Folder Issue3

October 2012




Open for business or opening Pandora’s box? A constructive critique of corporate engagement in water policy: An introduction

Nick Hepworth
Water Witness International and University of East Anglia, UK;

ABSTRACT: The corporate world is waking to the realisation that improved water management is fundamental for future prosperity and human well-being. This special issue explores aspects of its response: from the application of an array of analytical tools such as water footprint accounting, risk filters and standards; water use efficiencies; derivatives and insurance mechanisms; to collaborative infrastructure and watershed projects; stakeholder engagement and attempts to influence water governance at all scales. Drawing on the papers in this issue the motivations for this new agenda are traced and its potential in helping to unlock some of our most intractable water challenges, or to open a Pandora’s box of controversies are considered. Key concerns include the potential for diverging corporate and public interests; policy and regulatory capture; privileging of economic over social perspectives; process inequities; displacement of existing water management priorities, and the risks of misguided interventions which undermine institutional and hydrological sustainability. Reflecting on these and the state of research on the topic eight priorities for a constructive response are discussed: closing the legitimacy gap; evaluating outcomes; reviewing evaluative tools; representation and inclusiveness; conceptual and methodological groundwork; outreach; and involvement and mobilisation. In conclusion, corporate engagement on water has great potential as both a progressive or reactionary force. Debate, research, scrutiny and action are urged to differentiate the 'good', the 'bad' and the 'ugly' and to pose fundamental questions about sustainability and equity.

KEYWORDS: Corporate water engagement, water stewardship, water risk, legitimacy



Water footprint: Help or hindrance?

Ashok Kumar Chapagain
Freshwater Programmes, WWF-UK, Godalming, Surrey, UK;
David Tickner
Freshwater Programmes, WWF-UK, Godalming, Surrey, UK;

ABSTRACT: In response to increasing concerns about pressures on global water resources, researchers have developed a range of water footprint concepts and tools. These have been deployed for a variety of purposes by businesses, governments and NGOs. A debate has now emerged about the value, and the shortcomings of using water footprint tools to support better water resources management. This paper tracks the evolution of the water footprint concept from its inception in the 1990s and reviews major applications of water footprint tools, including those by the private sector. The review suggests that water footprint assessments have been an effective means of raising awareness of global water challenges among audiences 'outside the water box' including decision makers in industry and government. Water footprint applications have also proved to be useful for the assessment of strategic corporate risks relating to water scarcity and pollution. There is evidence that these applications may help to motivate economically important stakeholders to contribute to joint efforts to mitigate shared water-related risks, although there have been few examples to date of such approaches leading to tangible improvements in water resources management at the local and river basin scales. Water footprint assessments have so far had limited influence on the development or implementation of improved public policy for water resources management and there is reason to believe that water footprint approaches may be a distraction in this context. Suggestions that international trade and economic development frameworks might be amended in light of global water footprint assessments have not yet been articulated coherently. Nevertheless, if used carefully, water footprint tools could contribute to better understanding of the connections between water use, economic development, business practice and social and environmental risks. In light of the review, a set of 'golden rules' is suggested for using water footprint tools in the broader context of awareness-raising, management of shared water-related risks and public policy development.

KEYWORDS: Water footprint, corporate water risk, water scarcity, public policy, freshwater management



Mitigating corporate water risk: Financial market tools and supply management strategies

Wendy M. Larson
LimnoTech, Ann Arbor, MI, US;
Paul L. Freedman
LimnoTech, Ann Arbor, MI, US;
Viktor Passinsky
Erb Institute for Global Sustainable Enterprise Programme; Ross School of Business; School of Natural Resources and Environment, The University of Michigan at Ann Arbor, MI, US;
Edward Grubb
Ross School of Business, The University of Michigan at Ann Arbor, MI, US;
Peter Adriaens
Zell-Lurie Institute for Entrepreneurial Studies; Ross School of Business; Civil and Environmental Engineering; School of Natural Resources and Environment, The University of Michigan at Ann Arbor, MI, US;

ABSTRACT: A decision framework for business water-risk response is proposed that considers financial instruments and supply management strategies. Based on available and emergent programmes, companies in the agricultural, commodities, and energy sectors may choose to hedge against financial risks by purchasing futures contracts or insurance products. These strategies address financial impacts such as revenue protection due to scarcity and disruption of direct operations or in the supply chain, but they do not directly serve to maintain available supplies to continue production. In contrast, companies can undertake actions in the watershed to enhance supply reliability and/or they can reduce demand to mitigate risk. Intermediate strategies such as purchasing of water rights or water trading involving financial transactions change the allocation of water but do not reduce overall watershed demand or increase water supply. The financial services industry is playing an increasingly important role, by considering how water risks impact decision making on corporate growth and market valuation, corporate creditworthiness, and bond rating. Risk assessment informed by Conditional Value-at-Risk (CVaR) measures is described, and the role of the financial services industry is characterised. A corporate decision framework is discussed in the context of water resources management strategies under complex uncertainties.

