Regulatory risk stems from changing, ineffective, poorly implemented, and inconsistent water policy and regulations.
Global water challenges, unsustainable industrial water practices, and increased concern among local communities about water scarcity and pollution, are all putting pressure on local authorities and policymakers to consider water reallocations, regulations, and development of water. In many countries, water service providers are considering pricing policies that promote greater efficiency in order to curb water scarcity. In others, governments are regulating industrial effluent to clean up their rivers, lakes, and streams.
In many part of the world, local governments do not have the capacity to consistently deliver high-quality water to local industries and agricultural growers.
However, regulatory risk is also present when governments are not able to effectively manage their water resources or create effective policies and regulations. In many areas of the world, crumbling infrastructure leads to incredible water losses thereby exacerbating water scarcity. In others, a lack of water quality regulations causes rampant pollution to the extent that local industries must pay high costs to treat their incoming water before it is suitable for use.