Addressing global water stress

As World Water Week unfolds, bringing the world’s attention to the most pressing water-related challenges, we’re taking the opportunity to consider the broader implications of water scarcity on global economies and investment landscapes. Recent findings from the World Resources Institute (WRI) underline the severity and widespread nature of the issue.

Stark statistics on water stress

New WRI data paints a sobering picture:
– A staggering 25% of the global population, distributed across 25 countries, grapple with extremely high water-stressed conditions annually. These countries are depleting a significant 80% of their available water supplies each year.
– Furthermore, for at least one month every year, about 4 billion people – or 50% of the world’s populace – are exposed to high levels of water stress.

Soaring global water demand

According to WRI’s Aqueduct water risk map, the thirst for water has grown exponentially worldwide, with demand more than doubling since 1960. Although regions like Europe and the US have seen a stabilisation in their water demand, African nations are experiencing a surge. Projections suggest that by the year 2050, the global water demand will rise by an alarming 20% to 25%.

The list of 25 countries under acute water stress includes nations like Saudi Arabia, Chile, San Marino, Belgium, and Greece. Even more concerning are the top five countries bearing the brunt of the highest water stress: Bahrain, Cyprus, Kuwait, Lebanon, and Oman.

Economic implications of water scarcity

For asset managers, the economic ramifications of water stress are of paramount importance. According to Aqueduct‘s data:
– By 2050, a colossal 31% of global GDP – amounting to $70 trillion – will be under the shadow of high water stress. This represents a significant increase from 2010 when 24% of global GDP ($15tn) was exposed.
– Delving deeper, four countries – India, Mexico, Egypt, and Turkey – are set to represent over half of this exposed GDP in 2050.

But it’s not all doom and gloom. There are cities and nations that have taken the bull by the horns and transformed their water-scarce conditions into opportunities for growth. For instance, both Singapore and Las Vegas, despite being in extremely water-scarce environments, have flourished. Their secret? Pioneering interventions like desalination, wastewater treatment, and reuse. The WRI report emphasises that with the right political will and proactive measures, water stress can be managed and even reduced.

As stewards of vast financial resources and key players in global economic ecosystems, asset managers have a crucial role to play. Water stress, scarcity and mismanagement directly impact a company’s operational resilience, reputation, and profitability. By actively engaging on sustainable water practices, asset managers can ensure the resilience of their investments and drive positive environmental change. If you’re looking to prioritise this critical ESG factor, reach out to the SI Engage team to learn more and begin the conversation.

With World Water Week as a backdrop, now is the moment to act and reshape the future of water security.

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