Water stress: what it is, causes and how it affects companies

Water stress occurs when a territory's water demand approaches or exceeds the volume of water available, or when its quality limits its use. Technically it is measured as the ratio between water withdrawals and available renewable resources: the higher that ratio, the greater the stress.

This is neither a distant problem nor a purely environmental one. For a company that needs water to produce, cool, clean or irrigate, water stress is a direct operational and financial risk. This guide covers what it is, how it differs from scarcity, what causes it, how it hits companies, and how to measure and reduce it with tools like the WRI's Aqueduct Water Risk Atlas and the water footprint.

What water stress is

Water stress describes the pressure on the water resources of a basin or region. One of the most used indicators, the WRI's Baseline Water Stress, defines it as the ratio of total annual water withdrawals to total available renewable water (surface and groundwater). When that ratio reaches 80% or more, stress is considered "extremely high"; between 40% and 80% it is classed as "high".

Put simply: there is water stress when more water is demanded than the system can sustainably replenish, whether from excess demand, lack of resource or degraded quality. It is a relative concept: it depends both on how much water exists and how much is used.

Water stress versus water scarcity

They are often confused, but they are not the same:

• Water scarcity is a physical shortage of water: there simply is not enough resource to cover needs. It tends to be structural (arid climates) or temporary (droughts).
• Water stress is broader: it measures the pressure between demand and availability, and also captures competition between uses (agricultural, urban, industrial) and quality problems, not just quantity.

A region can have enough water in absolute terms and still suffer water stress if demand is highly concentrated or much of the resource is polluted.

Causes of water stress

Water stress rarely has a single cause. It is usually the sum of several factors:

• Rising demand: population growth, expanding irrigation and higher industrial and urban consumption pressure a limited resource.
• Variability and climate change: longer, more frequent droughts, shifting rainfall patterns and higher evaporation cut availability. Water is one of the vectors through which climate change hits the economy first.
• Aquifer over-extraction: pumping groundwater faster than it recharges depletes reserves that take decades or centuries to replenish.
• Pollution: discharges and diffuse contamination reduce usable water even when the physical volume exists.
• Infrastructure and losses: inefficient networks that leak water and poor management make the problem worse.

How water stress affects companies

For a company, water stress translates into four types of risk worth distinguishing:

The common thread is that water stops being a cheap, guaranteed input. Sectors like textiles, agri-food, mining, energy and manufacturing are especially sensitive, above all if their sites or suppliers sit in areas of high water risk.

How to measure water stress

Managing water stress starts with measuring it, and there are two complementary levels:

Assessing the territory's risk

The World Resources Institute's Aqueduct Water Risk Atlas lets you place each site or supplier on a global water-risk map and see its Baseline Water Stress level. It is the starting point for knowing where your company is exposed.

Measuring your own footprint

The water footprint quantifies the volume of water your activity consumes and pollutes, distinguishing direct water from your value chain's. Crossing your footprint with the territory's risk tells you not only how much water you use, but how much the water you use matters depending on where you use it. For the step by step, see how to measure the water footprint in companies.

How to reduce water stress

Once the critical points are identified, the most common reduction levers are:

1. Efficiency: cut consumption per unit produced with technology, leak detection and good practice.
2. Reuse and recirculation: treat and reuse water in internal processes to lower net abstraction.
3. Act on the value chain: much of the footprint usually sits upstream, in suppliers and raw materials, so working with them multiplies the impact.
4. Prioritise by stress zone: concentrate effort where water is scarcest rather than spreading it evenly.

There is a full treatment in the guide to strategies to reduce a company's water footprint. The ultimate goal is to strengthen the business's water security: securing enough water, of the right quality, today and in the future.

Frequently asked questions

Are water stress and water scarcity the same?

No. Scarcity is the physical shortage of water; water stress measures the pressure between demand and availability and also captures competition between uses and quality problems. There can be water stress without absolute scarcity.

How do I know if my company is exposed to water stress?

Place your sites and suppliers in a tool like the Aqueduct Water Risk Atlas to see each area's stress level, and calculate your water footprint to know how much water depends on them. Crossing both figures defines your exposure.

Is cutting water use enough to manage the risk?

It helps, but not always enough. Where water is used matters: saving in a stress-free area is worth less than doing so in a critical basin. That is why it pays to prioritise by the territory's risk and act on the value chain too.

Measure and reduce your water risk

With Manglai's water footprint software your company calculates the water it uses and crosses it with the water risk of each location, to identify where water is a real risk and prioritise the actions that genuinely cut your exposure to water stress.