The established tendency to see water everywhere as an endless resource is being increasingly challenged in many parts of the world, including here in the UK. For too long, water has been taken for granted and UK businesses rarely debate the consequences of water mismanagement at the regional and national levels. Climate change is having impacts not only on the hydrological cycle, resulting in increased droughts and floods1, but also on vital water resources and ecosystem services2, such as the ability to regulate water quality through sedimentation3. These pressures imply that now, more than ever, we are threatened by significant weather-related water stress and risks. Consider for example the dire droughts in the Brazilian coffee belt, in Australia, Singapore and Malaysia and more recently California, as well as the intense floods we have recently had here at home. For businesses, the risk of these events means reduced resilience of supply chains and potential losses from commodity price hikes that follow sudden drops in agricultural production. An example is the 2012 drought in the US that led to the lowest maize annual yield since 2006, with widely discussed potential consequences on global food prices4.
We at ASDA, just like other businesses, have to cope with the risks of more pronounced seasonal weather fluctuations. In fact, our recent study (to be published this year), in line with IPCC guidelines, has shown that only 5% of our fresh produce supply chain is not at risk from future impacts of climate change. There are tangible business incentives to urgently respond to these risks and guarantee the long-term ability of the food chain to meet market demand.
Addressing water risks
Maintaining global food security, feeding growing populations and satisfying the demand of water-intensive diets are all tasks that will require significantly more water for agriculture and food production activities in coming years5. The ability to meet this demand is at risk as water is increasingly under threat from climate change and population growth. From being handled as an essential natural resource, water has now become an economically strategic one. In fact, water availability is one of businesses' top-five environmental risks6.
Retailers are the core channel for the sale of agricultural products and they therefore depend on agricultural production. They can only thrive as businesses if they appropriately manage the dependencies of their supply chains on water sources. Food retailers are the major buyers of agricultural products, the yields and quality of which are directly affected by water availability. At ASDA, we are becoming increasingly aware that water presents a number of physical, political and social opportunities as well as barriers to food access. Of all the environmental impacts we are responsible for, 80% lie within our supply chain, and analyses of product life cycles and supply chains have clearly highlighted the fundamental value of water, both as a global good and as a core local natural capital resource7.
There is a need to improve the understanding of water impacts and dependencies at local levels, where the impacts of water scarcity or water abundance are directly felt. We also urgently need metrics to develop robust assessments that account for water's temporal and spatial dimensions, such that we can respond and manage our supply chain risks accordingly. We have recently been investigating our choice of cropping given the changing weather and climatic patterns, and we are also assessing how better water management may alleviate the pressures of climate change.
Water and the consumers
In 2011, we recruited a panel of 7,500 ASDA customers — 'Everyday Experts' — with the aim of gathering primary information on customers' thoughts about sustainability; we have now reached 20,000 respondents. The surveys revealed that the vast majority of ASDA customers, regardless of their income, age or gender, care about sustainability and about where their food originates8. In February 2014, 9,500 responded and 72% had actively investigated where their food had come from. Therefore, we came to the conclusion that adequate water management in our business is not just important to enhance the resilience of supply chains but it is also fundamental to maintain our reputation as a sustainable business in the market. Businesses face the challenge of addressing these concerns and need to deal with the growing pressures on water but more generally on the planet's natural capital.
The water–retailer relationship
The quantity and quality of crop yields rely on a number of conditions including water access, soil fertility, adequate climate, seeds access, land availability and healthy terrestrial fauna and flora. Regarding water access, the production of agricultural commodities along the food supply chain depends on the local availability of water through precipitation or irrigation. When water becomes scarcer locally, it has knock-on consequences on the retail industry. Therefore, it is in food retailers' best interests to invest in adequate water stewardship to ensure the sustainability of product supply chains.
At ASDA, we are examining our role in water stewardship around the world and throughout our supply chains. This serves to pinpoint not only the physical factors that define water access but also the social and economic implications of water availability. Production systems such as monocultures that cultivate crops (for example, palm oil and sugar cane) for global distribution may benefit local communities with employment and funding opportunities, but are often reliant on over-exploited water resources. Such systems therefore need to be reconsidered and restructured. As an example, a 2013 study has shown that farmers' poor land-management practices in the case of maize production in the UK has led to increased surface water runoff9 that apparently contributed to the severity of the recent flooding in the UK, as recently reported in the news10. Indeed, the study9 shows that three-quarters of the maize fields in the southwest of the UK have contributed to flooding. However, helping to reform land-use and water-use systems is a difficult task for retailers such as ASDA, which has supply chains extending beyond the UK and therefore comprising large amounts of virtual water — the hidden flow of water due to food or other commodities being traded from one place to another11. Acknowledging the impacts and dependencies of products sourced from overseas, whether from water-scarce or water-rich areas, is of the utmost importance in today's globalized systems.
Businesses and other stakeholders in the food sector need to work with farmers and suppliers on water-related activities to ensure current and future demand for produce is met and to reduce their risk to supply-chain disruption. At ASDA, for example, through sourcing from International Procurement and Logistics Limited (http://www.ip-limited.com/), we launched a water-trickle scheme for celery growers in Spain that provided a water-spray kit to farmers with the aim of ensuring a secure supply of product to our stores. As demonstrated by the scheme, retailers' engagement with growers on water projects can help growers achieve better quality crops and higher yield. The success of growers translates into increased resilience of retailers as we can, in this case, source higher quality celery at a lower cost because the risk of volatile production level is reduced. In Morocco, we worked with an important citrus supplier on a project to convert existing sprinkler practices to drip irrigation; this resulted in a 60% reduction in water usage. By adding automation to the system, a further reduction of 40% was achieved.
