More and more companies the world over are becoming conscious that the continuity of their operations is dependent on the availability of sufficient fresh water of good quality and on a peaceful social context. Furthermore, the development of the concept of a water footprint and the accompanying methodology has made measuring the virtual water or “invisible water” associated with goods and services possible.

The implementation of water compensation projects helps entities to alleviate their negative impact linked to water use by investing in sustainable water projects within the area or community where the entity’s activities take place. A product is considered to be less intensive in water needs if the negative impacts resulting from its water footprint are reduced or compensated. Internal reduction measures involve, for example, improving the efficiency of water use in a company’s internal operations. Any remaining portion of the water footprint that cannot be reduced by internal measures is offset through the implementation of water compensation projects (see figure below). Some examples might be improving local watershed management, developing environmental awareness and education, or facilitating access to drinking water in communities that face water scarcity.

The main goal of a Water Compensation Project is to mitigate the negative impacts induced by a water intensive activity in water scarce regions. These negative impacts inflicted on the environment and on local communities are reduced through the implementation of holistic and comprehensive water management solutions. Generally it is beneficial to involve and consult both the public and private actors in a region in order to create synergies and choose relevant solutions. We also encourage local ownership to optimise the compensation projects’ implementation.

Water footprint & Risk Analysis

Performing water footprint calculations which take into consideration the water consumed and wastewater released provides a rough estimation of potential environmental impacts linked to freshwater use. The goal of this calculation is to

  • Determine the amounts of water implicated.
  • Analyse the environmental impacts that could be potentially offset by the compensation project abroad.
  • Identify which locations in an area of interest are most vulnerable to water risks and most suitable for the implementation of water compensation projects.

Participatory Workshop & Feasibility Study

The use of tools like participatory workshops is a powerful means to encourage recognition of significant threats, to identify responses relevant in the local context and to engage people in activities that can reduce water risk.
The subsequent step is to identify and evaluate a set of water compensation measures that could substantially improve water sustainability for the communities directly surrounding the areas affected by important suppliers in water scarce countries.

Project implementation

Coordinate the project implementation in partnership with relevant local actors, perform follow-up and monitoring, build local capacity through trainings.

Project long-term sustainability

Ensure the project’s self-sustainability in partnership with relevant local stakeholders using innovative mechanisms such as water benefits credits and social business models.