Investing in Climate Change

The Rising Tide of Water Scarcity Issues


Midway through 2019, officials in Chennai, India, a city of 4.9 million residents, announced that its four primary water reservoirs had dried up. About 18 months earlier, Cape Town, South Africa, declared the water supply for the city of 4 million had dwindled to three-month levels. According to a 2019 report from global research firm World Resources Institute (WRI), water scarcity has resulted in “extremely high” stress on water supplies in 17 countries, and 44 others are contending with “high” stress levels.

With dire conditions so pervasive, many see the world on the verge of a global water crisis, prompting government officials, innovative companies, and impact investors to strategize solutions to the situation.

Resources Increasingly Diminished, Polluted, and Unusable

Water scarcity represents an unsustainable condition: water supplies cannot adequately meet water demand. The World Wildlife Foundation (WWF) explains that the leading causes are:

  • Pollution: From human waste to industrial run-off, toxic materials taint surface sources and subsurface aquifers.
  • Agriculture: While thirsty crops and leaky irrigation systems draw down rivers, lakes, and aquifers, fertilizers and pesticides pollute freshwater sources.
  • Population growth: A steady rise in the number of people on Earth translates into ever-growing water demand.
  • Climate change: While more frequent droughts and floods strike communities, melting snowpacks and glaciers disrupt long-standing freshwater-seawater balances.

Although much of the crisis is centered in arid locations such as California, where the agricultural industry consumes 80% of the water used, some of the world’s greatest cities are vulnerable. According to the BBC, the top at-risk cities include Beijing, Moscow, London, Tokyo, and Miami.

As water scarcity grips a region, community health suffers from a lack of clean drinking water, plummeting sanitation levels, and a slowing economy, according to the WWF. Researchers in the Harvard Law School National Security Journal add that water scarcity issues “pose severe global security risks.”

In the private sector, innovative companies are focusing on both supply and demand, developing new technology around wastewater distillation, desalination systems, and personal usage.

Tackling Water Scarcity

To address water stress, the WRI suggests three approaches. First, agricultural efficiencies must be improved through farming techniques and technology. At the same time, constructed and natural infrastructures must be supported to work together. And finally, water previously discarded as “waste” should be treated and recycled to extend its life cycle.

Since federal legislation in the US is unlikely, given recent moves to weaken the Clean Water Act, state governments are taking action. For example, Connecticut passed its first state water plan earlier this year, while California has been operating under a water conservation act for a decade.

In the private sector, innovative companies are focusing on both supply and demand, developing new technology around wastewater distillation, desalination systems, and personal usage. For example, India-based Aquvio, which recently closed a round of seed funding, is a water-purifier startup that reaches over 1.2 million people. Other investors are raising capital through enterprises such as WaterCredit and WaterEquity, while the New York Times notes that water-related mutual funds and exchange-traded funds are offered by multiple asset managers.

Want to learn more about water management? Read:

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