Water crises: a point of no return?

News - 3/22/2019

Water is increasingly sought after and needs to be protected. 2.1 billion people are in desperate need of blue gold, according to a report released by the UNESCO last Tuesday. Inadequate access to safe drinking water and sanitation services cost 780,000 deaths caused by dysentery and cholera each year, far more than the victims of conflict, earthquakes and epidemics, according to the report. An increasing number of metropolises are facing significant water shortages around the world. Until it reaches "Day Zero", the date on which the taps are dry. For example, the worst water crisis in nearly a decade hits Manila at the moment. Infrastructure delays and rising demand are the cause of all the evils of the capital of the Philippines.

Blue gold is facing such significant challenges that the World Economic Forum has ranked water crises as one of the five biggest global risks facing the planet in terms of impact in its Global Risks Report 2019. The independent international organization highlights “a range of compounding factors risks pushing more megacities towards a water day zero” including population growth, industrialization or weak infrastructure. It also denounces “short-termist and polarized politics” that jeopardize water resources.

Water is a rare resource. It is estimated that only 1% of the water on the earth is usable. According to the United States Geological Survey, salt water represents 97% of total reserves while 2% of freshwater is frozen in ice caps and glaciers. Liquid freshwater reserves, meanwhile, are unequally spread between countries with large supplies and an increasing number of countries which are suffering from water stress. At the same time, global warming, along with population growth and rising per capita water footprints are putting increasing pressure on resources and exacerbating competition between water users and usage.

Water is central to most of human activities, whether agriculture, industry, and domestic and even recreational needs. People talk about the “virtual water” needed to make a product or deliver a service. According to the Water Footprint Network, an estimated 10,000 litres of water on average are used to make a kilo of cotton while a kilo of beef requires approximately 15,000.

A call for action

All hope is not lost as long as there is an awareness on the part of all governments and citizens. Unlike commodities like oil, water is a renewable source. Solutions exist to avoid waste and shortages. Technological progress is opening up a significant array of potential solutions like using big data to model rainfall for more intelligent watering of crops or biochemical advances which make sea water desalination by reverse osmosis more accessible. If we are to preserve blue gold, we will also have to change our consumption habits and production methods.

Companies have been communicating more than ever in 2018 on their contributions to the UN’s Sustainable Development Goals (SDG) for 2030 covering very different fields including clean water and sanitation. They are first and foremost directed at governments. Private companies and investors have also been asked to contribute. Public and private initiatives have been rapidly growing for more than 2 years. SDGs were integrated in our macro (sovereign debt) in april 2017 and micro (issuer) ESG research in April 2018.