2 May 2012

Die water footprinting, die!

While in Oxford, I attended a session in which Dr Dave Tickner (WWF-UK) gave an "apologetic" presentation ("Beyond metrics: can water footprinting improve water security?") in favor of using water footprinting as a tool -- one of many -- for managing water.

Despite his humble tone, I saw two big problems with this "one tool in the box" idea:

First, footprinting is an imperfect measure of "appropriate" water use. It takes the same amount of water to raise a cow on rainfed pasture as it does to raise one on irrigated alfalfa. Water scarcity (demand vs supply) matters more than water use (demand per unit).*

Second, footprinting is the wrong instrument for setting policy: a "footprint" disclosure/requirement is not necessarily comparable with price information, due to the first problem (what does it mean?) and an additional problem (what's the value/importance of water within the overall production or purchase decision?)

These two problems make me dislike footprinting, but a third problem -- political naivete -- makes me much more nervous, to the point where I want to remove "footprinting" from any discussion of public policy. That's because I can see how a politician would love to impose some naive form of "footprint disclosure" or regulation on businesses or consumers.**

Such a policy would enrich footprinting consultants, but it also risks creating the perverse impacts that we have seen with biofuels policies (corn ethanol leading to groundwater depletion, higher food prices and ecosystem pollution; biodiesel leading to clear cutting rainforests for palm oil plantations).

So, I don't care if companies want to waste money on measuring their water footprint, but PLEASE PLEASE PLEASE keep footprinting out of laws and regulations. It's MUCH better to concentrate on pricing water for scarcity and/or regulating water use for sustainability.

Oh, and I'm not alone. I asked one senior water guru from a Fortune 500 company how much of $1 million from his company he'd invest in footprinting and how much he'd put into programs supporting "local sustainable water use." His answer? Zero percent into footprinting. This is a guy who knows and cares about sustainable water use from field experience. That matches my "academic" intuition.

Footprinting is a clever attempt to measure impact in the absence of prices, but scarcity-adjusted prices (via markets or regulations) are far more effective at conveying useful information that can be integrated into production and consumption decisions.

Bottom Line: Forget footprinting as a measure of impact. It's more important to balance supply and demand to prevent shortage than to care about the number of units of demand that a product represents.

* This over-simplification is no accident. The "creator" and main proponent of footprinting -- Arjen Hoekstra -- is an engineer, and engineers are notoriously good at building whatever you like without regard to the cost. Economists are more sensitive to the tradeoffs in any project.
** I discuss the abuse of regulations in the business of water in this recent paper.