Water Footprint Compensation

Empowering Change

Water Footprint Implementation successfully launched the Water Footprint Compensation – a first-of-its-kind water offset scheme -during the United Nations Water Conference in New York in March 2023. Based on the principle of ‘a litre for a litre’, the aim of the initiative is to accelerate the transition to a water-secure world by providing companies with enabling knowledge and a robust platform to offset their water consumption. 

The first phase of the initiative provided the methodological foundation. For the second phase, Water Footprint Implementation has joined forces with the Association of Dutch Water Operators (WaterWorX), Blue Deal Netherlands, the Netherlands Water Partnership (NWP), and Akvo Foundation to further develop the methodological framework and build the digital infrastructure to underpin the scheme. Together, the consortium has the capacity to put the compensation methodology into practice and rapidly scale up. Our ambition is to engage 10,000 organisations within the first five years of the scheme’s deployment.

Why do we need a Water Footprint Compensation scheme?

Despite efforts to reduce the pressure we put on our water resources in recent decades, increasing pollution and over-consumption continue to deplete water resources worldwide. Regulatory efforts need to be complemented by restorative actions at local or river basin levels, not only by public authorities but also by private sector water users. All industry sectors – be it food, textiles, energy, or technology – often contribute to the pollution and depletion of freshwater resources, not only in the locations of operations but worldwide through their supply chains.

The most severely affected water systems are frequently situated in the Global South, and their depletion is largely unknown to western consumers. With the popularisation of the water footprint concept over the last decades companies, governments, and consumers can look beyond their direct water use and begin to appreciate the global dimension of freshwater resources and the impacts of consumption in the catchments of production. For example, recent studies on the virtual water trade – the ‘hidden’ water that travels through supply chains – have brought to light the high dependency of the Global North on the availability of fresh water in the Global South.

Many private sector actors are willing to invest in offsetting the negative consequences of their water consumption. In the corporate sustainability space, businesses such as Microsoft, Amazon, Google, BP, Nestle, and Meta have made Net-Zero Water, Water Positive, or Water Neutral pledges. These terms, borrowed from language around offsetting carbon dioxide emissions, are well intended yet lack a science-based definition adapted to water. In addition, there is no standardised methodology for carrying out offsetting activities, which questions the credibility of the pledges. Furthermore, the pledges commonly focus on direct operations. To reach meaningful impact at scale, companies need to look beyond their direct operations to their supply chains, where the largest share of water consumption and impact frequently lies.

What is Water Footprint Compensation?

Water Footprint Compensation 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. A water footprint can only be compensated once the user has measured and assessed the impacts of both their direct (operational) and indirect (supply chain) water consumption and redressed 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 five-step process:

  1. accounting for the compensator’s water consumption
  2. establishing the volume of water for which compensation is required 
  3. undergoing close consultations with the compensator 
  4. developing a realistic water footprint reduction and compensation plan
  5. implementation, monitoring, and evaluation. 

Compensation should be the fourth step after measures have been taken to avoid, reduce, or reuse water 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 Water Footprint Compensation mechanism consists of two elements:

  • A science-based, internationally validated, Water Footprint Compensation Standard (to be developed, 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, non-governmental, governmental, and multilateral organisations, and the private sector for a collaborative, two-year standard development process.
  • A Water Footprint Compensation Project Platform. The main function of the platform will be to facilitate the connection between compensators and project owners, to showcase compensator profiles and ongoing projects, to provide an archive for completed projects/compensated footprints, and a transparent monitoring and reporting mechanism.

To learn more about the Water Footprint Compensation initiative please register here.