Photo courtesy ofRainforest Action Network

Emergildo Criollo, leader of the Cofan indigenous tribe, was part of the Ecuadorean delegation that visited the United Houma Nation in Louisiana after the BP Deepwater Horizon spill in 2010.

On Tuesday, an Ecuadorean appeals court upheld a ruling that Chevron Corp must pay $US 18 billion in damages to the government of Ecuador for allegedly polluting the Amazon River basin and damaging people’s health, Reuters reported.

An Ecuadorean judge had ordered the U.S. oil giant to pay $US 8.6 billion in environmental damages last February, but the amount was increased to about $US 18 billion after Chevron failed to make a public apology, as required by the original ruling.

“We ratify the ruling of Febuary 14, 2011, in all its parts, including the sentence for moral reparation,” the court in the Amazonian city of Lago Agrio said in its ruling on Tuesday.

“This (ruling) confirms and ratifies that the company polluted and affected the Amazon,” the plaintiffs said in a statement. “It is necessary to clarify that no amount will be enough to repair all the crime they did in our area, nor will it be enough to bring the dead back to life.”

In the next chapter of the 18-year bitter legal dispute, Chevron — which is currently also battling claims that it is responsible for environmental damage from an offshore oil spill in Brazil last November — quickly denounced Tuesday’s appellate court decision, calling it “illegitimate” and a fraud, according to Reuters.

“Today’s decision is another glaring example of the politicization and corruption of Ecuador’s judiciary that has plagued this fraudulent case from the start,” the statement said. “The Lago Agrio judgment was procured through a corrupt and fraudulent scheme, much of which was captured on film and memorialized in the plaintiffs’ representatives’ own emails and correspondence.”

Chevron accuses the lawyers of misconduct, including fabricating expert reports, manufacturing evidence, bribing and colluding with court officials, among others.

In a statement, the company also said it was pursuing an action in the U.S. District Court for the Southern District of New York against the plaintiffs’ lawyers for violations of the federal racketeering statute and common-law fraud.

Chevron is also banking on international arbitrators, who are expected to decide this month if they will weigh in on what has become a landmark international legal dispute.

Meanwhile, the plaintiffs’ latest statement has accused Chevron of “junk science,” lies, and “an international lobbying campaign to taint the reputation of Ecuador’s government.”

The laswsuit against the U.S. oil company was brought on behalf of 30,000 Ecuadoreans from the Amazon River basin, who accuse Texaco – which Chevron acquired in 2001 – of dumping 450 million barrels (19 billion gallons) of toxic oilfield waste and 400,000 barrels (17 million gallons) of raw crude oil into unlined pits and rivers in the Amazon jungle between 1972 and 1992 and of damaging indigenous people’s health, according to the BBC. The local community asserts that decades of negligent drilling have polluted nearly 5,000 square kilometers (2,000 square miles) of Amazon waterways traditionally used by for laundry, cooking, drinking, and bathing.

Chevron denies responsibility, saying that Texaco had cleaned up its share of waste pits. The company also argues that investigators have found no scientific evidence of the long-term environmental, health, and social damage that the plaintiffs describe.

Commenting on the appellate court’s ruling, Ecuador’s president, Rafael Correa, said he was happy and described the dispute as a “David and Goliath” battle.

Yet, an Edward Jones analyst in St. Louis told Bloomberg that the ultimate outcome is unlikely to “cost the company.”

“There is really very little that Ecuador can go after in the country, and Chevron doesn’t really have any material assets there,” Brian Youngberg said in a phone interview with Bloomberg. “We are going to have to watch this play out through the international court system and the U.S. court system.”

Source: BBC, Bloomberg, Financial Times, Global Post, Reuters

Images courtesy Chris Korbulic and Water For People

’Tis the season for giving. During the holiday season, hundreds of millions of dollars are donated worlwide to non-profit organizations working in the development sector. “Give the gift of clean water” is a common slogan that you are sure to find in your inbox at least a dozen times over the course of the next month.

But what does it mean to give clean water? How do we know that change is occurring? What looks different now, as compared to five years ago? If we had known then what we know now, what would we have done differently from the beginning? Looking five years down the road, will water still be flowing?

ABOUT THE AUTHOR:

Ned Breslin is the CEO at Water For People, a nonprofit that implements drinking water and sanitation solutions in 11 developing countries. He is author of Rethinking Hydrophilantropy.

