ReviewThe emerging role of water footprint in supply chain management: A critical literature synthesis and a hierarchical decision-making framework
Introduction
Except for the humanitarian perspective of freshwater resources, water is a pivotal constituent of major economic activities, including agricultural and industrial operations (Jefferies et al., 2012). According to statistics, the agricultural sector accounts for 70% of the global freshwater exploitation, while the industrial sector is responsible for 22% of the worldwide freshwater utilization (UN Water, 2009), allowing only 8% of freshwater resources for domestic use (WBSCD, 2006). However, there are several factors that pose significant stress over the availability of global freshwater supplies, such as growing world population, climate change and continuing industrialization (Manzardo et al., 2014). Moreover, changes in the production and consumption patterns due to rapid economic development, as well as the competition among water-dependent business sectors over freshwater appropriation, further influence the future of water resources (Ercin and Hoekstra, 2014).
As freshwater is depleting at an alarming rate, projections highlight that more than 40% of the world population will be living in regions facing severe water scarcity in 2050 (UN Water, 2014). In this regard, the identification, assessment and management of water-related risks have emerged as major concerns for companies, policy-makers and society (McKinsey and Company, 2009). Specifically, the European Union (2000) has enacted the Water Framework Directive (Directive 2000/60/EC), which is one of the most contemporary and advanced legislative frameworks for water protection worldwide (Hoekstra, 2011), in order to set targets to the member states concerning the preservation of freshwater resources. At the same time, the Union has funded research projects, such as E4WATER (2016) and EcoWater (2014), towards sustainable freshwater assessment and management in agriculture and industry. Indicatively, the EcoWater project aims at assessing the economic and environmental efficiency of various water-friendly practices in order to better support decision-making in diverse water use systems (Levidow et al., 2016). Regarding the business sector, empirical evidence clearly documents that not only have leading corporations integrated water stewardship into their corporate social responsibility agenda, but also they have fostered their profitability through water management initiatives (CDP, 2015).
In this perspective, the scientific community has developed the concept of water footprint (WF) as a key performance indicator of water use at national, corporate and product levels (Hoekstra et al., 2011). The term was initially introduced as a measure of freshwater resources' appropriation (Hoekstra and Hung, 2002) based on the theories of “ecological footprint” and “virtual water” developed by Wackernagel and Rees (1996) and Allan (1998), respectively. In particular, the WF of a product is defined as the total volume of freshwater consumed and polluted directly or indirectly across the product's entire supply chain (Hoekstra, 2008). As a multidimensional indicator, WF is comprised of three components, namely blue, green and grey water (Hoekstra et al., 2011). The blue water refers to the consumptive use of surface or groundwater, while the green water addresses the rain water stored in the soil and then absorbed by plants. Finally, grey water constitutes the amount of freshwater required for assimilating the load of pollutants given existing water quality standards. According to this approach, Hoekstra et al. (2011) developed the Water Footprint Assessment (WFA) methodology as a set of four discrete stages: (i) setting goal and scope, (ii) WF accounting, (iii) WF sustainability assessment, and (iv) WF response formulation. In particular, the first stage aims at determining the purpose of the study and the system boundaries. The second stage includes the collection of the necessary data and the calculation of the WF as a sum of the different water components, while the third stage focuses on the evaluation of water use from environmental, social and economic perspectives. The final stage embraces the identification of strategies and policies for WF mitigation.
As opposed to WFA methodology, life cycle analysis (LCA) researchers have developed several alternative methodologies for the assessment of freshwater consumption and pollution (Kounina et al., 2013). Specifically, Ridoutt and Pfister (2010) propose a water-related LCA method based on the impact of freshwater utilization in relation to local water stress. In particular, the authors argue that green water does not contribute to water scarcity until it becomes blue water, while it is only accessible through the use of land. As such, the stressed-weighted WF is expressed as the total blue and grey water multiplied by the “water scarcity index” developed by Pfister et al. (2009). All scientific approaches for assessing WF impacts in a LCA context paved the way for the development of an international standard on water footprinting, namely ISO 14046 (ISO, 2014), which is considered as the water-oriented successor of the general LCA-based ISO 14040 and ISO 14044 (ISO, 2006). ISO 14046 specifies the principles, requirements and guidelines for the quantification, impact assessment and reporting of the WF of products, processes and organizations. Notably, the aforementioned standard can support decision-makers in identifying water risks, as well as management opportunities, in order to maximize water-related efficiency.
Notwithstanding scientific efforts in the field of water footprinting, several water accounting tools are relatively new or still underdeveloped (Christ, 2014), failing to address freshwater use and management holistically in a full supply chain context (Chico et al., 2013). In addition, industrial water management practices aim mainly at protecting local freshwater resources, with minor focus on recognising the related impact across supply chain networks (Northey et al., 2014). To that end, Quinteiro et al. (2014) emphasize the necessity of further research in order to determine actions for reducing the effects of consumptive and degradative freshwater utilization in the supply chain echelons that exhibit a dominant contribution to local water scarcity. In this respect, this work is a first research effort towards: (i) synthesizing the existing literature on product WF assessment in order to identify relevant gaps and opportunities, and (ii) mapping corporate WF management policies for supply chains, following the natural hierarchy of the decision-making process, in order to provide valuable managerial insights. The remainder of the paper is structured as follows. In Section 2, we provide a critical synthesis of scientific publications focusing on product WF assessment in the agricultural and industrial sectors. In Section 3, we propose a comprehensive business-oriented hierarchical framework that includes WF mitigation decisions for agrifood supply chains as proposed by both academic and corporate communities. Finally, conclusions and recommendations for future research are discussed in Section 4.
Section snippets
Water footprint assessment in the literature
In this section, we first present the research methodology in order to provide a critical synthesis of the scientific literature on product WF assessment. The synthesis is followed by a brief discussion on the related results and findings in order to identify any gaps in the existing body of knowledge, as well as opportunities for prospective research.
Water footprint management for agrifood supply chains
In this section, we review both academic and corporate literature on state-of-the-art WF mitigation policies with emphasis on corporations of the agrifood sector, which dominates global freshwater consumption and pollution. We then develop a novel holistic framework for water management in agrifood supply chains based on the natural hierarchy of the decision-making process.
Conclusions
Freshwater constitutes a vital resource in a plethora of agricultural and industrial activities (UN Water, 2009). As such, the overexploitation of available water supplies has motivated governmental authorities and business corporations to act towards the protection of freshwater resources through efficient WF assessment, management and monitoring (McKinsey and Company, 2009). Taking into consideration the supply chain perspective, this paper provides a critical literature synthesis on product
Acknowledgements
One of the authors (E.A.) would like to express her sincere thanks to the Public Benefit Foundation Alexander S. Onassis for financially supporting this research work as a part of her doctoral studies. In addition, this paper has been conducted in the context of the GREEN-AgriChains project that has received funding from the European Community's 7th Framework Programme (FP7-REGPOT-2012-2013-1) under grant agreement No 316167.
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