How the global water crisis affects us all, including businesses.
Global water challenges, like water scarcity and pollution, are having an increasingly negative impact on businesses. Now more than ever, companies need to assess their water performance and the river basins in which they operate to stay in business.
Each river basin is unique, but there are a number of water trends that can be seen in many places around the world.
Increasing water demand
The demand for water in industry and agriculture is increasing significantly due to population growth and economic development. Freshwater consumption worldwide has more than doubled since World War II, and is expected to rise another 25 percent by 2030 (Wild et al., 2007).
Agriculture accounts for more than two-thirds of global water use, including as much as 90 percent in some countries of the Global South (UN Water, 2013).
The world’s population is currently growing by about 80 million people per year (USCB, 2012), and is predicted to reach 9.1 billion by 2050 (UNDESA, 2013).
Water stress and unsustainable supply
“Water stress” refers to the ability, or lack thereof, to meet human and ecological demand for fresh water. Areas become water stressed when there is not enough clean water – or access to clean water – to meet environmental and societal needs.
Water is already over-exploited in many regions of the world. More than one-third of the world’s population – roughly 2.4 billion people – live in water-stressed countries, and by 2025 the number is expected to rise to two-thirds of the world’s population (United Nations, 2014). Groundwater tables and river levels are receding in many parts of the world. In many areas, there is not enough water left to support healthy ecosystems and the services they provide.
Many local governments do not have the capacity or funds to manage their water resources sustainably. This often leads to insufficient and inconsistent delivery of water; low-quality, polluted water sources; unreliable infrastructure; and a lack of planning for water shortages or climate change.
Declining water quality
Declining water quality and outright pollution is an acute problem around the world caused by agricultural runoff, contaminated industrial wastewater, and improper disposal of human waste. This pollution leads to environmental degradation and severe human health concerns.
In many developing countries, waterways traditionally used for drinking water or other community needs have been heavily contaminated. Decreased environmental flows, resulting from industrial or environmental factors, exacerbates water pollution by further concentrating existing contaminants in smaller quantities of water.
One example: In China, many rivers are so polluted that even industry cannot use the water. An estimated 20,000 chemical factories in China are dumping uncontrolled or marginally controlled pollutants into rivers (OECD, 2007). In 2006, a third of surface water samples were deemed severely polluted (Xinhua, 2007).
Unmet environmental, social, and economic needs
Many key water needs — especially environmental and basic water services for the poor — are currently unmet. In many cases, there is sufficient physical water supply to meet the demand, but water managers do not prioritize the need for environmental flows, or don’t have the capacity or funding to meet key needs. These problems will only deepen as agricultural, industrial, and residential water demand continues to increase.
Almost 900 million people worldwide do not have access to safe drinking water, and up to 5 million people die each year from water-related illnesses. At the same time, insufficient water levels for rivers, lakes, and streams threaten habitat and valuable ecosystem services. Approximately 2.3 billion people, almost 40 percent of the global population, do not have access to toilets or other ways to safely dispose of their urine and feces (WaterAid, 2015), leading to severe human health concerns, polluted rivers, and unproductive workforces. Over 500,000 children die every year from diseases associated with inadequate water and sanitation, while many more people are left unable to work and provide for their families, and ecosystems are severely contaminated and over-exploited (WaterAid, 2015).
Environmental sustainability and social responsibility have become very important to investors, consumers, and the general public. These stakeholders are increasingly expecting that companies operate in a way that eliminates adverse impacts on ecosystems and people, and provides societal benefit.
Investors are increasingly filing resolutions that ask companies for more disclosure on water practices, including policies, environmental and social impacts, and water usage throughout the value chain. This concern is not just about brand reputation, it’s about fiscal prudence. Investors realize water risks play a critical role in business viability.
Consumer demand for “green” products and responsible corporations has led to a competitive advantage for conscientious companies. The water sustainability certification system developed by the Alliance for Water Stewardship has created a new standard by which consumers and investors can compare companies’ water performance.
Climate change is projected to significantly reduce renewable freshwater resources in most dry subtropical regions (Jiménez Cisneros et al., 2014). Where industries and people could once expect reliable water supplies on an annual basis, they are now often left without enough water to function and a great deal of uncertainty.
These changes often compound existing water risks. For example, in many areas, climate change will concentrate annual precipitation into a shorter time frame, thereby putting stress on local infrastructure and storage capacity in the dry months. Catastrophic weather events can also exacerbate existing water problems, such as a hurricane spreading pollution or a drought exacerbating water scarcity.