Water scarcity and droughts are threatening economic stability in many regions around the world. According to experts, insufficient rainfall is the leading cause of water shortage, which results in reduced agricultural productivity, food insecurity, and higher energy costs. The consequences of these events are not just environmental, but economic as well. Governments and businesses must address this critical challenge with appropriate measures to mitigate the economic impact of water scarcity. This article explores the factors contributing to this problem and discusses possible solutions to ensure the sustainable use of water resources.
Human activities are severely disrupting rainfall patterns across the world, according to scientists and economists. As a result, societies face significant economic, health, and social stability risks. This situation arises from the assumption on which current economies are built: that we can rely on adequate precipitation. But climate change and land use change are altering this assumption so significantly that water security is now deteriorating in many parts of the world. A key source of low-carbon energy, hydropower production, is at risk, and severe water scarcity has the potential to cause political instability, conflict, and mass migration.
New tools enable the tracking and quantifying of water vapor flows that rise from rainforests and fall in far-flung places, such as Argentine soybean and wheat fields. These areas are currently experiencing worsening drought conditions as the Amazon jungle shrinks, compounded by losses of forests and other natural environments, which disrupt the natural flow of water.
According to the Global Commission on the Economics of Water, which was established last May, there is a risk to everything from the food supply to energy production. The Commission warns that eroding water security is creating risks to social stability and health, with severe water scarcity causing political instability and displacement of people. The report comes a week before the first United Nations (UN) water summit in five decades.
The scale of the water issue is vast. A 2021 report by UN-Water states that almost one in three people, approximately 2.3 billion, live in water-stressed countries, with a third of them under critical pressure. A UN Food and Agriculture Organization report from 2020 adds that 3.2 billion people live in agricultural areas with significant water scarcity or shortages. Despite these stark statistics, the full impact of water scarcity is often overlooked. It is a fundamental requirement of life, agriculture, production, and economic growth, and is key to achieving the United Nations’ Sustainable Development Goals.
Changing the current trajectory towards growing water scarcity will require understanding how closely water supplies are linked to climate and nature protection. It will also require viewing freshwater as a global rather than a local or regional issue and strengthening how limited supplies are managed, shared, and valued. Researchers state that improving water security involves shifts to more precise and sparing irrigation systems, crops that require less water, farming methods that stand up to drought, and growing fewer water-dependent crops in short-supply locations.
While the potential solutions exist, some of them are challenging to implement. Dams are a prime example. A desire to capture and store more water, manage extreme rainfall and generate clean hydroelectricity leads to a surge in dam building around the world. But such construction can lead to losses of forests, other natural environments, and farmland, and the land rights of local communities may also be threatened. Since agriculture is responsible for over 70% of global freshwater use, trade in food equals trade in water. Therefore, improving water security also requires ongoing changes, such as boosting freshwater storage, recycling more wastewater, and using less water in manufacturing in urban areas.
Financing the improvements required for water security will be a significant challenge, and many developing countries do not have the funds. However, some money could be raised by phasing out climate-wrecking subsidies that encourage water waste, such as agriculture and water subsidies that total almost $700bn per annum. The Global Commission on the Economics of Water also recommends considering “just water partnerships,” similar to the multi-billion-dollar Just Energy Transition Partnerships, which assist countries in transitioning to clean energy.
The challenges of water shortage and the subsequent effects on society are equally as significant as those caused by global warming, making the upcoming UN Summit on water a vital event. Water, as a fundamental requirement for life, agriculture, production, and economic growth, requires an increase in global cooperation, financial resources, sustainable water management initiatives, and innovative conservation techniques to attain long-term water security.
