Thirst for change: Finance's role in tackling global water scarcity

Thirst for change: Finance's role in tackling global water scarcity

By 2030, nearly half the world's population will face water shortages. As supplies dwindle, droughts intensify, and demand escalates, we stand at the precipice of a worldwide water emergency according to the latest World Water Development report1. The report underscores the stark reality of deviation from achieving Goal 6 of the UN Sustainable Development Goals (SDGs) — to "Ensure availability and sustainable management of water and sanitation for all."

Causes, consequences, and projections

A perfect storm of factors has plunged the planet into a water crisis of staggering proportions. Climate change disrupts weather patterns and melts glaciers, while pollution from industry, agriculture, and sewage taints freshwater supplies. At the same time, populations grow, development intensifies, and demand escalates. This toxic cocktail means that by 20302, the world could face a 40% shortfall between water supply and demand.


The impacts are already severe. The UN’s Food and Agriculture Organization has declared water scarcity is becoming endemic. Today, according to UNICEF four billion people (two-thirds of the global population) endure severe shortages for at least one month per year. Additionally, 700 million people could be displaced by intense water scarcity by 20303.


No country or region is immune. Droughts are an increasing phenomenon across the world, regardless of status as a "developed" or "developing" country. In regions with typically abundant supplies, forecasts predict these supplies will decline. However, the effects in areas that already experience a shortage of supply will be profound as they contend with deepening crises. This is nowhere more relevant than for arid areas such as the Middle East and the Sahel, where the world bank estimates that climate changes effects on water may have a negative effect on GDP of 14%, and 11.7% respectively4.


The impact on peace and stability are just as concerning; as access to clean and stable water supplies become increasingly fragile, it is predictable that these tensions will escalate into localised and cross-border conflicts5. Varied water users, including nation-states, provinces, and diverse stakeholders like local communities and corporations within those areas, may face irreconcilable differences in water usage, leading to unrest. Recognizing this precise problem, the UN World Water Day 2024 has adopted the theme "Leveraging Water for Peace."


Global action to safeguard water

The gap between current water management practices and UN sustainability targets underscores the need for immediate global action. No single entity can tackle this alone - success requires all stakeholders to step up.


Governments must prioritize investments in water infrastructure, efficiency, and conservation through policy and regulation. For example, recent legislation in the US, UK, France, and Italy aims to stimulate water infrastructure upgrades and incentivize reduced usage.

Corporations, which account for over two-thirds of consumption6, also bear significant responsibility to drive necessary changes. Their investments and expertise will prove critical in finding new solutions and scaling existing ones.


Regulators and policymakers play a crucial role as architects of a regulatory framework incentivizing sustainable water management practices and encouraging corporate investments in water scarcity solutions. In doing so they create the market conditions which allow the private sector to fully play its part in advancing the goals of UN SDG 6 and addressing water scarcity.


With coordinated efforts from all stakeholders, significant progress can be made toward the UN Sustainable Development Goal of ensuring water availability and security for all.


Private sector solutions

Effective global water management demands a combination of strategies. On the supply side, water utility companies will need to invest heavily in upgrades to reduce water losses through leak detection and flow control, and to improve water quality. They will also increasingly need to look towards technological solutions such as desalination and atmospheric generation. To solve the mismatch between future supply and demand, we cannot only rely only on improving existing systems and developing technological supply-side solutions to offset rising consumption. We must also curb demand.


Businesses will need to adopt novel solutions to reduce their water consumption and wastage, including through capturing run-off and greywater recycling.


If we fail to act, the taps will run dry for billions worldwide. The gap between current practices and UN targets underscores the need for immediate global action. With co-ordinated efforts progress can be made to safeguard the world's water sources.







5See the worldwater conflict list for examples of water-related conflicts -


More about the authors

Rhydian Campbell Responsible Investment Associate

Read next