INTHEBLACK November 2023 - Magazine - Page 27
F E AT U R E
AT A GLANCE
Water security affects
governments, businesses
large and small, and
individuals.
There is no metric to measure
life quality more essential
than access to sufficient safe
drinking water.
Accountants can play an
essential role in getting water
metrics right.
TROUBLED
WATERS
Accounting for water security is vital to agriculture, industries and
regional economic growth. The numbers will affect the value chain,
and accountants are essential to getting them right.
Words Amanda Woodard
Economic growth is a thirsty business.
Water is essential to grow food, build
businesses and boost GDP. However,
questions are being asked about how best to
account for this increasingly scarce resource.
Each year, more than 4 trillion cubic litres
of water are extracted from the planet’s water
basins. Of that, 70 per cent goes to agriculture,
19 per cent to industry and 11 per cent to
households.
Water security has become a serious concern
for about two-thirds of businesses across the
globe, either directly or in their value chains.
In a 2022 consultation paper, the
International Sustainability Standards
Board (ISSB) of the International Financial
Reporting Standards (IFRS) Foundation lays
bare some of the reasons why.
“Freshwater consumption worldwide
has risen exponentially in recent decades.
Declining water quality is also an acute
problem around the world due to agricultural
run-off, industrial wastewater, improper
disposal of human waste, and many
other issues.
“Meanwhile, climate change is affecting
the hydrologic cycle, leading to more
frequent extreme weather events, such as
droughts and floods. In water-stressed
regions, increasing competition for
resources between businesses and their local
communities can exacerbate risk exposures.”
For all its critical importance, there is no
shared definition of what “water security”
actually means, says Will Fargher, director
of water consultancy Aither.
“We’re not just talking about having
sufficient quantities of water – but about
its quality, affordability and access,” he
says. Because the concept of water security
is “ill-defined and poorly understood”,
the job of decision-making, planning
and investment around water is made
more challenging.
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