Though there is value to sharing the successes, as well as the failures, of an organization as lessons learned by that organization and lessons that other organizations can learn from, this is information that the development sector struggles to feel comfortable offering. There is a stigma associated with more transparent insight into programmatic impact, largely — but not exclusively — because of concerns over fundraising. Two points of view dominate this problem:

1. Don’t Ask, Don’t Tell: There are those who believe that, if the truth were known about how difficult it is to transform lives with development assistance, this would actually undermine funding for a particular cause or organization. This is perhaps best exemplified by a recent blog by Jessica Keralis, the chair of the communications committee for the American Public Health Association’s (APHA’s) International Health Section. Keralis essentially argues that context matters when discussing development; yet context with value to an audience that is otherwise unacquainted with the relevant back-story is difficult to come by in an increasingly sound-bite-driven era.

   “Is there value to sharing failures that could be lessons for your own organization or others? Absolutely,” writes Keralis. “But how much good does it do the average layperson to hear about a failed project? …Unless an individual has background knowledge on how aid and development works, it is difficult to put these stories into context.”

   Therefore, Keralis points out, it is not prudent to be honest about what is happening in the field. She even states that, if she were running an NGO, she would consciously not divulge project difficulties to donors, who could lose faith “in a charity’s ability to learn from its mistakes.”

   And, let’s be frank, many CEOs and fundraising directors would tell you the same thing after hours, over a beer.

   Keralis goes on to say, however, that there is “true value to learning from failed projects.” Unsuccessful scientific experiments are still published alongside their breakthrough counterparts, but the difference is that they are published in professional journals — in other words, “failures are shared with an audience that can appreciate them and the lessons they bring.” In conclusion, Keralis suggests that the development sector use the research world as a model for how best to exchange lessons about failure, as if within a like-minded support group. And she implies quite strongly that the general public should not be told of these difficulties.

2. One Size Fits All: The development sector is still dominated by simplistic fundraising campaigns that link a small donation with a large, transformative result. You know the campaigns I speak of: “Your $25 donation equals water for life for one person,” or “Contribute $10 per month to end hunger.”

   The hope with these one-size-fits-all campaigns is that people will reach for their wallets and not ask any challenging questions about whether or not the intended outcome was actually achieved. And, to date, that hope has proven to be true – it seems that the simple threshold of low payment for transformative outcome does, in fact, lead to donor contentment. Data on how much is actually raised using this model is not clearly evident, but the fact that the approach is so prolific suggests that it at least resonates with both organizations and individuals.

   Once again, many CEOs and fundraising directors would tell you, over that same beer, that this approach is an easy sell, with little risk of tough questions.

Thankfully, quite a few senior leaders from significant development agencies are beginning to challenge both of these standard viewpoints.

For instance, Dr. Unni Karunakara — the president of Médecins Sans Frontières (MSF, or Doctors Without Borders), an international and independent medical humanitarian organization that delivers emergency aid to people affected by armed conflicts, epidemics, healthcare exclusions, and natural or man-made disasters — correctly questions relief agencies and the media for oversimplifying the challenges faced on the ground in Somalia with simplistic messages about how famine can be easily eradicated.

Dr. Karunakara rightly worries that the effort to raise lots of money through simplistic messaging misleads people, undermines education efforts on what it truly takes to eradicate hunger, and are likely to backfire, as it is improbable that hunger and famine will never again rear their ugly heads.

The consequence of such simple campaigns — and their possible ricochet-like effects — could raise broad doubts about the entire development effort in Somalia, despite the fact that some organizations, like MSF, are already hard at work and continue to be invested over the long term, in ways that might, in fact, lead to a change over time. Dr. Karunakara and his cohorts at MSF understand that transforming Somalia will take considerable time, significant resources, multiple actors working together, and a good deal of luck.

And that battle would be completely undermined if a donor bothers to ask the legitimate question, “Wait a minute; I thought my $25 solved this problem?”

Similarly, Dominic Nutt, the head of the communications and campaign team for World Vision — a Christian humanitarian organization that provides hope and assistance to 100 million people in nearly 100 countries by tackling the causes of poverty and injustice — suggests that, like many in the development sector, his organization may be somewhat stuck, due to their simplistic fundraising approach.

Nutt argues that the gap between field realities and fundraising promises are immense, and that simplistic messages, though they appeal to the average person who will, in turn, then open his or her own wallet to make a donation, ultimately mask the difficulties of what real support for global development work looks like. In this way, Nutt asks exactly the right question about whether this simplicity actually undermines the fieldwork.

