A new tool for analyzing water impact looks at both farms and finances

Which industrial sectors are most water-intensive isn’t necessarily obvious. Industries vary with respect to region. Also the technology they use and other factors. More interesting is different sectors may find themselves near the top or bottom of the water-usage list. For that’s depending on how their water and industry impacts are calculated.

Water intensive industries creating drought
on August 19, 2014 in Oroville, California.

For example, farmers in developed regions who use sophisticated irrigation techniques use water much more efficiently than farmers who rely on traditional flood irrigation. When water is reused, this increase in efficiency further reduces the water footprint of agriculture in a region.

Although the usual suspects still dominate the list of the most water-intensive industries. Yet the new Carbon Disclosure Project (CDP) Water Watch Index also provides a wider and more detailed look. Especially at the water impacts of various industries.

Thirstiest Sectors

Irrigated agriculture continues to top the list. Thereby accounting for 70% of global water use and, in many OECD countries, more than 40% of water use. In addition, Water Watch gives special attention to the impact of cotton farming. Cotton is the most popular natural fiber for clothing. Thereby accounting for about a third of all textile fibers produced around the word. It also requires 2,700 liters of water to make a single cotton shirt is the amount of water (on average) that a person consumes in about two and a half years. Apparel manufacturing also tops the water-impact list.

Power Plants

Nuclear plants and other thermal power plants use large amounts of water both to produce steam and to cool. Oil and gas extraction uses large amounts of water for hydraulic fracturing (fracking). Lots of water is required to wrest resources from deep underground when mining minerals and other natural resources.

The paper and pulp industry also uses impressive amounts of water. The journal Frontiers in Environmental Science notes that high demand for chemical oxygen and biochemical oxygen and low biodegradability are characteristic of its wastewater and that around 85% to 90% of the freshwater it uses is wasted.

Water makes up a large part of the products of the food and beverage industry. But this industry also uses water in many other ways, including to clean and process.

Focus on Financials

It’s no surprise that the CDP Water Watch tool points to apparel and textile manufacturing, cotton farming, livestock farming, oil and gas extraction, and mining as producing some of the largest impacts on water resources.

It may be more surprising to see the financial industry on the list. But the CDP now recognizes the effect, albeit indirect, of this industry on water resources. Funding that enables high-impact operations often comes from banks, insurers, and asset managers. So when agribusiness depletes non-renewable groundwater, Water Watch looks at both the immediate cause of depletion and the financing that made it possible.

The idea is to promote water security by giving investors information that helps them to develop criteria for environmental, social, and governance (ESG) investing; screen portfolios for water impacts; and identify the exposures of particular companies.

Future of Water-impact Analysis

Concepts like “the water-energy-food security nexus” and “virtual water” are now being incorporated into analyses of water issues. As the questions and how we answer them evolve, there’s no telling what the list of the most water-intensive industries may look like the day after tomorrow.