Water accounting is defined by the Bureau of Meteorology as a systematic process of identifying, recognising, quantifying, reporting and assuring water use. It includes the rights and other claims to that water; and the obligations against that water.
Water management is of critical concern to business, from access issues that disrupt production, to tightening legislation over water quality and increasing costs associated with allocations.
All of these issues can seriously affect the future survival of business. Agribusiness uses 70% of fresh water for irrigation; industry uses quality water for production; service industries use water for daily operations. Periodic floods wash business profits away (as with the 2010-11 and 2012 floods in Queensland), while water shortages are growing in significance on the driest inhabited continent on earth, with El Nino and climate change as constant factors.
In a recent interview with the Financial Times, Nestlé Chairman Peter Brabeck suggested water access and management now comprise a more urgent concern for contemporary business even than climate change, which gains so much political attention. With the OECD predicting global demand for water to increase by 55% between 2010 and 2050, and by as much as 400% in the manufacturing sector, the need for business to manage water resources efficiently and effectively has never been more important.
Water accounting helps to put everyone in the picture about water opportunities and risks and Australia has been leading the world in its development. Behind this leadership is a combination of the typical accountant busy setting standards for good performance in water accounting practice, and specialists at the Bureau of Meteorology who are experts at predicting rainfall, weather, supplies of water, droughts and floods. They work together in a transdisciplinary team, providing an excellent example of the way many future problems might be tackled.
Since its inception in 2009 the Water Accounting Standards Board (WASB) has been at the heart of leading the world in the water accounting process. As well as setting standards for measurement, disclosure and assurance of information, it also advises the Bureau of Meteorology and oversees the development of water accounting standards, by which water users’ activities can be quantified and made transparent.
The origins of Australian water accounting hail back to 2004 when COAG, recognising the importance of effective water management to Australia’s future, established the National Water Initiative. As part of this process it was agreed that Australia needed a standardised form of water accounting to assist with the management of water resources. The Water Accounting Development Committee, which preceded the WASB, was established in 2007.
Specific achievements since this time include development of a Conceptual Framework released for public comment in 2009. This document incorporates definitions including how water report entities (those who can and should report water information) are defined, and eight Statements of Water Accounting Concepts. An exposure draft for Australian Water Accounting Standard 1 (AWAS1) was circulated in late 2010 with the final version released 24 months later.
More recently an assurance standard, Australian Water Accounting Standard 2 (AWAS2), has been released. As part of the development phase for these standards pilot projects were conducted generating a positive response in organisations as diverse as river catchments, public companies and the Minerals Council of Australia.
Although adoption of AWAS1 and AWAS2 remain voluntary, Australia’s efforts have set it apart as the only country in the world to show a commitment to the development of standardised general purpose water accounts and reports.
But now with the Abbott Government desperate to perform a Budget balancing act, Australia is in danger of losing this expertise, at a time when the rest of the world looks for guidance. With the recent Millennium Drought over and more than $12 billion investment in desalination plants with 1,500 megalitres established, the impression is that in the short term water does not matter anymore.
Not only is this decision at odds with current policy - indeed the Department of the Environment’s website clearly states Australia faces a major challenge in ensuring the sustainable [..] supply [of water] in the face of [a] drying climate and rising demand, - it is also letting the Australian business community down. As a business issue water risk will not disappear and reinvestment in accounting for water availability and use will resurface.
Australia’s investment in water accounting needs to be expanded, especially in the areas of business support and assistance. But, as often occurs in the world of politics, stopgap monetary gains appear to have won out over long-term solutions that could help secure Australia’s water future and protect the country’s business organisations from additional risk. It is well-accepted within Australia that droughts do in fact recur and it will now be for future governments to bemoan their predecessor’s lack of fortitude.
There has never been a greater need to capitalise on educational and learning programs about water – for business governance, for boards, for management and employees and, it now seems, for the policy makers, politicians and bureaucrats too. Or will water accounting be yet another Australian innovation the benefits from which are lost overseas?