Two Demographics + Two Solutions = One Transformative Change
I welcome further discussion and open debate on this challenge that non-profits face, as I know of no field staff who likes these simplistic campaigns or who believes that such small amounts of cash can radically change, for example, the life prospects of a rural African woman. Likewise, it sounds as if more and more senior leadership is saying the same thing — and not just after hours, over a beer.

Yet, despite this growing bottom-up awareness, the development sector will never become truly transparent until two things happen. First, non-profits that are engaged in complex overseas development will need to find the courage to tell their stories, to be open and honest about difficulties they have encountered in achieving transformative changes around the world, and to communicate their failings alongside their successes.

For water supply, this is simple. Sustainability — which rolls off the tongues of non-profits quite easily when talking about their own work — in the water sector means that water is flowing, that inevitable mechanical failures are addressed rapidly, and that funds collected are used to keep water flowing, to extend services to new families in a service area, and to eventually upgrade the water technology, so that water continues to flow forever.

Shifting gears, the second thing that needs to happen within the development sector looks at the funders, rather than the funded. Philanthropists must begin asking tougher questions about the real and lasting impact of their charitable contributions, which will require donors to be clear as to what outcomes they expect to see. This means that philanthropists must stop focusing only on the short-term questions of whether money was spent well and whether the project was completed. Though both questions matter, the more challenging questions take this dialogue to the next level.

The question is not whether $10,000 was allocated to a small village in northern Uganda and a handpump was installed, but, rather, whether that $10,000 actually has led — over time — to the community collecting clean water from that improved source (and its upgraded replacements) forever. The question is not whether a family of four in rural India repaid a loan for a new toilet, but whether they actually use that toilet and no longer are plagued by open defecation in their household. The question is not whether a pledge of $15 fed a Sudanese girl for one month, but whether that she eventually began to thrive, not just survive, so that she never again has to reach her hand out for another bowl of donated food.

I believe that this is what the donated money was intended to do: to keep water flowing in northern Uganda, and to have a functioning toilet that is used in rural India, and to eradicate hunger for a girl in Sudan. The money — important that it is and necessary that it is spent well — is simply the vehicle to these desired outcomes.

But, as with chiseling any sculpture out of solid rock, to truly scratch the surface of transformative change, organizations must allow the imperfections of their glossy façade to be seen and donors must choose the right tools with which to etch.

Ned Breslin
Follow Ned Breslin on Twitter.

This is the third in a multi-part series in which Ned Breslin discusses NGO success-indicator models and their alternatives. See Part I and Part II on Circle of Blue.

Infographic © Kelly Shea / Circle of Blue

Unprescribed: Drugs in the Water Cycle infographic. Click for full infographic.

By Brett Walton
Circle of Blue

At least a decade after analytic technology became sensitive enough to detect pharmaceuticals at concentrations of parts per trillion — or one drop in a thousand Olympic-sized swimming pools — nearly half of the states in the union have proposed legislation to encourage safe disposal of prescription medications. Because trace levels of pharmaceuticals have been detected in drinking water and linked to abnormalities in aquatic organisms, drug-disposal legislation has attracted broad support from public health officials, law enforcement agencies, and environmental groups.

Yet the U.S. pharmaceutical industry, whose twelve largest companies made a profit of $US 44 billion in 2010, have countered with a coast-to-coast campaign to prevent lawmakers from making the industry pay for drug-disposal programs, asserting that the programs have little effect on water quality, are burdensome to the consumer, and could lead to drug theft and abuse.

The debate over the relevance of these programs, which would involve new state safety regulations, pits expanding knowledge about the risks of minute concentrations of prescription drugs in the nation’s waters against a powerful industry’s resistance to governmental safety mandates. The contest comes during an era of economic distress in the United States that has prompted fresh doubts among many citizens about the effects of health and environmental regulations on the nation’s economic performance. Health and environmental advocates, meanwhile, contend that fouling the nation’s waters with prescription drugs and prompting higher levels of human disease represents a much larger threat to the economy and the nation’s well-being.

In 2009, some 3.9 billion prescriptions — topping $US 300 billion in sales for the first time — were dispensed in the U.S., according to IMS Health, a market research company. Sales nearly doubled over the last decade, and the baby boomers, all 78 million of them, are reaching the age when prescription drug use increases.

