Economic Implications of Water Scarcity and Shortages | The Future of Water Requires a Sustainable, Blue Path

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Without water, neither small businesses nor major global industries can function.

Not family farms or major agribusinesses. Not energy production facilities or computer manufacturers or steel companies. Similarly, poor water quality, or limited or unreliable access to water means higher costs for all businesses – and all consumers. Water scarcity means greater risks for a community’s long-term viability and a negative impact on their competitiveness. It also means that a community’s ability to grow and create jobs is at risk. Regardless of whether water has become the new oil, one thing is certain: water is ironically both taken for granted and serves as the engine of our economy. If not properly managed, water scarcity will directly affect the local ability to grow and create jobs.

Economic Implications of Water Scarcity and Shortages.

Right now, many companies already consider water resources when making decisions about where to invest or locate facilities. And they are giving preference to areas where water risks are lowest. These businesses understand what policymakers are now coming to realize: When water resources are unhealthy or unreliable, businesses cannot grow and cannot hire or sustain a workforce. Local commerce suffers, incomes decline, tax revenues fall. The effects are very real and they are felt immediately and acutely.

In the developing world, the lack of proper water and sanitation infrastructure constricts economic growth where growth is needed most. In parts of the United States and in many developed countries, the undervaluation of water has led to poor maintenance of aging infrastructure. Water is wasted, polluted and used inefficiently, while underground and aboveground infrastructure literally crumbles. The financial burden of upgrading these systems is compounded when action is finally taken or as emergency repairs are implemented on a more and more frequent basis.

Water resources are essential assets, and effectively managing and leveraging them is a shared economic responsibility of business and industry, farms and factories, individuals and communities. Water resource management is an urgent and growing need. Meaningful and impactful solutions exist that will set the right course for growth and development in cities and towns the world over.


Water in 2050

The Future of Water Requires a Sustainable, Blue Path

To be able to adequately feed and support the world’s growing population, our global economy needs to continue to grow. Water is critical to future growth. But it can also become the major limiting factor to growth. For instance, businesses in water-scarce areas are already at risk, and so investors are increasingly taking water supply into consideration during their decision-making processes.

Given today’s approach to water management, there is only so much growth that can be sustained. Gains in efficiency and productivity in water management and utilization can reduce these risks and enable higher levels of sustainable growth, but how much higher? How far-reaching do those gains have to be? And can we make a difference in a timely enough manner by understanding that the path for sustainable growth requires more than green solutions – but also requires blue ones?

The answers lie in examining current demand and supply pressures and looking at trends within each. Demand pressures include population growth and an increase in water-intensive diets as a portion of the population moves into increasingly higher water-consumption behaviors. Demand pressures also include growing urban, domestic and industrial water usage. Climate change plays a role by creating additional water demand for agriculture and for reservoir replenishment. On the supply side, issues such as water transport, availability and variability present challenges, as does the decline in renewable water resources.



In nearly every one of these categories, trends are moving in the exact opposite direction necessary to sustain future growth. Taken together, these trends create “water stress.” And the resulting ecosystem pressures along with economic and political conflict only exacerbate that stress.

Today, many regions of the world are already water stressed due to population and economic growth. In fact, 2.5 billion people (36% of the world population) live in these regions and more than 20% of the global GDP is already produced in risky, water-scarce areas affecting production, as well as corporate reputations when competition over water usages develops.

Given today’s accelerated pace of human development and the slow pace of managing issues as complex as water resources, tomorrow’s challenges are already at our door. Whether improving our governance models or our infrastructure systems, years and even decades (not weeks or months) are required to implement change!

This is especially troubling when considering analysis by the International Food Policy Research Institute (IFPRI), which found that 4.8 billion people – more than half the world’s population – and approximately half of global grain production will be at risk due to water stress by 2050 if status quo, business-as-usual behavior is followed.

The IFPRI study also found that 45% of total GDP ($63 trillion) will be at risk due to water stress by 2050. That’s 1.5 times the size of today’s entire global economy!

By wasting less, polluting less, reusing more, managing effectively and becoming more efficient in all uses of water – individual, collective, agricultural and industrial – we can achieve higher water productivity levels (economic output per drop) and reduce water stress. Continued evolution of technology and infrastructure improvements will enhance water supply capacity for cities and industries while helping deliver clean drinking water and sanitation services to rural populations and the urban poor.

In so doing, more than 1 billion people and about $17 trillion in GDP will no longer be at risk of unsustainable water supplies by 2050.

Only by changing today’s approach to future water management and water productivity (economic output per drop) can we ensure a prosperous future. This path – one that is Sustainable and Blue – will help ensure a better world for today’s generation.


JOIN US at THE 11th INTERNATIONAL LABEL CONFERENCE 2016 and learn about Economic Implications of Water Scarcity and Shortages 

16.-18.03.2016 | Zell am See | Austria



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