The Water Risk Monetizer was developed by
Insufficient access to clean water can significantly disrupt operations, increase costs and curtail growth. Despite increasing risks to businesses and communities, the cost of water today in many regions of the world remains relatively low. The Water Risk Monetizer helps bridge the gap between market price and risk (based on scarcity) by calculating a risk-adjusted price comprising forecasted future water costs, plus a risk-based premium that represents the value that should be placed on water based on real and future water scarcity risks. The premium makes it easier to factor the potential cost or impact of water risks into business decisions in the same way other risks are considered in planning and capital allocation.
"As a company committed to partnering with customers to address water
challenges, we understand that companies need tools to help interpret
the value of water," said
"Water is greatly undervalued in many markets around the world, meaning
business and society often take it for granted," said
"The Water Risk Monetizer provides companies with a robust, but easy-to-use way to put a price on their use of water which reflects its true value to sustaining natural capital," Mattison continued. "Companies can then take focused action at a strategic and operational level to reduce risks through more informed water efficiency, procurement processes and site location decisions."
The Water Risk Monetizer uses a scientific model developed by Trucost to quantify the potential impact of water scarcity on a facility in monetary terms. The model correlates local water scarcity to considerations that contribute to the full value of incoming water, based on scarcity, for a specific facility, including:
Using algorithms derived from published scientific studies on water scarcity and in-stream water values, such as groundwater recharge, waste assimilation, wildlife habitat and recreational activities, the tool correlates a facility's water use to these local water scarcity considerations to calculate a "water risk premium."
The water risk premium, when added to the local price a business pays for water, quantifies the value a business should place on water based on real and future water scarcity risks. The model aligns scarcity data with current market conditions to cap the water risk premium at the highest price paid for water globally today.
The result is a financial assessment of water risks, calculated in current and three-, five- and ten-year projections, including:
The information provided by the Water Risk Monetizer can be used by businesses around the world to better understand water risks and the potential cost implications of water scarcity for a particular facility. The data provides valuable information to help assess different business models, determine how water costs or scarcity may affect growth plans, help inform business goals and provide a catalyst for collaboration and stewardship for greater impact.
For more information and to try the tool, visit www.WaterRiskMonetizer.com.
A trusted partner at more than one million customer locations,
Trucost has been helping companies, investors, governments, academics and thought leaders to understand the economic consequences of natural capital dependency for over 14 years. Our world-leading data and insight enable our clients to identify natural capital dependency across companies, products, supply chains and investments; manage risk from volatile commodity prices and increasing environmental costs; and ultimately build more sustainable business models and brands. Key to our approach is that we not only quantify natural capital dependency, we also put a price on it, helping our clients understand environmental risk in business terms. For more Trucost news and information, visit www.trucost.com.
Alejandro González d’Hyver de las Deses
Communications Manager, Latin America
Phone: +52 (55) 5001 2935 or by email
Communications Manager, Brasil
Phone: +55 11 2134 2649 or by email
Communications Director, Latin America
Phone: +1 954 436 2668 or by email