Water Footprint Compensation

In March 2023, Water Footprint Implementation (WFI) successfully launched Water Footprint Compensation during the United Nations Water Conference in New York. In this first phase, WFI laid the methodological foundation for a first-of-its-kind water offset scheme based on the principle of “a litre for a litre”. Its ultimate goal is to accelerate the transition to a water secure world by providing businesses with the enabling knowledge and a robust platform to offset their water consumption. Our ambition is to engage with 10 000 organizations in the first 5 years of the compensation platform’s deployment.

Since then, WFI has joined forces with the Association of Dutch Water Operators (WaterWorX), Blue Deal Netherlands, the Netherlands Water Partnership (NWP) and Akvo Foundation to bring the initiative into its second phase: develop and build the methodological framework and digital infrastructure underpinning a global Water Footprint Compensation scheme. Together, the consortium has the capacity to apply the compensation methodology into practice and rapidly scale up. 

Why is Water Footprint Compensation needed?

Despite efforts in recent decades, pressure on water resources worldwide is increasing in terms of pollution and overconsumption. Regulatory efforts to prevent further pressure on water resources need to be complemented by restorative actions at the local or river basin level not only by public authorities but also by private sector water users. All our industry sectors, be it food or textiles, energy or ICT, often contribute to the pollution and depletion of freshwater resources, not only in the locations of operations but worldwide through their supply chain. 

To a large extent, these severely affected water systems are situated in the Global South, and their depletion is hence largely invisible to western consumers. With the popularization of the water footprint concept over the last decades, businesses, governments and consumers can look beyond the direct water use and begin to appreciate the global dimension of freshwater resources, and the impact our consumption can have in the catchments of production. For example, recent studies on virtual water trade – the water which travels ‘hidden’ through supply chains – have brought to light the high dependency of the Global North on the availability of freshwater in the Global South. 

At the same time, many private sector actors are willing to invest in offsetting the negative consequences of their water consumption. A new trend emerged in the corporate sustainability space with businesses such as Microsoft, Amazon, Google, BP, Nestle, and Meta making pledges on Net-Zero Water, Water Positive, or Water Neutral. These terms, though they may be borrowed from the CO2-offsetting language with good intentions, lack a science-based definition adapted to water and a standardized methodology for carrying out offsetting activities, questioning the credibility of those making such claims. Furthermore, a common aspect of the pledges made by businesses is the limited focus on their sites of operation. To reach meaningful impact at scale, companies should look beyond direct operations to their supply chains, where often the largest share of their water consumption and impact lies. 

What is Water Footprint Compensation?

Water Footprint Compensation (WFC)implies that a water user can mitigate the negative impacts of their water consumption by taking action to replenish, restore or protect the water system from which the water was abstracted. Compensating for a water footprint means the water user has first measured and assessed the impacts of both their direct (operational) and indirect (supply chain) water consumption and goes beyond direct operations to redress the impact on water scarcity and pollution where the largest share of their water footprint lies, in the supply chain. 

The Water Footprint Compensation method consists of a 5-step process. It begins with accounting for the compensator’s water consumption, establishing the volume of water for which compensation is needed, undergoing close consultations with the compensator to develop a realistic water footprint reduction and compensation plan, and ending with the implementation, monitoring, and evaluation.  Compensation should be the 4^th step after taking measures to avoid, reduce or reuse water both in direct operations and the supply chain and should aim to offset the residual water footprint, the amount of water that is unavoidable for production. 

The WF compensation mechanism consists of two elements:

• A (to be developed) science-based, internationally validated, Water Footprint Compensation Standard (building on Version 0.1 launched in March 2023). To this end, the consortium will enlist a Technical Working Group of international experts from academia, NGOs, multilateral organizations, private sector and government for a collaborative 2 year standard development process. 

• A Water Footprint Compensation Project Platform.  The main functions of the project platform will be to facilitate the connection between compensators and project owners, showcase compensator profiles and undergoing projects, be an archive for completed projects/compensated footprints and provide a transparent monitoring and reporting mechanism

To learn more or receive the Water Footprint Compensation working paper, please register here