There is a wide range of estimates for how many of those drugs go unused. The pharmaceutical industry maintains that the figure is 10 percent. According to research from the Unused and Expired Medications Registry, which keeps a large database on such matters, an estimated 40 percent of medications are not taken by the consumer and need to be disposed.

State Programs: Popular, Successful, and Broke
In September U.S. Representative Louise Slaughter, a New York Democrat, introduced legislation that would create a national industry-funded drug take-back program. Since no such permanent program now exists, some states are responding with their own plans, which are quickly running out of money. Cities and counties also run small-scale collection programs, using drop boxes or collaborations with pharmacies.

“The question is: who is going to pay?” Margaret Shield told Circle of Blue. Shield is the policy liaison for the Local Hazardous Waste Program in King County, Washington. “The drug industry can incorporate a program into the cost of business, and they’re saying no.”

Maine’s landmark program — the first statewide program in the nation when it began in 2007 — will exhaust its funding by the end of the year.

“Our state, like many, is broke,” Jennifer Crittenden, Maine’s program director since its inception, told Circle of Blue. “We’ve had a change in government administration with different priorities. There are no plans to continue funding the program.”

Crittenden said Maine’s program has been “immensely successful” and that it became a national model. The total annual cost for the program, which collected just over one metric ton (2,373 pounds) of drugs in its two-year pilot phase, is $US 75,000.

Because of budget austerity, five states — Florida, Maine, Minnesota, Oregon, and Washington — submitted bills during the 2009-10 legislative session that would have required the pharmaceutical industry to pay for drug disposal: none of these bills passed. The only industry-funded program is at the city level, in San Francisco.

Likewise, Iowa, Nebraska, and New Hampshire have enacted statewide drug take-back programs, which allow customers to drop unwanted pills at the pharmacy or to mail leftover medicines to a collection center, and 20 other states have introduced similar legislation to set up full-time programs or trial studies.

Kate Gainer, who administers the take-back program in Iowa, said she has had a different funding partner each year since the program started in 2009. “We’ve tried different angles but haven’t identified a sustainable source,” Gainer told Circle of Blue. “We pursued pharmaceutical avenues, but that was not successful.” The Iowa program has received nearly 10 metric tons (21,545 pounds) of returned drugs in just two years.

In Colorado, the same dynamic holds: Greg Fabisiak, who manages the state’s pilot project for the Department of Public Health and Environment, said the main challenges were finding funding and operating a large-scale program. The pilot project has only 11 drop-off locations in the entire state, but has collected 5.5 metric tons (12,000 pounds) of drugs since 2009.

New Protections Merited
Certainly, say advocates of drug-disposal legislation, the scientific evidence merits new safeguards. Numerous studies have observed fish developing sexual and behavioral abnormalities, such as males producing eggs or females disinclined to spawn. The scientific consensus is that pharmaceuticals threaten aquatic organisms, though the effects on human health are not as clear.

Pharmaceutical chemicals and hormones have reportedly been detected in the drinking water for at least 14 percent of Americans, according to test results from utilities and independent researchers published by the Associated Press in March 2008. Most worrisome are the endocrine disruptors — a sub-class that includes the estrogen used in birth control and bisphenol A used in plastics — which interfere with hormones and can lead to abnormal sexual development in fish, frogs, and even humans.

Image courtesy DEA

Collection bins advertise the Drug Enforcement Administration’s first national drug take-back event in September 2010. A second event was held in April this year. Combined, the DEA collected more than 600,000 pounds of unused or expired medications.

More than a year and a half later, in October 2009, the Obama administration released an updated guideline for how to safely dispose of the millions of pounds of medications that expire or go unused in the United States each year. Further, there have been three national take-back events since September 2010, with the most recent last Saturday, October 29, though there is currently no continuous national drug-disposal program.

Instituting take-back programs will be easier, now that the U.S. Congress passed a bill last year allowing changes to the Controlled Substances Act. Currently, controlled substances — such as narcotics and Oxycontin — can be handled only by law enforcement officers, meaning those pills cannot be returned to pharmacies. The U.S. Attorney General is expected to announce the specific policy changes this fall.

However, efforts to establish a sustainable source of funding to change ideas about drug-company responsibilities have failed so far, largely because of strong opposition and lobbying from the pharmaceutical industry, which does not want industry-funded programs to become a legal precedent. The bill in Washington state, for example, would have cost pharmaceutical manufacturers 1.5 cents per prescription.

