The Next Generation of Corporate Water Benefit Accounting Is Here

Companies are increasingly committing to robust water goals that aim to reduce their negative impacts on water resources. While water efficiency goals were once commonplace, the last decade has seen progressive companies begin to look beyond their facility walls to address shared water challenges, such as limited supplies, in the catchments where they operate, source materials or sell products. These leading companies have begun investing in projects designed to address such challenges while also helping communities and catchments adapt to increasing water risks; like, for example, building infiltration wells that help recharge aquifers.

This shift toward actions that address shared water challenges demanded a new standard to assess companies’ impacts in a meaningful and comparable way. WRI, along with partners at Quantis, LimnoTech and Valuing Nature, developed the Volumetric Water Benefit Accounting (VWBA) approach in 2019 to meet this growing need. It provided companies with a programmatic and robust methodology for calculating the volume of water resulting from stewardship activities that modify the hydrology in a beneficial way and/or contribute to solving a shared water challenge. Since its publication in 2019, VWBA has become the unofficial industry standard for companies that invest in water stewardship activities. 

Since then, water challenges have escalated across the planet, and corporate water stewardship efforts have continued to evolve. Ambition is increasing, scope is expanding, innovation is growing, and collaboration is commonplace. Many companies leading on water stewardship are well into the implementation phase of their volumetric water strategies, and some have also established water quality goals.

As corporate water strategies continue to evolve, and as companies move from making commitments to implementing projects on the ground, new guidance is needed on:

• Selecting and vetting water stewardship project opportunities.
• Tracking, reporting and communicating the benefits of water stewardship projects.
• Quantifying benefits with new and updated indicators and quantification methods for various project activities.
• Evaluating the water quality benefits of water stewardship activities.

To respond to this changing landscape, WRI partnered with LimnoTech, Bluerisk and Bonneville Environmental Foundation to produce a new generation of Volumetric Water Benefit Accounting (VWBA 2.0) and with LimnoTech and The Nature Conservancy to develop first-of-its-kind guidance on Water Quality Benefit Accounting (WQBA).

Introducing Volumetric Water Benefit Accounting (VWBA) 2.0 and Water Quality Benefit Accounting (WQBA) 

The new VWBA 2.0 and WQBA guidebooks, launched this month, provide corporate practitioners and project implementers with a clearly defined six-step approach for identifying water stewardship activities and quantifying, tracking and communicating their volumetric or water quality benefits. Both offer voluntary, principle-based and non-prescriptive guidance.

Companies and practitioners may use one or both of these guidebooks depending on the kinds of water stewardship projects they implement. Some activities (such as leak repair) will only generate volumetric benefits; others (such as nutrient management) will only generate water quality benefits; still others (like planting cover crops) have the potential to generate both volumetric and water quality benefits, which could warrant employing both VWBA 2.0 and WQBA to capture their full impacts.

Although the applicable activities and methods differ for VWBA 2.0 and WQBA, foundational principles for understanding catchment context, identifying credible projects, tracking and reporting, and making credible claims are consistent across both guidebooks. These principles are informed by decades of practitioner experience and industry best practice and are captured in the following six steps: 

Step 1: Understand the local catchment context. Learn about the local hydrological, political, social and governance conditions of the catchment. Identify shared water challenges and relevant stakeholders.

Step 2: Identify and evaluate potential project activities and partners. Evaluate potential projects against six eligibility criteria and ten selection considerations to ensure that their expected volumetric and water quality benefits are credible and aligned with the company’s goals.

Step 3: Quantify the water benefits of project activities. Select a volumetric or water quality objective, associated indicator and appropriate method for quantifying the project’s benefits. Use conservative assumptions and appropriate temporal scales and avoid double counting. 

Step 4: Plan and agree. Understand the cost and duration of the activity and align on a water benefit attribution plan with any additional project sponsors to ensure each party can make a credible claim. Develop tracking and reporting plans.

Step 5: Implement project and track progress. Execute project activities and document volumetric or water quality benefits.

Step 6: Confirm and prepare for water benefit communications. Confirm that volumetric or water quality benefits to be claimed are: (a) delivered by activities that meet the project eligibility criteria; (b) aligned with company goals; (c) representative of the activity’s status and duration; and (d) representative of the company’s contributions to the activity.

Quantifying Volumetric Water Benefits

The VWBA 2.0 guidebook explains how to measure water benefits in a clear and practical way. It is built on key principles, like setting clear goals, using straightforward but reliable methods, making conservative estimates, choosing the right timeframes and making sure water volumes are not counted more than once.

