“The centrality of fresh water to our needs for food, for fuel, for fiber is taking center stage in what has become a crowded, environmentally-stressed world,” Mindy Lubber, Ceres president, says in a teleconference yesterday. “The past year has been one of unprecedented droughts, floods and pollution incidents around the globe.”

Lubber notes that industries and companies, “as well as people around the world are feeling the impact directly. For example, the recent record drought in Texas has devastated cotton fields and livestock, causing an estimated $5.2 billion in economic damages.”

The apparel giant, The Gap, she points out, which relies heavily on cotton grown in Texas, “slashed its annual profit forecast by 22 percent in anticipation of significantly higher cotton prices.”

Also impacted by water risks, according to Ceres:

• Gas producer Toreador saw its stock price plunge 20 percent recently after the French government banned the practice of shale-gas fracturing, primarily due to concerns over the process's impact on water quality.
• Kraft, Sara Lee and Nestle all announce they will be raising food prices to offset higher commodity costs prompted by droughts, flooding and other factors.

“Competing freshwater demands and supply limits are creating material risks to companies' bottom lines and investment portfolios,” says Björn Stigson, president of the World Business Council on Sustainable Development, which worked with Ceres on the report. “Yet, communication between institutional investors and companies on water management has always been limited.”

Even as companies accelerate water efficiency and improved water resource management, pressures are likely to worsen, Ceres says. Many regions are on course to suffer major freshwater deficits over the next two decades, according to the report.

Ceres cites a recent study led by McKinsey, which finds that the world may face a 40 percent global shortfall between forecast demand and available supplies by 2030.

More than one-third of the world's population—roughly 2.4 billion people—live in water-stressed countries, and by 2025 that proportion is expected to rise by two-thirds, Ceres says. These global shortfalls will hit hardest in regions such as East and Southeast Asia where significant investment is fueling unprecedented economic expansion.

The Ceres Aqua Gauge is available as an Excel spreadsheet that can be downloaded from www.ceres.org/aquagauge.