Big Industry Lobbying Big Dollars
As late as 2007, the U.S. government encouraged people to dispose of certain medications by doing what health and environmental advocates now discourage — flushing them down the toilet so that they would not result in accidental poisoning, theft, or prescription drug abuse.

Since the mid-1990s, however, drug take-back programs have cropped up around the world as part of a wider “product stewardship.” An industry-funded model is standard in Australia, as well as in many European countries and Canadian provinces.

Though industry lobbying has successfully blocked all state attempts for such programs in the U.S., the nation’s first industry-pays model began this fall in San Francisco at the city level. The one-year pilot program carries a price tag of $US 110,000, with more than 90 percent being covered by Pharmaceutical Research and Manufacturers of America (PhRMA), the lobby group for drug research and biotech companies, and the remainder handled by Genentech, a biotechnology company.

The San Francisco Board of Supervisors passed a bill through committee for an industry-funded program, but the bill never came up for a full vote because industry representatives wanted to negotiate the outcome, said Caitlin Sanders, a toxic substances specialist at the San Francisco Department of the Environment

Shushma Bhatia, the toxics reduction program manager for the department, told Circle of Blue that the regulations for the program have been written, but the city still needs to find a vendor to manage collection and disposal.

These local and state programs have proved popular, and single-day national collection events, coordinated by the U.S. Drug Enforcement Agency (DEA), have exceeded expectations. During the three Saturday events in the last 13 months, law enforcement agencies throughout the country set up temporary collection sites, where citizens, sometimes toting pill-filled kitchen-drawers, have deposited nearly 450 metric tons (1 million pounds) of unwanted medications.

Image courtesy DEA

A man in Troy, Mo., brings a kitchen drawer filled with unused or expired medications to the Drug Enforcement Administration’s first national drug take-back collection event.

“The amount of prescription drugs turned in by the American public during the past three Take-Back Day events speaks volumes about the need to develop a convenient way to rid homes of unwanted or expired prescription drugs,” said DEA Administrator Michele M. Leonhart, in a press statement. “DEA remains hard at work to establish just such a drug disposal process, and will continue to offer take-back opportunities until the proper regulations are in place.”

But if those regulations would make drug companies pay, the industry wants no part of it.

During the 2009-10 legislation session in Maine — which was considering industry-pays legislation — there were advertisements in state newspapers claiming that take-back programs would increase the cost of health care, would not have a positive effect on water quality, and would create an opportunity for theft. These ads were paid for by the Generic Pharmaceutical Association (GPhA), the lobby group for generic drugs, and PhRMA, which has, since 1998, ranked fifth in the nation for lobbying expenditures, spending $US 90.7 million on lobbying activities in the U.S. from 2007 to 2010, according to the Center for Responsive Politics.

In a January 2011 comment to a report on product stewardship by Maine’s Department of Environmental Protection, the GPhA praised Maine’s legislature, which “wisely rejected” a pharmaceutical take-back program that was projected to cost $US 1.5 million annually for three years, “after which the annual cost would be unlimited.” The GPhA criticized the mail-back component of the program, stating that the estimated costs were $US 7.50 to $US 17.00 per envelope, since some generic medicines only cost $US 4 for a 1-month supply. The GPhA went on to say that effective and affordable take-back programs could be instated, “without mandating manufacturer-funded programs that risk increasing health care costs.”

Several pharmaceutical-industry groups sponsored this advertisement, which ran in Maine newspapers when the state legislature was considering a bill to establish an industry-funded take-back program.

Additionally, the comment mentions Raanan Bloom, the FDA’s environmental assessment expert, who says “the main way drug residues enter water systems is by people taking medications and then naturally passing them through their bodies.” According to the GPhA, it is estimated that more than 90 percent of the trace medicines found in surface water is excreted, rather than discarded or flushed:

“Thus, even if a costly program were 100 percent effective, it would do little if anything to impact the amount of pharmaceuticals entering water systems. In addition, experts agree that there is no scientific evidence to demonstrate that the traces of pharmaceuticals detected in water have any impact to humans.”

Widespread, But Miniscule
Pharmaceutical take-back programs are a multi-faceted issue. Advocates for take-back programs acknowledge that improper disposal is a small source of environmental contamination, compared to amounts that are excreted in bodily waste. They also recognize that the concentrations in rivers and lakes are millions of times smaller than prescribed doses, meaning the threat to human health is minimal, though consensus is that the same cannot be said for aquatic life.

