Water presents high risk to agribusiness

Embargoed until 21 June 2015, 05.00am

News release

Water presents high risk to agribusiness

Whether it’s growing crops, generating electricity or entertaining tourists, water is a key ingredient for the success of the New Zealand economy, yet this also makes it a key risk.

PwC’s latest publication, Preserving water through collaboration that works, considers how New Zealand within a global context, has responded to water risks and the potential to improve water management in the future. New Zealand faces its own risks which differ from those in other parts of the world, and these risks, are increasing.

PwC Director and Local Government expert David Walker says, “A usable supply of water is fundamental to the New Zealand economy and permeates across all industries – and notably farming, forestry, electricity generation and public sectors. However continued effective water management is becoming more complex and costly. Identifying and managing the potential material risks both in direct operations and in the supply chain - for example, pollution, flooding, irregular or reduced supply, governance, regulation and reputational issues, is an important step to managing the bottom line and avoiding sudden costs.”

Whether it’s used to cool, heat and/or clean as well as an ingredient, water is also a critical factor in the supply chain; it can cause disruption in storage, damaging stock and imposing detrimental impacts on distribution. Even Financial Services is touched by water, investing in and insuring a business with an unknown or unquantified exposure to water risk.

There are steps being taken by the public sector to address our country’s water needs with local government working on 1,160 water-related infrastructure projects valued at $16.07 billion, planned or already in progress through to 2025.

“Public funding is only one piece of the puzzle though. While New Zealand is in a relatively fortunate position compared to many countries with a very high amount of water use per capita (only the US and Chile use more) and relative abundance of freshwater coupled with a small population, we cannot afford to become complacent. There’s still much to be done to improve water management through collaboration and the Land and Water Forum initiative,” concludes Mr Walker.

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Notes to editors

For more information, please see the PwC report - Preserving water through collaboration that works available at: www.pwc.co.nz/water

For further information on the Land and Water Forum Initiative – please seewww.landandwater.org.nz

At the current pace, global demand for water will increase by 55% by 2050, projects the Organisation for Economic Cooperation and Development (OECD) and will mainly come from manufacturing (+400%), electricity (+140%) and domestic use (+130%). In fact, the World Bank has cited a 40% global shortfall between forecast demand and available supply of water by 2030. Add in competition from agriculture to feed growing populations, and the gap between supply and demand results in very challenging consequences.

This means that water has moved to the top of the global business risk agenda - according to the World Economic Forum’s Global Risks Report 2015 - and is a major concern for society as a whole. With agribusiness sharing water with communities, industry and other users, securing the right quality and quantity of water at the right time is set to become a serious production and reputational issue.

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