Water Risk and Its Impact on the Financial Markets and Society: New Developments in Risk Assessment and Management (Palgrave Studies in Sustainable Business In Association with Future Earth)

Acknowledgements
Contents
Notes on Contributors
List of Figures
List of Tables
Introducing Water Risk: A Framework for (Integrated) Water Risk Assessment and Management
	1 The Water Challenge
	2 Defining Water Risk and Discussing Opportunities
	3 Frameworks for Modeling Water Risk
	4 Contributions to Water Risk Modeling
	References
Assessing Water Risk: Frameworks, Models, and Tools
Data for Water Risks: Current Trends in Reporting Frameworks, Shortcomings, and the Way Forward
	1 Introduction
		1.1 The Many Dimensions of Water and Financial Risks
	2 At the Intersection of Water and Finance, a Complex and Fragmented Landscape of Data Stakeholders
		2.1 The Water and Finance Risks Information Ecosystem
			2.1.1 Overview
			2.1.2 From Sustainability Reports/Corporate Disclosures to Actionable Financial Information
			2.1.3 ESG Standards—The Guidelines for Sustainability Reports
			2.1.4 The Quantitative Tools
		2.2 Contextualization and Analysis of the Stakeholders Map
			2.2.1 Climate Agreements, SDGs, and Financial Risks: A Narrow View of Water Risks
			2.2.2 The Absence of National-Level Action on Water Finance
			2.2.3 The Prominent Role of the Civil Society
	3 ESG Disclosures and Investment Decisions
		3.1 ESG Frameworks for Investors
		3.2 Water Recommendations in ESG Frameworks
		3.3 Challenges with ESG Reporting Compliance and Application in ESG Financial Performance
			3.3.1 Context
			3.3.2 Data Availability, Complexity, and Costs
			3.3.3 Lack of Clarity, Standardization, and Relevance
			3.3.4 Confusion in the Expectations of the Investment Community
	4 Water Assessment Tools
		4.1 Water Risk Tools
		4.2 Water Valuation Tools
	5 Recommendations
		5.1 Reducing the Loss of Information
		5.2 Blind Spots in Water and Financial Risks
			5.2.1 Scarcity
			5.2.2 Flood
			5.2.3 Pollution
		5.3 Developments for a Better Accounting of Water and Financial Risks
			5.3.1 Data
			5.3.2 Tools
			5.3.3 Metrics and Frameworks: Beyond Baseline Assessments and Climate Change Projections
	References
How Do Investors Assess Water Risks?
	1 Water: The Investor Perspective
		1.1 Water and the Responsible Investor
	2 Assessing Water Risk
		2.1 Water Needs
		2.2 Water Risks Classification
			2.2.1 Physical Risks
			2.2.2 Transition Risks
			2.2.3 Operational Risks
			2.2.4 Regulatory Risks
			2.2.5 Financial Risks
			2.2.6 Reputational Risks
	3 Risks and Issues
		3.1 Global Water Issues
			3.1.1 Ocean Plastics
			3.1.2 Biodiversity
			3.1.3 Ocean Heating
		3.2 Climate Change and the Canadian Context
			3.2.1 Changes in Snow, Ice, and Permafrost and Changes in Freshwater Availability
	4 Sector-Specific Water Risks
		4.1 Agriculture
		4.2 Food and Beverage
		4.3 Consumer Goods
		4.4 Cannabis
		4.5 Energy and Utilities
		4.6 Mining and Extractives
		4.7 Oil Sands
		4.8 Real Estate
		4.9 Technology and Electronics
		4.10 Tourism and Leisure
	5 Assessing Water Information
		5.1 The CEO Water Mandate
		5.2 The Alliance for Water Stewardship
		5.3 Ceres Investor Water Toolkit
		5.4 Climate Disclosure Project (CDP)—Water
		5.5 Metrics and Qualitative Judgement
	6 Considerations of Water in Investments
		6.1 Water in Equity Portfolios
		6.2 Private Equity
		6.3 Fixed Income
	7 Assessing Water Risk
		7.1 Stress Testing
		7.2 Scenario Analysis
		7.3 Impact Measurement
	8 Investor Engagement and Corporate Water Stewardship
		8.1 The Importance of Corporate Water Stewardship
	9 Resilience and Opportunity
		9.1 Circular Economy
		9.2 Smart Water Networks
		9.3 The Concept of “Blue” Investments
	10 Conclusion
	References
The Developing Field of Water Risk Valuation for the Financial Industry
	1 Water Availability Impacts on the Profitability of the Coal and Power Sectors
	2 Shadow Price Model
		2.1 Impacts on Profitability
		2.2 Shadow Water Prices: Wide-Ranging Values
		2.3 Water for Coal: Data Gaps Bring Uncertainty
		2.4 Water for Power: Bottom-up Approach
		2.5 Challenges
	3 Balance Sheet Exposure
		3.1 Coal Mining Companies: Up to 100% Exposure to Water Stress
		3.2 Thermal Power Generation: Spread Out but Still Exposed
		3.3 Challenges
	4 Conclusion
	References
Financial Implications of Parched Power: Insights from an Analysis of Indian Thermal Power Companies
