Water scarcity is set to become the new normal. By 2025, it is expected to affect about two-thirds of the world's population, and a similar proportion of companies will encounter substantial water-related risks across their operations. This issue is of such significance that Eurasia Group has named water stress as one of the top 10 geopolitical risks for 2023.
Effective water policy management requires transitioning from a crisis reaction model to a preventative risk-handling approach. Yet such a shift is not anticipated to occur soon, which means that the burden of addressing the problem will fall on companies and communities themselves.
There is no immediate fix on the horizon. Traditionally, wealthier states have viewed water problems as issues for poorer countries, often remedying the situation through aid rather than sizable investment in essential technologies. High costs have kept solutions such as desalination out of reach for agricultural purposes, even though agriculture uses up to 70% of freshwater resources.
This year's UN water conference held from 22 to 24 March—the first of its kind in close to 50 years—did not yield any ground-breaking resolutions akin to the climate-centric Paris Agreement. That said, in a surprising development, participants announced a newly created UN special water envoy position, which means that water will have its dedicated home within the UN architecture. There are more than 30 UN agencies currently tackling water issues, but their efforts lack a united front.
While the conference did not prompt a widespread shift in water policy, it did ignite political momentum against water stress. Asian countries particularly stepped up, with commitments in areas such as infrastructure (China, Japan), regulatory frameworks (Vietnam), rural water access (India), and technology investments (the Asian Development Bank committed $11 billion by 2030).
Conversations at the UN water conference revealed a close link between climate, biodiversity, and water, prompting major companies to explore integrating environmental concerns into a holistic strategy. This climate-biodiversity-water nexus featured prominently at the recently concluded UN climate summit (COP28) in Dubai.
This is because climate change, biodiversity loss, and water problems are interconnected. Climate change is increasingly responsible for 11% to 16% of current biodiversity loss, amplifying droughts and floods across Asia. Addressing one crisis without the others will not suffice. If anything, this segmented approach can have adverse consequences. For instance:
To avoid creating climate remedies that further drive biodiversity loss and affect water bodies, nature-based solutions can be identified and deployed to mitigate all three crises. Coastal mangrove forests, for example, are some of the most biodiverse ecosystems and they store vast amounts of carbon, filter water, and protect communities from storms and rising sea levels. But they are also some of the most threatened habitats on the planet. Studies indicate that, by protecting and restoring mangroves in the Asia-Pacific region, the well-being of millions of people who depend on them for food and security could be secured, and business opportunities worth an estimated $23 billion could be created.
A sense of urgency in responding to the biodiversity and water crises is undermined by the fact that the deterioration of biodiversity often occurs out of sight and the depletion of water resources is talked about only during dry and summer seasons. However, continued erosion of the planet's life-support systems and water bodies will have global ramifications. The rapid loss and degradation of coastal wetlands, for instance, is leading to a reduction in local food security and increased vulnerability to extreme weather events. Environmental disasters such as hurricanes and floods in coastal areas of the Asia-Pacific are exacerbated by the loss of these systems, causing an estimated $56.8 billion in economic damage in 2018 alone.
Coordinated efforts from both public- and private-sector actors are therefore needed to reverse this trend and tackle multiple environmental crises simultaneously.