Marybeth Collins
A peer-reviewed study in Communications Earth & Environment links
Brazil’s soy and beef exports to water-scarce river basins, raising new concerns for China and the EU—two of the country’s top agricultural buyers. Researchers found that 20% of China’s imports and 50% of EU imports depend on basins experiencing high or critical scarcity, underscoring fresh supply chain vulnerabilities.
“Almost half of the blue water used for exports to the EU was sourced in river basins with high or critical water scarcity,” said Michael J. Lathuillière, lead author and researcher at the Stockholm Environment Institute, in the August 2025 article.
Water Stress Hotspots
The study identifies several high-risk basins that supply both markets:
- São Francisco & Parnaíba – categorized as critical scarcity
- Atlântico Sul & Uruguai – ranked as high scarcity
These hotspots show how global commodity demand can strain freshwater systems already competing with domestic uses such as households, energy, and ecosystems.
Beyond Deforestation Metrics
While global due diligence efforts—such as the EU Regulation on Deforestation-Free Products (EUDR)—focus heavily on forest loss, the authors warn that supply chains may shift from high-deforestation regions to high water-scarcity areas, unintentionally trading one risk for another.
Quantifying the Impacts
- Blue vs. Green Water: Most soy and beef production relies on green water (rainfed), but blue water (irrigation, cattle drinking, reservoir evaporation) remains a critical component.
- EU Exposure: Nearly 48% of blue water tied to EU imports came from water-scarce basins.
- China Exposure: About 20% of blue water in Chinese supply chains originated from high or critical scarcity regions.
Implications for Procurement
For businesses facing tightening ESG rules and Scope 3 disclosures, the findings point to three immediate actions:
- Layer Water onto Deforestation Due Diligence: Incorporate basin-level water scarcity into compliance and sourcing dashboards, alongside deforestation data.
- Apply Standard Metrics: Use the AWARE framework (Available WAter REmaining) to calculate water-scarcity footprints consistently.
- Target Risk Reduction: Prioritize interventions—such as reservoir management, efficient irrigation, or cattle water systems—in municipalities producing the largest footprints.
What Comes Next for Supply Chains?
The study makes clear that deforestation is only part of the sustainability equation. For procurement and sustainability leaders, the next step is to layer water metrics into existing due diligence frameworks. Doing so reduces blind spots and ensures compliance strategies do not simply shift risks from forests to freshwater.
Actionable priorities include:
- Expand Monitoring Beyond Forests: Incorporate basin-level water data, alongside deforestation, into sourcing and supplier dashboards.
- Engage Suppliers in High-Risk Basins: Work with producers in São Francisco, Parnaíba, Atlântico Sul, and Uruguai to improve irrigation efficiency, reservoir management, and water access practices.
- Adopt Global Standards: Use recognized methodologies such as the AWARE framework to quantify and disclose water scarcity footprints.
- Build Transparency into Reporting: Clearly communicate both deforestation and water risks in sustainability disclosures and ESG reports to meet emerging EU and global requirements.
For companies, this means recognizing that water scarcity is not a distant issue—it is a material supply chain risk with direct implications for resilience, reputation, and regulatory compliance.
