Water scarcity is impacting the vitality of communities around the
world. For businesses, it is a significant constraint to growth. The Water
Risk Monetizer is industry’s first financial modeling tool that
enables businesses to factor water into decisions that support business
growth and help ensure the availability of this limited natural resource
for future generations. The Water Risk Monetizer provides actionable
information to help businesses understand the impact of water scarcity
to their operations and quantify those risks in financial terms.
The Water Risk Monetizer was developed by Ecolab Inc., the global leader
in water technologies and services, and Trucost, the global leader in
valuing natural capital. Ecolab and Trucost are committed to advancing
the principles of water stewardship by increasing understanding of
global water risks and helping others make the business case for
responsible water use. The Water Risk Monetizer is available at no cost
to businesses throughout the world, and the secure site is designed so
only the user has access to the information entered.
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 Douglas M. Baker, Jr., Ecolab chairman and
chief executive officer. “Most companies acknowledge the need to take
action to mitigate risk and reduce impact, but making the business case
to address these challenges is difficult without the type of financial
information now available through the Water Risk Monetizer.”
“Water is greatly undervalued in many markets around the world, meaning
business and society often take it for granted,” said Richard Mattison,
chief executive of Trucost. “As water scarcity worsens due to climate
change, increasing consumption and inefficient use, companies with
operations and supply chains in affected regions face increasing risks
from water shortages and higher costs.
“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:
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Current and projected water use
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Current and projected local water scarcity
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Economic variance and purchasing power
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Population and GDP forecast
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:
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Forecasted water bills based on the historical relationship between
country level GDP and water price
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Water risk premiums based on scarcity calculated by Trucost’s
scientific model
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Total value (risk adjusted water price) that should be placed on water
based on real and future risk related to water scarcity
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.
An online press conference will be held at 10:00 a.m. Eastern Time on
Wednesday, Nov. 5 to discuss the new Water Risk Monetizer, provide an
overview of its capabilities and answer media questions about the tool.
Details to join the online press conference:
Press Conference URL:
bit.ly/1nKlBeN
North
America Conference line number: 1-877-668-4493
Click here
for international conference line information
Access code: 294 520
212
About Ecolab
A trusted partner at more than one million customer locations, Ecolab
(ECL) is the global leader in water, hygiene and energy technologies and
services that protect people and vital resources. With 2013 sales of $13
billion and 45,000 associates, Ecolab delivers comprehensive solutions
and on-site service to promote safe food, maintain clean environments,
optimize water and energy use and improve operational efficiencies for
customers in the food, healthcare, energy, hospitality and industrial
markets in more than 170 countries around the world. For more Ecolab
news and information, visit www.ecolab.com.
About Trucost
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.
(ECL-C)
Copyright Business Wire 2014