This analysis highlights the tension between water availability and agricultural production. Finding a balance between these two critical resources will be essential—especially as the global population expands.
Record-setting levels of smog this week shut down Harbin, a city of 11 million people in northeast China. Officials blamed increased coal consumption during the first days of winter heating, underscoring the urgency of the China State Council’s recently announced initiative to address persistent smog in major cities.
But while the Air Pollution Control Action Plan has ambitious goals—cutting air particulates and coal consumption—it may create unintended problems for the country’s water supply.
Water is never far from the news these days. This summer, northern India experienced one of its heaviest monsoon seasons in 80 years, leaving more than 800 people dead and forcing another 100,000 from their homes. Meanwhile, Central Europe faced its worst flooding in decades after heavy rains swelled major rivers like the Elbe and the Danube. In the United States, nearly half the country continues to suffer from drought, while heavy rainfall has broken records in the Northeast, devastated crops in the South, and now is inundating Colorado.
Businesses are starting to wake up to the mounting risks that water – whether in overabundance or scarcity – can pose to their operations and bottom line. At the World Economic Forum in Davos this year, experts named water risk as one of the top four risks facing business in the twenty-first century. Similarly, 53% of companies surveyed by the Carbon Disclosure Project reported that water risks are already taking a toll, owing to property damage, higher prices, poor water quality, business interruptions, and supply-chain disruptions.
The costs are mounting. Deutsche Bank Securities estimates that the recent US drought, which affected nearly two-thirds of the country’s lower 48 states, will reduce GDP growth by approximately one percentage point. Climate change, population growth, and other factors are driving up the risks. Twenty percent of global GDP already is produced in water-scarce areas. According to the International Food Policy Research Institute (IFPRI), in the absence of more sustainable water management, the share could rise to 45% by 2050, placing a significant portion of global economic output at risk.
To maintain its economic growth and provide for its massive population, China must reconcile two powerful, converging trends: energy demand and resource scarcity. One prime example of this tension is the country’s coal use and water supply.
A new study from the United States Geological Survey (USGS) reveals troubling news: The aquifers that millions of Americans rely on for freshwater are being depleted at an accelerating rate. In fact, aquifer depletion in the years between 2004 and 2008 was nearly triple the historical average.
Population growth and increasing demand—in particular for irrigating crops—are straining these underground freshwater sources. In many cases, aquifers have accumulated over the course of millions of years.
There are two lessons we take away from this USGS study:
Growing demand is increasingly coming into conflict with our finite global water supply. Even in places that are historically water-abundant, growth in water demand is outstripping available supply. (That’s why WRI’s Aqueduct project focuses on water stress – the ratio of water supply and demand – more than measures of water quantity.)
Investors need to understand a wide variety of business and market risks facing the companies in which they invest. In the 21st century, that includes water risks.
An increasing number of companies are experiencing detrimental water-related business impacts, including operational or supply chain disruptions and property damage from flooding, to name a few. These impacts can be costly--in 2011 they cost some companies up to $200 million--and have caught the attention of investors around the world.
A new report from CERES draws a connection between water risk and hydraulic fracturing in the United States. The report adds an important dimension to the conversation about how energy use and water stress will play out in the years ahead.
The report, Hydraulic Fracturing & Water Stress: Growing Competitive Pressures for Water, brings together Aqueduct’s high-resolution water stress maps with FracFocus.org data on the location and water use of U.S. shale oil and gas wells. The complete map (see below) shows where potentially water-intense hydraulic fracturing is happening in water-stressed areas.
The results of the study are eye-opening: Almost half of the more than 25,000 oil and gas wells mapped by Ceres are in water basins with either high or extremely high water stress.
We know less about one of world's most pressing challenges today than we did 10 years ago. It's no secret that water - or the lack thereof - will be one of the defining issues of the 21st century. And yet, the United Nations World Water Report, in 2009, stated that when it comes to water, "less is known with each passing decade."
The World Economic Forum recently named the water supply crises as one of the top risks facing the planet - edging out issues like terrorism and systemic financial failure. Water risks permeate almost every aspect of global society. We got a taste last year with crops scorched by drought, shipping lanes threatened and energy plants shut down by low water levels, and coastlines devastated by flooding. Exacerbated by climate change and population growth, such crises will become more common and costly. Yet, the world largely lacks the data we need to monitor, understand, and respond to these water challenges. We are flying blind when it comes to global water issues.