Water risk can manifest in many forms - but for companies, the financial value that is potentially affected by water-related events may be paramount.
In 2015, WWF, in conjunction with IFC, put out a report that provided a framework for valuing water and linking this to both water risk and water stewardship. This framework now forms the basis for this section in an effort to provide guidance to those seeking to convert risk into value. Furthermore, the Value section aims to support the High Level Panel on Water's Bellagio Principles on Valuing Water
The first tab - Valuation Approach Finder - was borne out of the fact that there are not only many ways to value, but there are many forms of value when it comes to water. Are you talking about the value of water as it relates to tariffs? The value of freshwater ecosystem services? Or a financial analyst looking at how water affects the value of a stock? These are all different forms of value for different users, so the Valuation Approach Finder helps you navigate through to identify relevant guidance materials and distinguish some of the “valuation tools” (or calculators), in order to help you find the most suitable one.
With the second tab - the Value Potentially Affected Tool (VPA) - WWF is adding its own water valuation tool into the mix. This new tool will draw from the Water Risk Assessment results, and combine likely events with potential financial impacts into a discounted cash flow analysis. Powered by CDP Water Security data, the new VPA tool will ultimately help to illustrate how water risk events can affect financial statements: from revenue loss due to droughts to depreciation of assets due to floods.
Lastly, as WWF seeks to ramp up our engagement, we are building a new narrative around the Valuing Rivers. Rivers are more than just sources of water; they provide an array of services from sediment delivery to transport to purification and fisheries. They are value generators for entire economies and this new section seeks to point this out, inititially through some mapping of economic value (distributed GDP) facing water risk. With 19% of the world's economy facing high to very high water risk, we believe the time is now for governments to begin to recognize the value of rivers and better support water stewardship.