions to the state’s current water shortage, it’s important to consider the full context of underlying reasons for California’s water vulnerability.
Our research shows that about 66 percent of the state’s irrigated agriculture—its biggest water user—faces extremely high levels of baseline water stress. This means that more than 80 percent of the available water supply is already being used by farms, homes, businesses, and energy producers. It’s clear that even without drought, the state would be in trouble.
WRI’s Aqueduct project recently evaluated, mapped, and scored stresses on water supplies in the 100 river basins with the highest populations, 100 largest river basins, and 180 nations. We found that 18 river basins—flowing through countries with a collective $US 27 trillion in GDP—face “extremely high” levels of baseline water stress. This means that more than 80 percent of the water naturally available to agricultural, domestic, and industrial users is withdrawn annually—leaving businesses, farms, and communities vulnerable to scarcity.
WRI’s Aqueduct project recently evaluated, mapped, and scored water risks like these in 100 river basins, ranked by area and population, and 180 nations—the first such country-level water assessment of its kind. We found that 36 countries face “extremely high” levels of baseline water stress (see list at bottom). This means that more than 80 percent of the water available to agricultural, domestic, and industrial users is withdrawn annually—leaving businesses, farms, and communities vulnerable to scarcity.
Three major financial institutions and two of the world’s largest food and beverage companies are driving improved water management using data from Aqueduct’s Water Risk Atlas. This list includes: Anheuser-Busch InBev, the leading global brewer; Nestlé, the world’s largest food and beverage company; LGIM, one of Europe’s largest institutional asset managers; one of the world’s largest banks; and one of the world’s largest pension fund managers.
Water risks—such as floods, drought, and increased competition for scarce water resources—are increasingly chipping into corporate bottom lines. The financial sector is taking notice, as companies and investors seek robust and comprehensive data to inform their decision-making processes. Previously, water risk had not been widely incorporated into financial risk assessments or business strategies, primarily because of a lack of awareness of business vulnerability to water risks, poor data, and uncertainty on how to use what information was available.
In January 2013, WRI launched the Aqueduct Water Risk Atlas, a comprehensive water risk mapping tool that highlights water risk hotspots for a company’s direct operations and supply chains. Using a scientific approach, the tool is transparent, robust, and is translated into a set of easy-to-use water risk indicators and maps. Within six months from launch, the uptake of Aqueduct’s data by investors and companies has steadily increased, as has use by governments, academic, and civil society groups.
Some of the world’s biggest global companies, funds, and investors are driving improved local water management, thanks Aqueduct’s information. Investors like LGIM are increasingly using Aqueduct water risk data to inform investment decisions, and multinational industry leaders like Nestlé and AB InBev are adopting Aqueduct’s Water Risk Atlas as a critical component of their corporate water strategies. The popularity of the Aqueduct tool provides strong evidence that:
- The investment community’s water-related risk awareness is growing;
- Investors can become key drivers for improved corporate water management worldwide; and
- Major multinational companies are incorporating water into business strategies to drive action on the ground and reduce shared water risks in watersheds.