The Value of Water—Estimating Water-Disruption Impacts on Businesses

Karin Sjöstrand,Andreas Lindhe,Josefine Klingberg,Lars Rosén,Mattias Haraldsson,Noor Sedehi Zadeh

doi:10.3390/w13111565

Abstract

As water serves as a necessary and often irreplaceable input in a range of goods and services, a disruption in water supply can cause lost production and sales for businesses. Thus, large benefits may be generated by reducing the risk of water disruptions. To enable selection of economically viable risk mitigation measures, the investment costs should be weighed against the benefits of risk mitigation. Consequently, quantitative estimates of the consequences of disruptions need to be available. However, despite the importance of water to businesses, the literature on their financial losses due to short and long-term water disruptions is still scarce. The aim of this paper is to estimate time-dependent water supply resiliency factors for economic sectors, i.e., a metric focusing on the level of output that businesses can uphold during a disruption, to contribute to better decision support for water supply planning and risk management. An online survey was used to gather data from 1405 companies in Sweden on consequences of complete and unplanned water supply outages. Results show that Food, beverage and tobacco manufacturing and Accommodation and food services are the two most severely affected sectors over all analyzed disruption durations.

Highlights

It is estimated that about 42% of the world’s total active workforce is working in heavily water-dependent sectors, i.e., sectors requiring a significant amount of water as a necessary input to their activities and/or production processes [1]
The results show that already very short water disruption events can cause extensive consequences for individual companies by forcing them to slow down their business activities
The investigation of direct economic business losses of short and long-term water supply outages shows that Food, beverage and tobacco is the most severely affected manufacturing sector over all analyzed water disruption durations

Summary

Introduction

It is estimated that about 42% of the world’s total active workforce is working in heavily water-dependent sectors, i.e., sectors requiring a significant amount of water as a necessary input to their activities and/or production processes [1]. An additional 36% of the workforce is working in moderately water-dependent sectors. These are sectors that do not require significant amounts of water to realize most of their operations, but for which water is a necessary part of the value chains. Climate change, deteriorating infrastructure, population growth and urbanization contribute with additional threats to water security, providing risks for both short and long-term disruptions in water supply. In recent years, both the likelihood and the severity of water disruption events have increased, both in the European Union and around the world [3,4]. As a disruption in the water supply can force businesses to production slowdown or shut down [5,6], threats to uninterrupted water services are acknowledged as significant business risks in many economic sectors [7]

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Discussion

Conclusion