The Drupps Water Pricing Model
Because Water Price and Water Value are two different things
Water’s true value is not reflected by its price
Water price and water cost are two different things. The first one is your cost for getting it, often at par with its production cost. The second one is the cost imposed on you without it, what you stand to lose if you don’t have enough.
It is important to understand this difference because it makes sound investments in water security unnecessarily difficult. Today’s water price says nothing about its availability tomorrow.
The Drupps Water Pricing Model
Many businesses have been hooked on near-free water for so long they cannot see its true value. That prevents them from making sound investments in their own water security.
Drupps has developed a simple model to visualize the true value of water for commercial users. Its purpose is to highlight water’s value as a vital component for continued operation, instead of just another input.
Probability of Water Shortage
This one is based on official statistics for your local water basin, combining current water levels with future projections.
Since future projections come with a range we propose choosing the mean value, or the “top” of the normal distribution.
Calculation example
An operation with an output value of 100 M€ facing an average 5% drop in water supply is running a Financial Water Risk Exposure amounting to 5 M€/yr.
With a desired 3-yr payback on the investment, this operation should invest up to 15 M€ to reduce net water need by 5%.
Water is too important not to understand
You may disagree with our Water Pricing Model. Or maybe you embrace it. Either way is fine with us as long as we make you shift your mind about water’s true value.
Access to clean water is a human right. Commercial users come second. That’s why they need to think harder about what to do if water shortage hits. We are here to help.