A new report from global professional services provider PwC is warning that water challenges are presenting increasingly high risks to business, with the growing gap between supply and demand moving water to the top of the business risk agenda.

The Organisation for Economic Cooperation and Development (OECD) is projecting that at the current rate, demand for water will increase by 55% globally by 2050.

The increase will mainly come from manufacturing (+400%), electricity (+140%) and domestic use (+130%). The World Bank has separately cited a 40% global shortfall between forecast demand and available supply of water by 2030.  PwC says that when competition from agriculture to feed growing populations is added in the gap between supply and demand, this results in “very challenging consequences.”

This means that water has moved to the top of the business risk agenda - according to the World Economic Forum’s Global Risks Report 2015 - and is a major concern for society as a whole. With business sharing water with communities, industry, farmers and other users, securing the right quality and quantity of water at the right time is set to become a serious production and reputational issue.

PwC’ has produced a new report  ‘Collaboration: Preserving water through partnering that works’ which explores the risks for business associated with water and how to collaborate with stakeholders to achieve a common goal – to share water successfully.

The risks for business from having too much or too little water, water that is either too dirty or too expensive are increasing. It is also a critical factor in the supply chain - whether it used to cool, heat and/or clean as well as an ingredient. It can also cause disruption in storage, damaging stock and imposing detrimental impacts on distribution. Even Financial Services is touched by water, investing in and insuring a business with an unknown or unquantified exposure to water risk. 

Introducing the report, Malcolm Preston, Global Sustainability Leader at PwC commented:

“Continued effective water management is becoming more complex and costly for business.  Identifying and managing the potential material risks both in direct operations and in the supply chain - for example, pollution, flooding, irregular or reduced supply, governance, regulation, climate change, disaster threat, reputational issues etc. - is an important step to managing the bottom line and avoiding sudden costs."

“Ultimately, securing water will come down to effective collaboration with other users in the water basin and when stakeholders come together, even with the best intentions to work together, they often have hugely differing perspectives and demands. PwC recognises the complexities of collaboration and are able to offer an independent perspective.”

According to PwC, collaboration across a shared water basin will become a necessity to reduce or avoid production problems or reputation issues. The report says that water has a place on the risk agenda for every business, either as a direct operational issue or in the supply chain.

Business needs to have effective monitoring and management in place, both from its own perspective and that of its stakeholders. Not only is production at stake, reputation and licence to operate are too, so the decisions around water have far reaching consequences.

The report also flags up the inescapable fact that investing in infrastructure for water is costly, referring to OECD estimates that by 2025 water will make up the lion’s share of global infrastructure investment. For just the OECD countries, and Russia, China, India and Brazil, water spending will top £1 trillion, nearly triple the amounts needed for investments in electricity or transport.

The report is intended to help a wide range of stakeholders to take steps towards collaborative action to address the issues surrounding water risks,  including business leaders, investors in water intensive industries, utility providers, a legislators and regulators and non-governmental organisations.

Click here to download Collaboration: Preserving water through partnering that works in full