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#BusinessCase: Dow/TNC Study Highlights Benefits of Valuing Ecosystem Services

The Aland River with floodplains in northern Germany | Image credit: Wikipedia

According to a recent study in Ecosystem Services, businesses may pay more for less reliable sources of water in the future.

This week, scientists from The Nature Conservancy (TNC) and The Dow Chemical Company (Dow), with research support from Colorado State University and Duke University, published Finding solutions to water scarcity: Incorporating ecosystem service values into business planning at The Dow Chemical Company’s Freeport, Texas facility, which addresses challenges businesses face to accurately estimate the value of water resources and address future scarcity threats. The results highlight business decision-making and risk management for Fortune 500 companies can be improved by keeping water sustainability in mind.

“Water scarcity is a business, social and environmental risk,” said Peter Kareiva, Chief Scientist for TNC. “Declining water availability and quality affects industries, cities, farmers, recreational users, and ecosystems. By looking at the future water scenarios we have continued to help better understand and quantify the value of nature for businesses.”

The study explores the value of “natural capital” assets, such as a healthy river that provides inexpensive, reliable water. It addresses how this value will change due to climate change and an increasing demand for fresh water, particularly in urban areas.

Researchers analyzed five water scarcity solutions that involved nature and collaboration with other water users. Of those five, three solutions:

  • restoring floodplains to expand reservoir storage,
  • financing irrigation efficiency technology,
  • and a municipal rebate program for low-flow toilets or low water use landscaping

were found to be cost-competitive with corresponding traditional solutions, such as building more reservoir storage. These three solutions could also provide collective benefits to the public and biodiversity, and may be appropriate for implementation via multi-stakeholder collaboration.

“Water is extremely important to our global operations and we need to find new ways to make water sources more reliable,” said Earl Shipp, site leader for Dow Texas Operations. “This research can help businesses across a variety of regions better understand water. It means going beyond traditional solutions, thinking at a basin scale and examining how nature plays a role in preserving water sources.”

The freshwater analysis was conducted at Dow’s Texas Operations facility in Freeport, Texas, at the mouth of the Brazos River. Research was conducted as part of Dow and The Nature Conservancy’s six-year collaboration to help Dow and the broader business community, recognize, value and incorporate nature into global business goals, decisions and strategies. The study also supports Dow’s recently announced 2025 Sustainability Goals, which include a Goal on “Valuing Nature,” through which Dow seeks to deliver $1 billion in value through projects that are good for business and good for ecosystems.

The business benefits of acknowledging water scarcity have quickly become a topic of importance for forward-thinking organizations. Last month, a study by Sedex and WWF found that although positive efforts are being made to manage and set targets around water risks, more collaborative systems are needed to help suppliers ensure environmental legal requirements are met. And banks such as Wells Fargo and Bank of America have also realized the impact of water scarcity on their business and are investing in solutions.

Caitlin Kauffman is Sustainable Brands' acting Editorial Assistant. She recieved her Bachelor's in International Relations and Peace and Conflict Studies from CU Boulder. She has written for several publications including Sierra Magazine and O.A.R.S. As a women's health educator she… [Read more about Caitlin Kauffman]

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