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Understanding the True Cost of Water


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Overcoming Barriers to Corporate Water Stewardship

For companies pursuing corporate water stewardship strategies, a common barrier to action is the perceived low cost of water “at the tap.” Water reduction, reuse, and recycling projects often do not meet investment hurdle rates or compare positively to other investments. This also acts to limit community and watershed engagement actions outside of the fence line as well.

Our water and monetization experts worked with a leading beverage manufacturer to more thoroughly understand all of the cost drivers for water throughout their operations. In analyzing the true cost of water for representative production facilities, we expanded the assessment to include not only direct water costs but also considered:

  • Treatment costs (pre-treatment, chemicals, filters)
  • Energy costs (heating, steam generation, cooling, and transportation of water)
  • Losses of water with embedded cost or value
  • Waste costs (sewer fees/surcharges, water to drain, wastewater)
  • Regulatory costs (water-related permitting, fines, and compliance management)
  • Operations and maintenance costs

Using a “true” or “actual” cost of water as the baseline, we then worked to analyze future case scenarios with consideration of aspects such as:

  • Increasing direct costs of water (e.g., inflation, municipal cost increases)
  • Water allocation limits and production impacts
  • Seasonal scarcity from both frequency and severity of droughts

This more in-depth cost of water analysis yielded significantly more savings once very tangible water throughput costs were added to the company’s investment models. Water actions that previously could not satisfy the company’s internal investment hurdle rates can now be justified and defended on a more equal playing field with other investments. The future case modeling provided an ideal planning tool to project the business implications of increasing water costs and potential production losses due to insufficient water to meet growth projection.

You can download a full True Cost of Water Toolkit here from the Beverage Industry Environmental Roundtable.

This piece is an excerpt from the Environmental Leader 2015 Insider Knowledge Report. Download the full report here.

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