Volumetric water benefit accounting can be applied to a variety of urban or rural activities that have the potential to address shared water challenges. The type of project activity should align with the selection of appropriate objectives, indicators, and methods to evaluate and quantify its volumetric output.

Table 1. Common water stewardship activities with volumetric water benefits

^{Note: The classification above includes the most commonly implemented water stewardship activities by corporate water stewardship practitioners at the time this guidebook was written. This list is not comprehensive, and organizations are encouraged to also consider other activities that respond to local shared water challenges and relevant partners’ priorities.}

^{Source: Authors.}

The VWBA guidebook provides a high-level overview of common benefit accounting methods that can be used across numerous activities. VWBA 2.0 updates methods which were included in the previous guidance while also introducing new ones that are commonly used today:

1. Inundation method: Estimates the volumetric water benefits for activities that create, restore or protect areas where inundation is the primary hydrologic function provided or protected.
2. Instream Habitat Volume method: Estimates the volumetric water benefits for activities with the primary objective of creating, restoring or protecting a volume of water for water-related habitat.
3. Nonpoint Source Pollution Reduction method: Estimates the volumetric water benefits of activities that improve water quality by avoiding or controlling nonpoint source pollutant loading. 

For example, the Instream Habitat Volume method could be applied to activities where a primary objective is restoring water flows (such as through barrier removal, dam reoperation or side channel reconnection) to aquatic habitats for threatened or endemic species. The volumetric water benefit would be based on the volume of water provided for habitat. It is calculated as the difference between with- and without-project volumes, using the annual average or, if only certain periods matter ecologically, the volume during that timeframe treated as the annual amount.

Quantifying Water Quality Benefits

Water quality benefit accounting can be applied to a variety of agricultural, urban, landscape, sanitation and legacy contaminant projects that aim to address sediment, nutrient, bacteria, temperature and metal pollution. 

Table 2. Common water stewardship activities with water quality benefits

^{Note: (a) Several agricultural activities listed can be classified as regenerative agricultural practices (Ranganathan et al. 2020).}

^{Sources: Compiled by authors. Based on Reig et al. 2019; and Brill et al. 2021.}

The WQBA guidebook provides seven recommended calculation methods along with guidance on selecting the appropriate option:

1. Pollutant Reduction Efficiency method: Estimates reduced pollutant loading by determining a representative unit area loading rate for the drainage area before and after project implementation.
2. Simple Method: Applies a runoff coefficient specific to certain land types and pollutant-specific event mean concentrations to estimate post-project improvements.
3. Universal Soil Loss Equation method: Empirically models soil erosion as a function of rainfall, slope, soil erodibility and other factors.
4. Treatment System method: Estimates pollutant load or concentration reductions between the system inlet and outlet using a mass-balance approach.
5. Water Quality Monitoring method: Measures pollutant concentrations at the inlet and outlet of a structural practice or in a receiving water body.
6. Modeling method: Models changes in nutrient loads or concentrations using simple or mechanistic field- or watershed-scale modeling in a variety of land-use settings.
7. Region-specific methods: Estimate or model water quality benefits using locally established and credible tools or models.

For example, if eutrophication is a primary concern to a company, then excess nutrients would be selected as the pollutant of concern and pollution load reduction the indicator. A company may choose to invest in a project to plant vegetated buffers to reduce nutrient runoff to local waterways and then use the Pollutant Load Reduction Efficiency method to calculate the nutrient load reduction from the vegetated buffers.

Get Started

With these two resources, practitioners can feel confident in the integrity of their water stewardship investments. The principles provide a foundation upon which companies can identify investment-worthy projects and make credible claims. VWBA 2.0 and WQBA are useful for companies at any stage of their water stewardship efforts — whether they’re just beginning or already have established practices. There is no requirement to have used VWBA 1.0 before. Use of these resources will also increase the likelihood that any project outputs — whether volumetric benefits, water quality benefits or both — not only reduce water risks to the company, but also generate sustainable and positive outcomes for the broader catchment.  

VWBA 2.0 and WQBA are available for download now.

Volumetric Water Benefit Accounting 2.0 was supported by Amazon Web Services, Apple, Cargill, The Coca-Cola Company, Constellation Brands, Diageo, Ecolab, Google, Meta, Microsoft, Nestle Waters, PepsiCo, Procter & Gamble and Starbucks. 

Water Quality Benefit Accounting was supported by AB InBev, Amazon Web Services, Cargill, The Coca Cola Company, Google, Meta and Starbucks.