Planet Earth is 70% water, yet only about 0.5% is freshwater readily available for drinking, washing and watering crops. And much of that is becoming scarcer due to rising demand and intensifying heat and drought linked to climate change.
Some 2 billion people globally already lack regular access to fresh drinking water, while half the world’s population suffer water scarcity for a part of the year.
Water stress is costly. It can lower crop yields, worsen food insecurity, reduce energy production and increase health risks due to poor sanitation.
The economic value of functioning freshwater ecosystems was estimated at $58 trillion in 2023 — or about 60% of global gross domestic product (GDP), according to conservation organization, the World Wildlife Fund (WWF).
High water stress in arid, drought-stricken countries across Africa and the Middle East is set to cause an economic decline of 25% over the next 20-30 years, noted Quentin Grafton, the Unesco Chair in Water Economics.
This also means less money for necessary food imports or the major infrastructure required for easing water scarcity, such as dams and desalination plants.
As water shortages impact food supplies, economic activity and employment in these regions, social and political upheaval can follow, explained Grafton, who is also an economics professor at the Australian National University.
Displacement and mass migration are consequences, leading to instability in regions like southern Europe as people cross the Mediterranean Sea from areas experiencing increasing desertification.
The problem is amplified since implementing solutions also costs a lot of money. Diverse freshwater ecosystems can reduce the duration and severity of droughts but have been drained through development and over-irrigation. These require major rehabilitation, with the world having lost a third of its wetlands since 1970, notes the WWF.
The water crisis is also set to slow the rise of powerful developing economies. Grafton says India does not have enough water to maintain, for example, the coal power plants producing thermal electricity that has underpinned rapid economic growth and helped alleviate poverty across the nation.
“Their goal is 7% growth but this is a fantasy,” he said of the nation with 18% of the world’s population and only 4% of its freshwater. “There’s not enough water to go around.”
India’s rural poor suffer most from water scarcity. Over-exploitation of groundwater is a major concern as the water table recedes. Solutions include programs that fortify local water catchments with earthen dams that better retain monsoon rains before the dry season.
The record heat and drought causing rivers to slow and lakes and reservoirs to dry out has also skewed the hydrological cycle whereby water evaporates and falls back to earth as rain.
Soil moisture and nutrition have been thrown into permanent decline as a result. This has decimated the agricultural production that is the foundation of economies across Asia and Africa.
During the severe 2020-23 drought in the Horn of Africa, some 13 million livestock died and crops failed as at least 20 million people suffered acute food shortages and loss of livelihoods. The drought was made 100 more likely due to climate change.
Water scarcity is also increasing across Europe as the region warms faster than any other continent on the planet apart from Antarctica.
After Europe recorded its hottest year yet in 2024, Germany experienced its driest known late winter to early spring period this year. Drought extended across large parts of the continent from the United Kingdom to Central Europe, while Mediterranean countries have experienced ongoing severe heat, wildfires and water scarcity.
At the same time, more and more industry sectors are competing for limited water resources, says Sergiz Moroz, a water management expert at NGO, the European Environment Bureau.
The European Union is addressing the significant water consumption of IT data centres, which rely on water-intensive cooling systems and are expanding rapidly alongside cloud computing and AI. The bloc’s Water Resilience Strategy, set to take effect in 2026, plans to impose usage limits on tech companies.
Meanwhile in England, climate change, population growth and environmental pressures are expected to cause a water shortfall by 2055 equivalent to a third of the nation’s current daily usage, according to government projections.
