CDP Water/Carbon Nexus Accounting

The Carbon Disclosure Project (CDP) is the world’s largest corporate and business carbon tracking mechanism with some 2,500 companies beginning to disclose their carbon footprints. This project “represents 475 investors with $55 trillion under management.” (Bhatia, Bloomberg 2009)
Of course the water content of everything we use is far more significant than most people imagine, and CDP recently announced that it will be canvassing 300 companies water use as well (available 4th Quarter of 2010). Major companies are signatories of CDP including Goldman Sachs, chemicals giant BASF, Walmart, Chevron and many more. It is not known which companies will be canvassed for water, but this is a major step in the right direction of trying to account for the world’s most important input, water, and the world’s most important output, greenhouse gases (known more commonly as C02 equivalents which includes gases like methane which are much more potent than C02 in its radiative forcing effects and therefore often measured in C02 “equivalents”, or simply “carbon”, for ease).
A similar project was recently conducted by the Pacific Institute and Ceres trying to address the risk of water (availability) which is becoming more and more pronounced (Morrison, Ceres 2009) One of the frustrations of businesses and communities is the lack of water input tracking throughout the value-chain process of products and processes. The Pacific Institute documented 8 sectors/industries including apparel, high-tech/electronics, beverage, food, biotech/pharma, forest products, metals/mining, and electric power/energy. It then broke out each industry into 4 steps of the value-chain including raw material production, suppliers, direct operations, and product use/end of life. Blue (surface and groundwater), green (rainwater stored in the soil as moisture) and grey (polluted) water intensities were calculated across this matrix to compare industry water intensity.
One common thread in the difficulty of tracking water and carbon is accounting for the transportation of billions of goods, materials and people traded and transported throughout the world. This kind of accounting is often overlooked because of the complexity, but it is fundamental that we understand the transportation usage of water and carbon of products and processes because it is so huge to begin with. The EPA put transportation as the #2 US greenhouse gas emitter at 28% of total emissions (the electric power industry was #1 at 34% of the total GHG emissions).

The Ceres / Pacific Institute report revealed how complex this tracking can get when you consider the value-chain of a good or process (it left out transport however). While the sheer numbers may seem daunting, imagine how many packages UPS, DHL, FedEx etc. deal with on a total world daily basis. They know exactly what’s going where, where it’s at in real time (usually) etc. Walmart for instance is renowned for its allocative efficiency of products throughout its stores and supply chains by knowing exactly where everything is, and how long it will take to restock stores in need.
At least retail should have little problem letting consumers, producers, entrepreneurs & legislatures compare the water and carbon footprints of 2 goods. Products bar codes’ could have an added tracer that identifies where the product was shipped from. Additional barcodes could be added by each transporter identifying the distance and means of transportation (or by another similar convention). This would inevitably favor local products, but that’s maybe part of the great sacrifice that fate asks of our generation, which has it pretty well so far compared to the previous generations. You may need to pay a small premium for the extra tons of CO2 and water you are actually consuming. This isn’t really a tax, it’s more of a weaning industry off the ecological welfare it’s been taking all these years. No more ecological subsidies- it’s time we pay for what we actually consume (including transport)! I hope CDP is accounting for transport somehow.

Bhatia, Meera. ” Carbon Disclosure Project to Canvass Water Use by Companies.” Bloomberg 19 November 2009 http://www.bloomberg.com/apps/news?pid=20601085&sid=aPkh05tK1SOE
Morrison, Morikawa, Murphy & Shulte. “Water Scarcity& Climate Change: Growing Risks for Businesses & Investors.” Ceres & The Pacific Institute February 2009 http://www.pacinst.org/reports/business_water_climate/full_report.pdf
INVENTORY OF U.S. GREENHOUSE GAS EMISSIONS AND SINKS: 1990 – 2007 APRIL 15, 2009 U.S. Environmental Protection Agency. http://epa.gov/climatechange/emissions/usinventoryreport.html p. 36

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