Gauging Risks

(Originally posted on waterefficiency.net)

By Elizabeth Cutright
Editor
Water Efficiency

Interesting news from the World Resources Institute (WRI) this week. According to an article entitled “Betting on Water” by Piet Klop, WRI is partnering with Goldman Sachs and General Electric to develop a “Water Index.” The index will be created using “publicly available data on water quality and water scarcity” in order to create a series of map overlays that combine and compare various water-related risks. Unlike the more familiar water footprint (and its cousin, virtual water), the Water Index offers an analysis of how the environment can effect a company’s water supply and/or its water needs, rather than the other way around.
More specifically, the Water Index would supply a company with information regarding the availability and quality of water sources considered integral to the companies operations, along with information on other competition for that water source. As the article elaborates, “Water risks, in short, are disruptions, costs, revenue losses, or growth constraints due to water shortages and declining water quality—all can affect asset performance and the profitability of a company.” The idea is that better information can lead to not only smarter investment decisions, but—hopefully—a more conscientious use of water in order to avoid a negative “repetitional cost.”
So what do you think? Can the information contained in something like this Water Index really affect the behavior of companies large and small? And if so, what—if any—information contained in this index will actually encourage water conservation and intelligent resource management