We have learned that working in collaboration with others to improve water stewardship is a far more efficient way to achieve change. Because water is such a local issue and impacts on a variety of stakeholders, working together shines the light on who is most vulnerable and where solutions can be implemented most effectively. We have contributed to the guidance on water stewardship developed in collaboration with the Institute of Grocery Distribution (IGD) — a not-for-profit research and training institution that helps the food industry to meet the needs of the public. The initiative allowed stakeholders at all levels of the food supply chain to exchange ideas and increase awareness of water as a scarce resource12. In the UK, ASDA has partnered with Linking Farming and the Environment (LEAF), a leading organization that promotes sustainable food and farming, and with Molson Coors UK, a brewing company. Processing companies often set water efficiency targets. Molson Coors UK have specifically set a challenging goal of improving water efficiency by 20% by 2020. Together, ASDA, LEAF and Molson Coors UK, produced easy-to-use guidance for farmers on water saving techniques13. Finally, at ASDA we have also trialled rainwater harvesting at our depots in Avonmouth, Bristol and Rochdale, and upgraded the filters to reuse more water for washing trays; these two plans combined will reduce our own water consumption by 50%7.
Initiatives that address water availability and access across supply chains are key to sustainability efforts and can reduce the risks to our business. It is vital to engage with the various stakeholders on the ground, such as agribusiness, small scale farmers and local governments, all of which have a vested interest in water, to generate and implement the most appropriate and effective solution.
Engaging with all facets and users of water will alleviate pressures and the risks from dependencies, even more so under the impacts of climate change, but it requires initial investment. The question is who should make that investment and what will the returns be? The financial burden might need to be shared among many stakeholders in a region, all of whom are feeling the impacts on water and have incentives to implement solutions. Retailers like ASDA would consider financial investments if the benefits are clearly identified and achievable. The latter conditions will depend on a combination of initiatives, including adequate research, collaborations and possibly even long-term retailer–farmer relationships. A water-related investment could potentially shield retailers from water-induced market fluctuations and protect against price hikes or from having to source too often from more expensive options, for example overseas. It will also reduce the need to over-contract, which is currently required to ensure that the quantity of produce demanded by our customers is delivered even when there is poor weather; this adds to the transaction cost of the produce. By supporting growers in better water management, as we did in Spain for example, retailers could also potentially enhance retailer–farmer relationships.
Although we have a menu of solutions to choose from, we lack the coordinated response and innovative financial mechanisms that would scale up implementation of those solutions. Moreover, we should address the long-term implications of water impacts while dealing with the short-term behaviour of investors and businesses.
Businesses have been incredibly successful and innovative in coping with water deficits through contingency planning, but in today's world threatened by a weaker water cycle under climate change and a growing population, is this sufficient? We need to work collectively to find solutions as this would not only generate multiple benefits at lower individual costs, but would also define saving water as best practice and provide strategic opportunities to address climate change impacts on water. Given the large number of water users, the growing demand for water resources, the variety of stakeholders involved and the increasing intensity of climate change impacts, collective action and shared solutions are needed to alleviate the pressure on the environment, business and communities.
Paul Kelly is at ASDA, ASDA House, Southbank, Great Wilson Street, Leeds LS11 5AD, UK
*e-mail: p6kelly at asda.co.uk
1. Wu, P. et al. Nature Clim. Change 3, 807–810 (2013).
2. Watts, G. & Anderson, M. A. Climate Change Score Card (LWEC, 2013).
3. Schaafsma, M. & Cranston, G. E.Valu.A.Te: The Practical Guide (University of Cambridge Programme for Sustainability Leadership, 2013); http://www.cpsl.cam.ac.uk/~/media/Files/Business_Platforms/Natural_Capital/EValuATe_Practical_Guide_Nov_2013.ashx
4. Mardell, M. US corn price forecast to rise sharply BBC News Online (10 August 2012); http://www.bbc.co.uk/news/business-19213550
5. Chartres, C. & Varma, S. Out of Water: from Abundance to Scarcity and How to Solve the World’s Water Problems (Pearson Education, 2011).
6. Global Risks 2014 (WEF, 2014); http://www3.weforum.org/docs/WEF_GlobalRisks_Report_2014.pdf
7. Our Sustainability Story (ASDA, 2013); http://your.asda.com/system/dragonfly/production/2013/11/21/10_27_20_372_ASDA_SUSTAINABILITY_STORY.pdf
8. The Big Green Journey (ASDA, 2013); http://your.asda.com/system/dragonfly/production/2013/11/21/10_27_58_190_ASDA_BIG_GREEN_JOURNEY.pdf
9. Palmer, R. C. & Smith, R. P. Soil Use and Manag. 29, 567–575 (2013).
11. Hoekstra, A. Y. & Chapagain, A. K. Water Res. Manag. 21, 35–48 (2007).
12. The Impact of Crisis on Water Stewardship in the UK Food and Consumer Goods Industry (IGD, 2012); http://www.igd.com/our-expertise/Sustainability/Water/11117/TheImpactofCrisisonWaterStewardshipintheUKFoodandGrocery-Industry/
13. Simply Sustainable Water: Six Simple Steps for Managing Water Quality and Use on Your Land (ASDA, LEAF, Molson Coors, 2014); [AU: please confirm year of report] http://www.leafuk.org/resources/000/691/685/SSW.pdf