In the last decade there have been improvements to the use of water resources; however, there are still an estimated 800 million people who do not have access to clean water and some 4 billion people who live under water scarcity at least one month per year. Several regions are also depleting their freshwater resources at a very fast pace — many major river basins in both developed and developing countries, are facing extremely high levels of water stress.
Water is badly managed in many of these places. It is underpriced, subsidized and in some cases given away for free. In many regions the unsustainable water use is usually acknowledged when a crisis occurs such as a flood or drought. A typical example of this is in California, the over-abstraction of groundwater has been largely ignored, until a drought hits the region, costing the state approximately $2.7 billion per year. Unmanaged water-related risks such as floods and droughts can cost an economy billions of dollars, not to mention the tragic loss of life.
Water is vital not only for the production of food, but also for energy production, for the extraction of materials, to maintain aquatic ecosystem services, for the livelihoods of people, and not least for the economy. Despite only accounting for just under 4% of global gross domestic product (GDP) in 2014, the agriculture sector consumes the majority of the world’s freshwater resources (estimated at 70%), against 23% for industry and 8% for municipal use.
Business as usual cannot continue — the global demand for water is expected to nearly double over the next 15 years. With dwindling supplies in many regions this could turn into a global water crisis affecting communities, industries, food production and the environment. There are, however, a number of solutions available which, in the words of Professor Keith Richards, should be ‘sustainable, collaborative and adaptive’.
Investment in well-needed infrastructure is one part of the solution. On a global level, a total of $7.5 to $9.7 trillion is needed in investment for water and sanitation and related equipment. In developed countries investment is needed to upgrade and maintain aging infrastructure, while in developing countries investment is needed to build new infrastructure. Other solutions include pricing water efficiently, developing tradable permits to encourage efficient allocation of water and adequate regulation. Technology also has an important role to play — for example, smart meters encourage users to understand their consumption practices and precision agriculture is enabling farmers to collect real time data on weather, soil, and crop maturity.
There isn’t a shortage of available solutions. Finding the right solution is a matter of good governance, and choosing a mix of solutions that works for your local community. It is, however, imperative that we do get it right this time as otherwise we will be sleepwalking into a global water crisis.
Authors: Elizabeth Curmi, PhD.,Edward L Morse,Willem Buiter,Aakash Doshi,Dr. Richard Fenner,Adriana Knatchbull-Hugessen,Eric G Lee,Elaine Prior,Professor Keith Richards,Patrick Yau, CFA,Anthony Yuen,