Water is the drop for December

With devastating floods sweeping across parts of NSW and Victoria, water is ironically in abundance this time. The Murray Darling Basin Plan came about because the Basin is under enormous stress as a result of past water-allocation decisions, prolonged drought, natural climate variability and emerging climate change.

Recent Institute events have brought the topic of accounting for water into the spotlight for members. There were some lively sessions on water accounting held at the Institute’s Business Forum in Brisbane and at the Wine Industry Day in Adelaide.

By bringing hydrologists and accountants to the table, the Water Accounting Standards Board (WASB) released an exposure draft of its first water accounting standard, called Exposure Draft of Water Accounting Standard 1: Preparation and Presentation of General Purpose Water Accounting Reports (EDWAS 1).

The purpose of the draft is to elicit practical feedback for the final Australian Water Accounting Standard. By accounting for water, valuable information will be available to different user groups about one of Australia’s most essential yet precious resources. As water becomes scarcer and competition for water grows, the need to account for how it is sourced and distributed will increase.

So what is water accounting? It is a systematic way of identifying, recognising, quantifying and reporting on water, water rights, water obligations or other claims to water. Water accounting is very similar to general financial accounting, but we’re using volumetric rather than financial measurement, and the focus is on water rather than other assets and liabilities.

The challenges of water scarcity were very evident during a discussion at the Institute’s Wine Industry Day. Water is an integral part of the process of making wine - from growing grapes to actually producing the finished product. The wine industry has been proactive in establishing new ways of doing things to reduce the need for water although, obviously, water can never be removed completely from the wine making process.

Water and the way the wine industry is starting to adapt are really good examples of why companies are embracing sustainability as core to strategy. As I have said previously, sustainability is about managing risks - water and its availability in the future will be a major risk to many organisations.