The 2026 Complete Guide to Water Credits (WRCs)

Carbon tends to sit at the forefront of climate considerations, but there’s another important, interconnected piece of the sustainability puzzle that often gets overlooked: water.

Globally, 4 billion people face severe water scarcity for at least one month out of every year, according to the United Nations University Institute for Water, Environment and Health (UNU-INWEH).

Like with global warming, human activities have had a major impact on water systems. Not only are we often using too much water, but issues like land use change and rising temperatures also stress freshwater ecosystems and the water cycle.

If we ignore these issues, more water systems will be permanently damaged. That likely means more people will live with insufficient access to clean water, agricultural production will become more difficult and expensive, and many businesses will face economic risks, like supply chain delays and shortages.

Fortunately, there are ways to reduce water risks and even improve water systems.

One option is to purchase water credits. Similar to how carbon credits emerged as a solution for offsetting hard-to-avoid greenhouse gas emissions, water credits provide a market-based solution for conserving and restoring water systems.

Here, we’ll take a deeper dive into:

• What are Water Credits?
• How do Water Credit Projects Work?
• Water Credit Project Types and Examples
• Benefits of Water Credits
• Why Individuals and Businesses Should Buy Water Credits

What Are Water Credits?

If you’re familiar with carbon credits, you already get the gist of water credits.

Similar to how one carbon credit represents one metric ton of carbon dioxide equivalent avoided or removed from the atmosphere, one water credit represents 1,000 gallons of natural freshwater flow that has been improved or restored.

Water credit projects involve protecting, restoring, or conserving water flows to ultimately help natural systems like rivers, wetlands, and aquifers, along with the communities that rely on them.

Source:  Bonneville Environmental Foundation

For example, leading project developer Bonneville Environmental Foundation (BEF) issues Water Restoration Certificates® that are third-party verified, namely by Watercourse Engineering or the National Fish and Wildlife Foundation. All BEF WRC® projects are also tracked and registered on S&P Global’s Markit registry to avoid double-counting.

Other water credit programs exist, but BEF WRCs® are arguably the most established market-based solution for addressing your water footprint.

Terrapass offers BEF WRC® certificates that support projects like the Middle Deschutes River Flow Restoration project in Oregon, which in turn helps support a healthy ecosystem for local wildlife and communities.

Buy BEF WRCs® through Terrapass today.

How Do Water Credit Projects Work?

Water credit projects work similarly to carbon credit projects in terms of directing financing toward initiatives that support the restoration of natural freshwater flows and ecosystems.

Water restoration project developers like BEF work with farmers, conservation groups, and local irrigation districts to identify these opportunities and manage the projects. Water restoration projects also meet additionality requirements, meaning that without the funding from water credits, the projects would not be possible.

For example, funding might go towards the cost and effort of securing legal agreements that help restore river flows. This is necessary to help overcome challenges like “use it or lose it” water rights policies in the Western U.S. By maintaining a water source for ecological purposes, water rights holders can maintain their water rights while addressing old and inefficient requirements like the obligation to use all of their allotted water.

Note that since water issues are largely regional, best practice is to purchase credits from water restoration projects that help relieve water stress in the same basins where you’re using water. However, water credit projects are mostly concentrated in the Western U.S. where water stress is more severe, so matching projects to your location isn’t always possible. If that’s the case, buying a mixed portfolio of water credits can still compensate for your impact, it just might not directly address water issues in the areas you operate.

Water Credit Timing

Each water credit directly translates to 1,000 gallons of natural freshwater improved or restored over an 18-month cycle.

Note that while these projects might provide long-lasting water benefits, along with other associated environmental and social benefits, best practice is for buyers to only count water credits against their water footprint for the year in which these certificates are purchased.

To address your water footprint for multiple years, buyers can purchase water credits for each year they want to balance their water impact, similar to how you would purchase carbon credits corresponding to each year’s emissions.

Also note that water credits have vintages, which refer to the primary year when the water restoration took place. Like with carbon credits, best practice for water credits is to buy ones with recent vintages — generally within the last five years, but ideally within the past three. However, you don’t have to match vintages with the year of your own water consumption, as you’re still funding water improvements that help balance your own footprint.

Water Credit Project Types and Examples

BEF WRC® projects fall into one of three main categories:

1. Restoring Flows: These projects often involve legal transactions like water rights transfers and partnerships with local groups to help keep water flowing in rivers and streams, rather than overly diverted, like for inefficient agricultural practices.

Example — Jordan River Flow Restoration: This project uses Environmental Water Transactions (EWTs) to help secure more water flowing from the Jordan River into the Great Salt Lake in Utah, which helps address the critical shrinking of this lake.

1. Restoring Natural Systems: While similar to restoring flows, this project category focuses more on physical interventions to help restore freshwater systems like rivers and wetlands to their natural state, thereby increasing freshwater and potentially providing co-benefits like cleaner water.