KEYWORDS: Water-risk management, water scarcity, decision framework, water trading, water derivatives



The private sector'€™s contribution to water management: Re-examining corporate purposes and company roles

Peter Newborne
Research Associate, Overseas Development Institute, London, UK;
Nathaniel Mason
Research Officer, Overseas Development Institute, London, UK;

ABSTRACT: Corporate water policies are evolving and practices developing, raising issues of what are appropriate private-sector roles in water management. Leaders of multinational companies have pledged to increase water use efficiencies in company plants/premises and down supply chains, while promoting partnerships in water management with a range of actors, public and private, including local communities. A set of questions is, here, posed for consideration by governments and communities, on the extent, limits and implications of private-sector involvement, particularly in contexts of water scarcity. While water specialists are accustomed to analysis of mandates of public institutions, many are much less familiar with the internal workings of corporations. Companies are legal and social constructs, operating within frameworks of company law and codes of stock exchanges. These set the normative parameters of what each company is for, and for whom, and help explain the underlying motivations and priorities of each. To illustrate corporate purposes and degrees of responsiveness to different stakeholders, example company models are cited. Company statements mixing commercial and philanthropic messages risk confusing company roles. Corporate actions need to match companies' internal characteristics to 'do what it says on the inside of the corporate tin'. Partnerships can, potentially, offer an alternative normative framework for achieving sustainable and inclusive growth.

KEYWORDS: Corporate purposes, company laws, water scarcities, stakeholders, partnerships



Investigating food and agribusiness corporations as global water security, management and governance agents: The case of Nestlé, Bunge and Cargill

Suvi Sojamo
Water and Development Research Group, Aalto University, Aalto, Finland;
Elizabeth Archer Larson
London Water Research Group, King'€™s College London, UK;

ABSTRACT: This article investigates the agency of the world'™s largest food and agribusiness corporations in global water security via case studies of Nestlé, Bunge and Cargill by analysing their position in the political economy of the world agro-food system and the ways they intentionally and non-intentionally manage and govern water in their value chains and wider networks of influence. The concentrated power of a few corporations in global agro-food value chains and their ability to influence the agro-food market dynamics and networks throughout the world pose asymmetric conditions for reaching not only global food security but also water security. The article will analyse the different forms of power exercised by the corporations in focus in relation to global water security and the emerging transnational water governance regime, and the extent to which their value chain position and stakeholder interaction reflect or drive their actions. Due to their vast infrastructural and technological capacity and major role in the global agro-food political economy, food and agribusiness corporations cannot avoid increasingly engaging, for endogenous and exogenous reasons, in multi-stakeholder initiatives and partnerships to devise methods of managing the agro-food value chains and markets to promote global water security. However, their asymmetric position in relation to their stakeholders demands continuous scrutiny.

KEYWORDS: Global water security, food and agribusiness corporations, agro-food value chains, water management, transnational water governance



From risks to shared value? Corporate strategies in building a global water accounting and disclosure regime

Marco A. Daniel
Oxford University Centre for the Environment, Oxford, UK;
Suvi Sojamo
Water and Development Research Group, Aalto University, Aalto, Finland;

ABSTRACT: The current debate on water accounting and accountability among transnational actors such as corporations and NGOs is likely to contribute to the emergence of a global water governance regime. Corporations within the food and beverage sector (F&B) are especially vulnerable to water risks; therefore, in this article we analyse motivations and strategies of the major F&B corporations participating in the debate and developing different water accounting, disclosure and risk-assessment tools. Neo-institutionalism and neo-Gramscian regime theory provide the basis for our framework to analyse the discursive, material and organisational corporate water strategies. Findings based on an analysis of the chosen F&B corporations'€™ sustainability reports and interviews with key informants suggest that the corporations share similar goals and values with regard to the emerging regime. They seek a standardisation that is practical and supportive in improving their water efficiency and communication with stakeholders. This indicates that some harmonisation has taken place over time and new actors have been pursuing the path of the pioneering companies, but the lead corporations are also differentiating their strategies, thus engaging in hegemonic positioning. However, so far the plethora of NGO-driven accountability initiatives and tools has fragmented the field more than 'war of position' amongst the corporations. Furthermore, several companies claim to have proceeded from internal water-risk management to reducing risks throughout their value chains and watersheds. As a result they are 'creating shared value' with stakeholders, and potentially manifesting an emergent paradigm that goes beyond a private regime framework. Nevertheless, in the absence of verification schemes, questions of sustainability and legitimacy of such actions on the ground prevail and remain a topic for further research.