	1 Introduction
	2 Approach
		2.1 Process and Scope
		2.2 Data Sources
		2.3 Methodology
			2.3.1 Historical Analysis
			2.3.2 Forward-Looking Analysis
		2.4 Assumptions and Limitations
			2.4.1 Historical Analysis
			2.4.2 Forward-Looking Analysis
	3 Analysis
		3.1 Historical Analysis
		3.2 Forward-Looking Analysis
			3.2.1 The Relationship Between Drought and Water Shortage-Induced Outages
			3.2.2 Estimating Future Impacts
	4 Conclusion
	References
Water Insecurity and Climate Risk: Investment Impact of Floods and Droughts
	1 Introduction
	2 Economic Impact of Floods and Droughts
		2.1 Heatwaves
		2.2 Floods
		2.3 Droughts
	3 Global Economic Impact
	4 The Emitters
	5 Attributable Financial Contribution to Climate Damages
	6 Critique
		6.1 Pre-industrial Baseline
		6.2 Producer-Versus-User Responsibility
		6.3 Combination of Flood and Drought Baseline and Producer Responsibility
	7 How Should Investors React?
	8 Conclusions
	References
Chronic Coastal Water Threats Warrant a Valuation Re-Think
	1 Introduction: New Risk Landscape Will Cause Reassessment of Valuations
	2 Changing Physical and Regulatory Landscapes
		2.1 Sea Level Rise Is Accelerating
		2.2 Central Banks and Regulators Starting to Recognize Risks
	3 A Case for Accounting for Chronic Risks Today
		3.1 Clustered Assets and People Lead to Increased Risks
		3.2 Negative Finance Feedback Loop Will Continue if Valuations Do Not Include Such Risks
		3.3 Adjust the Terminal Value to Incorporate Chronic Coastal Threats into Valuations
	4 How to Assess Coastal Threats
		4.1 A Coastal Risk Index for Risk Assessment
		4.2 Absolute and Relative Risk Assessment
		4.3 Understanding Government Action
		4.4 Dealing with Hotspots
	5 Challenges
	6 Conclusion
		6.1 Preparing for the Financial Evolution
		6.2 Next Steps
	References
Managing Water Risk: Investing in the Future
Water Risks, Conflicts, and Sustainable Water Investments: A Case Study of Ontario, Canada
	1 Introduction
	2 Background
		2.1 Theoretical Background on Risk Assessment and Management
		2.2 Corporate Water Risk Assessment and Management
		2.3 Financial Sector and Water Risks
		2.4 Gaps and Opportunities in Water Risk Assessment
	3 Case Study: The Province of Ontario, Canada
		3.1 Water Management and Governance Landscape for Ontario
		3.2 Sub-Watershed Based Physical Risks
		3.3 Federal, Provincial, and Municipal Regulatory Risks
		3.4 Reputational Risks, Conflicts, and Legacy Issues
	4 Opportunities for Sustainable Water Investments
	5 Conclusion
	References
Forward Pricing of Embedded Water: A Step Toward Sustainable Development in Agriculture
	1 Introduction
	2 The Indian Context
		2.1 Water Governance: A Miss in India
		2.2 The Situation of Water Scarcity in India
	3 Research Methodology
		3.1 Climate Classification
		3.2 The Model
		3.3 The Model Assumptions
	4 Analysis
		4.1 One-Crop Model
		4.2 Many-Crop Model
	5 Impact of Forward Pricing of Embedded Water
		5.1 For Farmers
		5.2 For Government
		5.3 The Challenges
	6 Conclusion and Recommendations
	References
Misbehaving Drinking Water Systems: Risk and the Complex Nature of Failure
	1 Introduction
	2 Features of Water Distribution Networks
	3 Failure Types
	4 Propagating Failures
	5 Competing Modes of Failure: Hydraulics and Water Quality
	6 Benefits of Failure
	7 Need for Risk Analysis
	8 Summary and Conclusions
	References
Multi-dimensional and Interacting Water and Climate Risks and Pricing Them in the Industry Context
	1 Introduction
		1.1 Climate-Induced Tail Risk
		1.2 Importance of Incorporating Climatic Extremes into Risk Models
	2 Likelihood of Extreme Climate Events
		2.1 Choosing Climate Data to Quantify Impacts Across Space and Time
		2.2 Defining an Extreme Event
		2.3 Calculating Climate Exposure—Basic Algorithm
	3 Quantifying Financial Impact of Extreme Climate Events (Application to the Mining Industry)
		3.1 Metrics to Quantify Loss/Damage
			3.1.1 Overview
			3.1.2 Temporary Impact
			3.1.3 Permanent Impact
		3.2 Quantifying the Portfolio Impact
		3.3 Relative Risk and Indexing Across Portfolios
		3.4 Parallels with the COVID-19 Crisis
	4 Summary
	Annex 1: Extreme Value Theory Applied to Extreme Rainfall
	References
Water Risk: An Overview and Inspiration for Future Work
Index