Example —  Pine Tree Brook Dam Removal: This project removes dams in the Pine Tree Brook in the Boston area to support the movement of local trout and improve water quality. For example, one of the dams on this brook was previously put in place to create a local ice rink, but that was no longer needed due to the 1950s construction of a nearby ice rink facility that does not rely on this water source. So, removing it helped return the brook to more of its natural order.

1. Improving Efficiency: Some water credit projects focus more on conservation and efficient water use, which can thereby help retain or restore water in natural systems.

Example —  Mason Lane Headgate: In Arizona, the Mason Lane Ditch diverts a tributary of the Verde River to irrigate agricultural land. This project funds the replacement of an inefficient headgate system with a modern, automated one to enable more precise control of the diverted water.

Benefits of Water Credits

In addition to directly supporting freshwater restoration, water credits provide a wide range of co-benefits, such as supporting:

• Groundwater conservation: Projects that minimize groundwater usage not only can improve water volume but also provide benefits like stabilization of river beds. That helps to avoid problems like sinking land and enables water systems to maintain natural filtration capabilities.
• Biodiversity: Water restoration projects often support biodiversity, like providing a healthier habitat for local fish and bird populations. That can provide associated environmental and economic benefits, like supporting pollinators and keeping local fisheries well-stocked.

One example of biodiversity co-benefits can be seen in the Merced County Seasonal Wetland Habitat project, which aims to provide an annual spring habitat for migratory birds in central California.

You can support projects like these by buying BEF WRCs® through Terrapass today.

• Recreation: Maintaining freshwater ecosystems helps provide communities with recreational opportunities, such as fishing, boating, and hiking. That can correlate with economic opportunities for these areas, while also supporting the health of local populations.
• Agricultural economies: The funding from water credits can directly support farmers and ranchers, providing an important income stream that can help mitigate issues like crop shortages. Long term, water credits can also support a more stable water supply that sustains these agricultural businesses season after season, even amidst increasing floods and droughts caused by climate change.
• Community empowerment: Water credits often involve working with tribal groups and other local communities. The economic, ecological, and recreational benefits can help protect these communities’ cultures and rights.
• Lower emissions: While water credits are separate from carbon credits, there can be interconnected benefits. For example, more efficient irrigation systems can use less water and energy. More reliable water supplies can also reduce the need for high-emitting fertilizers.

Why Individuals and Businesses Should Buy Water Credits

Water risk sometimes gets overshadowed by carbon emissions risk, but it’s important for both individuals and businesses to consider their water footprints. Buying water credits enables you to account for the impact of your water usage while supporting a broad range of environmental, economic, and social benefits.

In particular, consider the following:

For Individuals

You likely use far more water than you assume, particularly when accounting for indirect usage, like the water that went into making the jeans you bought. One survey from American Water found that most Americans think they use less than 100 gallons of water per day, when really total usage adds up to over 2,000 gallons daily, based on data from Water Footprint Network.

While it’s important to be mindful of your water usage, we’re all inevitably going to use water throughout our daily lives. So, purchasing water credits helps you take responsibility for the impact of this water usage while funding projects that have a wide range of co-benefits you may value.

For Businesses

Just as many companies acknowledge climate risk and commit to addressing greenhouse gas emissions, water scarcity and overuse can have direct economic effects on businesses, along with creating risks like reputational damage. By 2050, 31% of global GDP is projected to be exposed to high water stress, according to the World Resources Institute.

So, buying water credits can address your company’s direct water footprint and contribute to solving water scarcity and quality issues that can harm your operations going forward. Meanwhile, businesses can potentially increase goodwill with customers, employees, and the local communities where they operate by supporting water credit projects that have meaningful co-benefits.

Buying water credits can also align with other standards and certifications that many businesses value. Some examples include:

• WRI’s Volumetric Water Benefit (VWB) Accounting 2.0: Water credit projects can potentially align with this VWB accounting standard, and Bonneville Environmental Foundation was one of WRI’s partners involved in creating it. Still, consider looking into the details of this accounting standard and project specifics to determine alignment.
• UN Sustainable Development Goals (SDGs): Depending on the specific project, there can be benefits that align with multiple SDGs. For example, a project might align with SDG 6: Clean Water and Sanitation, while also supporting local economic development that aligns with SDG 11: Sustainable Cities and Communities.
• LEED Certification: Water credits can be matched to a building’s annual water usage and counted toward this green building certification.
• 1% for the Planet: BEF is an environmental partner of 1% for the Planet, so buying BEF WRCs® can qualify a company for membership.
• B Corp: Buying water credits can also count toward earning B Corp certification.

Ready to Support Water Restoration?

Terrapass makes it easy for you to balance your water footprint while supporting sustainable ecosystems and community development.

You can directly purchase BEF WRCs® through Terrapass today or reach out to speak with one of our sustainability experts who can help you build a custom portfolio of carbon credits and water credits that align with your sustainability goals.

Talk to a Sustainability Expert

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