KEYWORDS: Water-risk accounting and disclosure, food and beverage sector, global environmental governance, private regime, transnational actors



The role of productive water use in women'€™s livelihoods: Evidence from rural Senegal

Emily van Houweling
School of Public and International Affairs, Virginia Tech, Blacksburg, VA, USA;
Ralph P. Hall
School of Public and International Affairs, Virginia Tech, Blacksburg, VA, USA;
Aissatou Sakho Diop
iDEV-ic, Dakar Yoff, Senegal;
Jennifer Davis
Department of Civil and Environmental Engineering, Stanford University, Stanford, CA, USA;
Mark Seiss
Department of Statistics, Virginia Tech, Blacksburg, VA, USA;

ABSTRACT: Enhancing livelihoods and promoting gender equity are primary goals of rural development programmes in Africa. This article explores the role of productive water use in relation to these goals based on 1860 household surveys and 15 women'€™s focus groups conducted in four regions of Senegal with small-scale piped water systems. The piped systems can be considered 'domestic plus' systems because they were designed primarily for domestic use, and also to accommodate small-scale productive uses including livestock-raising and community-gardening. This research focuses on the significance of productive water use in the livelihood diversification strategies of rural women. In Senegal, we find that access to water for productive purposes is a critical asset for expanding and diversifying rural livelihoods. The time savings associated with small piped systems and the increased water available allowed women to enhance existing activities and initiate new enterprises. Women's livelihoods were found to depend on productive use activities, namely livestock-raising and gardening, and it is estimated that one half of women'€™s incomes is linked to productive water use. While these findings are largely positive, we find that water service and affordability constraints limit the potential benefits of productive water use for women and the poorest groups. Implications for targeting women and the poorest groups within the domestic plus approach are discussed.

KEYWORDS: Water supply, women, multiple-use water services, domestic plus, Senegal



Digging, damming or diverting? Small-scale irrigation in the Blue Nile basin, Ethiopia

Irit Eguavoen
Center for Development Research, University of Bonn, Bonn, Germany;
Sisay Demeku Derib
Center for Development Research, University of Bonn, Bonn, Germany;
Tilaye Teklewold Deneke
Agricultural Economics, Extension and Gender Research Directorate, Amhara Region Agricultural Research Institute (ARARI), Bahir-Dar, Ethiopia;
Matthew McCartney
International Water Management Institute, Vientiane, Lao PDR;
Ben Adol Otto
Advocates for Research in Development (ARiD), Pader District, Uganda;
Saeed Seidu Billa
Independent scientist, Germany;

ABSTRACT: The diversity of small-scale irrigation in the Ethiopian Blue Nile basin comprises small dams, wells, ponds and river diversion. The diversity of irrigation infrastructure is partly a consequence of the topographic heterogeneity of the Fogera plains. Despite similar social-political conditions and the same administrative framework, irrigation facilities are built, used and managed differently, ranging from informal arrangements of households and 'water fathers' to water user associations, as well as from open access to scheduled irrigation. Fogera belongs to Ethiopian landscapes that will soon transform as a consequence of large dams and huge irrigation schemes. Property rights to land and water are negotiated among a variety of old and new actors. This study, based on ethnographic, hydrological and survey data, synthesises four case studies to analyse the current state of small-scale irrigation. It argues that all water storage options have not only certain comparative advantages but also social constraints, and supports a policy of extending water storage 'systems' that combine and build on complementarities of different storage types instead of fully replacing diversity by large dams.

KEYWORDS: Water storage, water rights, land rights, Amhara, Fogera, Ethiopia



The last will be first: Water transfers from agriculture to cities in the Pangani River basin, Tanzania

Hans C. Komakech
Nelson Mandela African Institute of Science and Technology, Arusha, Tanzania; UNESCO-IHE, Delft, the Netherlands; Department of Water Resources, Delft University of Technology, Delft, the Netherlands;
Pieter van der Zaag
UNESCO-IHE, Delft, the Netherlands; Department of Water Resources, Delft University of Technology, Delft, the Netherlands;
Barbara van Koppen
International Water Management Institute (IWMI), Southern Africa Regional Program, Pretoria, South Africa;

ABSTRACT: Water transfers to growing cities in sub-Sahara Africa, as elsewhere, seem inevitable. But absolute water entitlements in basins with variable supply may seriously affect many water users in times of water scarcity. This paper is based on research conducted in the Pangani river basin, Tanzania. Using a framework drawing from a theory of water right administration and transfer, the paper describes and analyses the appropriation of water from smallholder irrigators by cities. Here, farmers have over time created flexible allocation rules that are negotiated on a seasonal basis. More recently the basin water authority has been issuing formal water use rights that are based on average water availability. But actual flows are more often than not less than average. The issuing of state-based water use rights has been motivated on grounds of achieving economic efficiency and social equity. The emerging water conflicts between farmers and cities described in this paper have been driven by the fact that domestic use by city residents has, by law, priority over other types of use. The two cities described in this paper take the lion'€™s share of the available water during the low-flow season, and at times over and above the permitted amounts, creating extreme water stress among the farmers. Rural communities try to defend their prior use claims through involving local leaders, prominent politicians and district and regional commissioners. Power inequality between the different actors (city authorities, basin water office, and smallholder farmers) played a critical role in the reallocation and hence the dynamics of water conflict. The paper proposes proportional allocation, whereby permitted abstractions are reduced in proportion to the expected shortfall in river flow, as an alternative by which limited water resources can be fairly allocated. The exact amounts (quantity or duration of use) by which individual user allocations are reduced would be negotiated by the users at the river level.

KEYWORDS: Inter-sectoral allocation, irrigation, priority allocation, urban water demand, water conflict, water right, water scarcity



Water fountains in the worldscape (Hynynen et al.; 2012).
Terje Oestigaard