Scarcity or abundance? The risks with climate change you could be missing

The words of the United Nations are among the most powerful when it comes to describing the nature and magnitude of the water crisis which is on the earth’s doorstep. In particular, the United Nations articulates well the links between water, social functioning and economic productivity. It says:

“Water is at the core of sustainable development and is critical for socio-economic development, energy and food production, healthy ecosystems and for human survival itself. Water is also at the heart of adaptation to climate change, serving as the crucial link between society and the environment.

Water is also a rights issue. As the global population grows, there is an increasing need to balance all of the competing commercial demands on water resources so that communities have enough for their needs.

At the human level, water cannot be seen in isolation from sanitation. Together, they are vital for reducing the global burden of disease and improving the health, education and economic productivity of populations.”¹

It’s incumbent on society and investors to understand the role water plays in climate change and the options at our fingertips to get involved for the better.

The state of play

According to the OECD2, climate change is, to a large extent, water change, and the primary way through which the effects of climate change will manifest. How society deals with our dwindling supplies of fresh water is likely to dominate the geopolitical landscape in decades to come.

The UN Food & Agriculture Organisation cites the disappearance of the Himalayan glaciers, source of the rivers that supply water to billions of people across Asia, and the potential loss of seventy-five million hectares of arable rainfed land in sub-Saharan Africa as just two of the many ways in which a changing climate will affect our water.

Lack of water now affects four out of every 10 people across the globe, and diarrhoea kills around 2.2 million people every year³.

Facing day zero

A term that we’ll all soon become familiar with is Day Zero – the point at which a city completely depletes its water supply. In 2018 Cape Town came within a couple of months of becoming the first major city to reach Day Zero, only staving off the worst-case scenario with the help of timely winter rains and some extreme water saving initiatives⁴ on the part of its residents.

India will be amongst the countries worst-affected, with some estimating that more than forty percent of the population – more than 500 million people – will have no access to drinking water by 2030⁵. As climate change increases the incidence of extreme weather, rains across the country will become increasingly monsoonal and harder to capture. The nation’s other major source of water – the immense Himalayan glaciers, the planet’s “third pole” – are in serious decline, and by 2060 the rivers they feed will carry less water as a result⁶.

India’s plight underscores the fact that 785 million people worldwide already lack basic access to drinking water, and any exacerbation of current crises could be catastrophic for the populations involved. Unfortunately, it is generally the poorest people in the poorest countries who currently have least access to safe drinking water. These same people are also least equipped to deal with the effects of a changing climate.

Investors may seek full transparency about water risks in a company’s operations but also across its supply chain, which often represents the largest proportion of water use. This information may be voluntarily disclosed by the company as part of its sustainability reporting regime; alternatively, organisations such as the CDP compile reports on the exposure of companies to water risk."