Have you ever heard of the term full cost accounting? In short, it represents what we could consider a quantum leap away from the traditional definition of cost analysis. Accounting, as we know and love it, requires us to be very particular and very strict when it comes to interpreting data. There is no margin for error and everything must balance. We all remember double entry, don’t we?
There is a significant difference when it comes to full cost accounting, as compared to the traditional approach. We need to account for everything in holistic terms and know that there is a social and environmental implication to everything that we do. This is often referred to as “triple bottom line” or “3P” style of reporting. A full cost accounting approach should always be used when it comes to the construction of the water costing profile, so all actions and potential implications are understood and dialed in to the plan. This is, don’t forget, our most precious resource.
Inclusive and accurate water costing is a “must do” exercise for every organization. As water is our most precious resource, we can be sure that there will be a considerable reaction should we overuse it or fail to be sustainable, especially in times of scarcity. Don’t just stop at an absolute calculation when water costing. The real cost of using and eliminating water is far more detailed and involved.
The true picture will only be revealed when water costing takes into account all the indirect costs associated. This is where we start to enter a gray area in accounting and corporate disclosure terms, as there is no absolute method in favor. Nevertheless, many of the most forward thinking companies are adopting a comprehensive approach to water costing, by really interpreting their actions from every angle.
Consider direct water costing. This will include the cost of energy required to treat, transport or modify the water for our particular use. It will include the cost of the technology and methods required to “manipulate” the water. It will include regulatory costs, as well as the cost of actually procuring and discharging the resource. Don’t forget, that there are management costs and other resource costs associated with time, materials, equipment and technology.
The direct water costing liability is only part of the equation. The next part will require a brainstorming session to unravel the company’s impact on its surroundings. For example, how will water use and discharge effect delicate ecosystems and local ecology? If there is a service disruption, how will it impact internally and externally, in broader terms? If a company chooses to use water in a particular way, is it likely to annoy or otherwise influence an important group of important stakeholders? What additional, potentially significant costs could arise?
Inclusive water costing calculations must be available and considered before any strategic initiatives are considered by the organization. If expansion could involve an increase in the amount of water consumed or discharged, how would this affect people and planet, quite apart from profits?
Every resource usage has its own implications. Justification must be apparent when it comes to each kilowatt of energy, each individual gram of carbon and each drop of water.
Daniel Stouffer has a great deal of information about water costing and how a visit to www.verisae.com can be of use to you.
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