Since the 1970s, the academic community has been aware of minute concentrations of pharmaceuticals in drinking water. But because the concentrations are so low — usually measured in parts per trillion, or thousands of times smaller than prescribed doses— it is only recently that monitoring technology has become sophisticated enough for detection.

About a decade ago, environmental advocates became concerned after the U.S. Geological Survey (USGS) completed the first national evaluation, sampling water in 30 states. Published in 2002, that study found detectable levels of pharmaceuticals in 80 percent of the 139 streams tested.

Then, in March 2008, the Associated Press brought public attention to the issue with its investigative series that revealed traces of pharmaceuticals in the drinking water of 41 million Americans in 24 major metropolitan areas. The AP’s findings led to hearings at the local, state, and federal levels. At a committee hearing in April 2008, Senate Democrats rebuked the Environmental Protection Agency (EPA) for not doing its job.

Since the 2002 USGS study, hundreds of tests have been carried out on water bodies across the U.S. The EPA maintains a database with thousands of research papers on the environmental contamination caused by pharmaceuticals and personal care products, or PPCPs. This is a broad designation for a class of more than 1,500 FDA-approved substances used in everything from Advil and antidepressants to soaps, lotions, and veterinary medicines — basically, anything humans or their pets put on their bodies that isn’t clothing and anything ingested that isn’t food.

Potential Threat: Fish Only?
Of the more than 1,500 identified compounds, only a couple dozen have ever shown up in treated drinking water that is supplied to homes. Fear of the human defects, however, is based more on assumption than empirical evidence. Scientists have not found a direct effect on humans from long-term, chronic exposure to PPCPs, mostly because it is too early in the research cycle for those studies to have been completed. A World Health Organization summary report released in June concluded that, though available data is limited, there is a “substantial margin of safety” between the concentrations currently in drinking water and the concentrations that would be needed to cause harm to humans.

Though human health is an assumed but unsubstantiated concern, the greatest immediate risk is to aquatic organisms, which have constant, prolonged exposure to contaminated water. These effects can move up the food chain, compounding at every trophic level, from the smallest organisms to the largest, with pharmaceuticals turning up in fish tissue. Furthermore, there is scientific evidence that these contaminants have altered the reproductive behavior and sex ratios of several species of fish.

Additionally, pharmaceutical-laden water is an ideal petri dish for nurturing that perpetual public health nightmare — antibiotic-resistant bacteria. Continuous exposure to low doses of medications would allow water-borne microbes to build immunity to the drugs that are designed to kill them.

Other Solutions
Despite this, the EPA does not regulate PPCPs, and most wastewater treatment facilities are not equipped to remove all of them. Doing so would require revamping the treatment process.

“We’re talking reverse osmosis and membrane technology everywhere, and that gets expensive,” said Gabriel Eckstein, a law professor at Texas Wesleyan University who has co-authored a report on keeping pharmaceuticals out of water bodies without relying on regulatory bulwarks like the Clean Water Act and the Safe Drinking Water Act.

Take-back programs are just one relatively inexpensive process that can be used to prevent unused medications from entering water supplies, according to Sierra Fletcher of the Product Stewardship Institute, an advocacy group. The more fraught aspects — such as drugs designed to be fully metabolized and upgrades to wastewater treatment plants — will be significantly more expensive and will require years for development.

“We don’t have a product-stewardship culture in the U.S.,” California State Senator Joe Simitian, a Democrat, told Circle of Blue. Simitian sponsored a bill — which passed in 2007 — to create guidelines for take-back programs in the state, but he doesn’t see the same vigor at the state or national level as in San Francisco.

“It’s difficult,” Simitian said, “because it’s a significant change in mindset. We’re trying to reshape the way we think about things in what is currently a throw-away world. It’s easier if there’s one obvious responsible party. But is it who makes the drug? Who sells it? Who buys it? Once that begins, everyone agrees there is a problem and something should be done, but somebody else should do it.”

Brett Walton is a Seattle-based reporter for Circle of Blue. Walton can be reached at brett@circleofblue.org.

By Brett Walton
Circle of Blue

Carbon Disclosure Project 2010. Global 500 Report. Click image for report PDF (Adobe).

