Manufacturing companies should put a higher price on water

Water is essential to life — and to manufacturing. Yet, many companies pay astonishingly low prices for the water they consume, often based on outdated pricing models that don’t reflect the true value of this vital resource. As global warming intensifies and water scarcity becomes a more pressing issue worldwide, it’s time for manufacturers to rethink the way they value and price water. Here’s why companies must start putting a higher price on water than what they pay for it today, not only for the sake of environmental responsibility but for their own long-term sustainability.

Water Scarcity: A growing risk to business

Water scarcity is no longer a distant, hypothetical problem — it’s happening now. By 2025, nearly two-thirds of the world’s population could experience water shortages, according to the United Nations. In some regions, water demand is expected to exceed supply by 40% by 2030 (World Economic Forum).

Manufacturers are particularly vulnerable to water shortages. In industries like food and beverage, textiles, and electronics, water is a critical input. As water supplies dwindle, companies risk disruptions in production, increased costs, and reputational damage. By proactively putting a higher price on water, manufacturers can begin to address this risk and future-proof their operations.

Higher water costs encourage innovation

When water is undervalued, there’s little incentive for companies to invest in water-efficient technologies. However, when the cost of water better reflects its true value, companies are motivated to seek innovative solutions to reduce their consumption.

In Israel, for example, one of the most water-scarce nations in the world, the agricultural sector has made incredible strides in water efficiency thanks to the higher cost of water. By investing in advanced irrigation systems like drip irrigation, Israeli farmers have managed to reduce water usage by 50-60% while increasing crop yields. Manufacturing companies can take a similar approach by investing in water recycling, closed-loop systems, and other water-saving technologies — but only if they start pricing water in a way that justifies these investments.

Preparing for regulatory changes

As water scarcity worsens, governments around the world are beginning to introduce stricter water regulations. Some regions are already implementing higher water tariffs, usage caps, and restrictions on water-intensive industries. It’s only a matter of time before more governments follow suit. In fact, 55% of global CEOs now rank water-related risks as a top threat to their business (CDP Global Water Report, 2020).

By voluntarily increasing the price they place on water today, manufacturers can get ahead of these regulations. The extra revenue generated from higher internal water pricing can be directed toward upgrading infrastructure, improving water management systems, and preparing for future compliance requirements.

The real cost of water

The price manufacturers pay for water today often reflects only the cost of extraction and delivery — it doesn’t account for the environmental and social costs of water consumption. These externalities, such as ecosystem degradation, water pollution, and reduced access to clean water for local communities, represent real costs that will eventually need to be paid. If manufacturers continue to ignore these costs, they risk facing severe backlash from stakeholders, including consumers, investors, and governments.

Companies like Unilever and Nestlé have already begun factoring the "true cost" of water into their decision-making processes. They recognize that water is not just a cheap commodity but a finite resource that must be managed responsibly. By following their lead and internalizing these costs, manufacturers can improve their long-term viability and protect their reputations.

Securing water resources for the future

Pricing water appropriately today allows manufacturers to invest in the technology and infrastructure needed to secure water resources for the future. Investing in water-efficient technologies, such as water recycling systems and rainwater harvesting, can significantly reduce a company’s reliance on freshwater sources and protect against future supply disruptions.

For example, PepsiCo has invested in water efficiency programs that have reduced its global water usage by over 25% since 2006, saving $80 million in water costs. These investments were made possible because the company recognized that paying more for water now would save them far more in the long run.

A higher price for a priceless resource

As water becomes scarcer and global warming accelerates, manufacturing companies can no longer afford to treat water as a cheap, limitless resource. By assigning a higher price to the water they consume, they create the financial incentive to invest in the water-efficient technologies and practices that will allow them to survive and thrive in a water-constrained future. This forward-thinking approach isn’t just about sustainability — it’s about ensuring long-term profitability and resilience in an increasingly volatile world.

The time to act is now, and the first step is simple: start paying what water is truly worth.

Jonas Wamstad,

Water innovator & Co-founder of Drupps