Drought, flooding, declining water quality, increasing water prices and other water-related risks are prompting top global companies to develop water policies, strategies and plans, and set water-related performance targets, according to a report released Friday by a leading climate change investment risk group.

The survey shows that big global companies are becoming more aware of the water risks to their operations, with 96 percent of the respondents reporting they could identify risk in their own operations and 89 percent reporting that they have already developed specific water measures for their business.

Conducted by the Carbon Disclosure Project – which since 2003 has published annual surveys of corporate greenhouse gas emissions and climate risk – the study is the first in CDP’s newly launched Water Disclosure Program, which aims to make water reporting a standard business procedure. The report is the latest entrant in a growing field of water risk reports and assessment tools worldwide.

Supported by 534 banks and institutional investors with $64 trillion in assets, the CDP has name recognition and clout. Some 82 percent of the world’s top 500 companies as measured by the FTSE Global Equity Index responded to its 2010 carbon survey, up from 44 percent in the first iteration.

The CDP-Water report, which was backed by 137 investors managing $16 trillion, is the first in what will also be an annual series. It polled 302 companies in the FTSE 500 that represent a total of 10 sectors vulnerable to water shortages, such as food and beverage, energy, construction and utilities.

“This data provides valuable insight into the strategies deployed by many of the largest companies in the world in relation to water and is a first step in helping drive investment towards sustainable water use,” said Paul Dickinson, CDP executive chairman, at a press conference for the report’s launch.

Of the 150 companies that participated, 122 agreed to make their information publicly available. The CDP leadership is pleased with the initial response rate, said Lisa Lee, the group’s communications director.

“Our experience with carbon has been that response rates climb as companies see what their peers are doing and the benefits that come from participating. The process of raising awareness and sharing best practice is where much of the immediate value of the program comes from,” Lee wrote in an email to Circle of Blue.

In the CDP-Water report, data are organized by sector. Firms will not be ranked like in the CDP-Carbon report for at least two years. Though not available in the report, company submissions are posted on the CDP website, where detailed, self-reported information on targets, policies and water withdrawals is publicly accessible.

Some 89 percent of the companies reported that they have existing water policies, and 39 percent said water problems have already affected their business.

While 96 percent of the surveyed companies were able to report on water risk and supply in their own operations, only half could do so with their suppliers. Supply chain water management was also identified as a knowledge gap in a February 2010 report from the investors group Ceres.

The CDP-Water report comes on the heels of another Ceres report published last month, describing the lack of water-risk disclosure in the municipal bond market.

Investors are in the vanguard of the push for accountability, since they stand to lose if water problems begin to affect the bottom line. Besides the CDP and Ceres surveys, several other groups are developing tools for water risk assessment.

The World Business Council for Sustainable Development has a Global Water Tool developed by engineering firm CH2M Hill that compares company water use with water and sanitation data broken down by watershed and country. Chemicals company DuPont is one of 300 businesses to use the tool.

“We used the WBCSD global water tool to help map our sites globally and determine which ones were in areas that are expected to be water scarce or stressed so we could accurately address water usage and needs as part of our water goal,” said Dawn Rittenhouse, DuPont’s sustainable development director, in an email to Circle of Blue.

DuPont, also a public participant in the CDP-Water project, has a goal of reducing water use by 30 percent in its facilities in water-stressed basins.

Other assessment products still in the development phase seek to go deeper than basin-level analysis.

Aqueduct, an assessment tool database from the think tank World Resources Institute, incorporates regulatory risk, social risk and governance quality into its analysis. Piet Klop, a research fellow at WRI, says granularity is the key idea that sets Aqueduct apart: fine tuning water data so that it is applicable to a specific facility or administrative unit.

“If all water is local, it makes no sense to put a whole basin at one risk code,” Klop told Circle of Blue. “You have to make the local globally comparable.”

So far, the concept is being modeled on a Yellow River basin prototype developed jointly with General Electric and Goldman Sachs. The basin has been divided into 132 hydrological and administrative units. Eventually, multiple water-sensitive sectors will be available, but for now users can zoom in on the thermal power sector and see how risk factors change within each unit in the basin.

The plan is to create a basic global map with physical water data and then take an expanded look at 10 economically important water-stressed basins.

Right now WRI is raising funds and has commitments from Coca-Cola and Bloomberg. Klop estimates that the full project, using publicly-available data, will take at least three years to complete.

Brett Walton is a Seattle-based reporter for Circle of Blue. Reach Walton at brett@circleofblue.org.