The global water crisis is escalating and knocking the water cycle off kilter, with huge implications for economies, societies and the planet. We can see this through increasingly frequent and devastating droughts and floods, which are local manifestations of a destabilised hydrological cycle.
Nearly half of the rain that falls on land originates from land, not oceans. Green water (the water stored as soil moisture and in vegetation) flows from intact ecosystems are a critical source of this rainfall. Therefore, in addition to climate change, land use change affects the hydrological cycle. Indeed, 14% of deforestation results from extending agricultural land.
Food systems are also at risk, especially since 55% of the world’s food is cultivated in areas with declining water storage. An estimated 23% of global cereal production could be lost if irrigation becomes unfeasible as a result.
Leaders are currently gathering to discuss how to finance climate action at COP29, a meeting of the 198 countries that signed the UN Framework Convention on Climate Change. They must recognize the need for action to value, manage and govern the water cycle as a global common good in order to build water resilience.
A recent report, The Economics of Water: Valuing the Hydrological Cycle as a Global Common Good, by the Global Commission on the Economics of Water (GCEW), supported by the World Economic Forum, reveals the startling truth about our water future. In particular, here are seven findings that will make you rethink how the world views and manages its most vital resource – and how we can build resilience in the face of growing water risks:
1. Climate change intensifies water scarcity
The hydrological cycle is deeply interlinked with climate change. Each additional degree of global warming adds 7% moisture-holding capacity to the atmosphere. The resulting rising temperatures trigger extreme heat waves and dry out landscapes. Drier soils can’t support the ecosystems that absorb carbon and also create conditions prone to wildfire. This combination is turning some forests into carbon sources rather than sinks.
Some regions are projected to see up to a 30% decline in freshwater availability due to altered precipitation patterns and extreme weather events driven by climate change. This has the potential to significantly exacerbate water scarcity in already stressed areas, further destabilizing the surrounding communities.
This stark reality demands action at COP29 to integrate climate and water policies to protect the most vulnerable regions from impending shortages. Protection of natural habitats to keep moisture in soils should be part of all nationally determined contributions (NDCs).
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2. The economic costs of inaction are monumental
Water scarcity could reduce GDP by up to 6% in some regions by 2050, particularly areas with arid climates or high dependency on water for agriculture and energy production. The failure to implement better water management policies could result in regional GDP losses from 2-10% by 2050.In 2022 alone, global economic losses from natural disasters were $275 billion, of which water-related disasters formed a major part.
The combined effects of changing precipitation patterns and rising temperatures due to climate change, together with declining total water storage and lack of access to clean water and sanitation, means high-income countries could see their GDPs shrink by 8% by 2050 on average. Lower-income countries could face even steeper declines of between 10% and 15%.
These staggering figures highlight the urgent need for investments in sustainable water management.
3. Water is a key lever for climate resilience
Natural climate solutions like ecosystem restoration can buffer extreme weather and protect water supplies, while enhancing adaptation to climate impacts. Restoring natural habitats helps keep moisture in soils, mitigating climate change and stabilising the hydrological cycle. Every dollar invested in restoration provides an estimated $7–$30 return in economic benefits by improving water quality, reducing flood risks and supporting agricultural resilience.
As COP29 puts a spotlight on climate adaptation strategies, using natural solutions to keep moisture in soils should be discussed. This could contribute to the triple agenda of mitigating climate change, protecting biodiversity and stabilising the hydrological cycle – not to mention supporting food security.
4. Urgent investment in climate-resilient water infrastructure is crucial
Water infrastructure investments must triple to $1 trillion annually to ensure sustainable, reliable water access in a changing climate. Without these investments, the world faces a water crisis that could undermine economic growth and exacerbate social inequalities.
But this funding gap is only part of the story. Far greater investments are needed to conserve freshwater and scale up innovations for more efficient water use across agriculture, industry, mining and other sectors.
It’s time to ramp up funding for infrastructure resilience and innovative water solutions.
5. Effective water governance is critical for climate security
Without coordinated water governance across sectors and borders, water crises will only worsen. Over 60% of freshwater resources – known as "blue water" and found in rivers, lakes, and aquifers – cross national boundaries, including 310 transboundary rivers and 592 transboundary aquifers.
COP29 presents a critical opportunity to forge improved governance that ensures shared water resources are managed cooperatively and equitably, avoiding conflict and promoting sustainable cooperation.
6. Collaboration will unlock financial resources to tackle the water crisis
Only 1.4% of private finance mobilized through development finance was dedicated to the water supply and sanitation sector. The GCEW report highlights the need for urgent public-private partnerships to mobilize resources and expertise for effective water management.
Engaging the private sector and fostering innovative financing mechanisms will help to scale up solutions that enhance water security for all. Conditionalities and access to public procurement or support can also promote more sustainable water and land use.
7. Water-related disasters are becoming more frequent and costly
The frequency of water-related natural disasters such as floods, droughts and storms, has increased by nearly 30% over the past three decades. These events are projected to escalate in intensity and frequency as climate change progresses. Natural disasters resulted in global economic losses of $275 billion in 2022, of which $125 billion were covered by insurance.
These growing risks underscore the need to prioritize water resilience and disaster risk management, integrating early warning systems and sustainable water infrastructure to reduce economic losses and protect vulnerable populations.
Time is running out for water resilience
The Economics of Water report warns that, by 2030, nearly half of the global population could be living in water-stressed areas. Time is running out. World leaders must implement robust water management strategies now to avoid the worst outcomes.
Ensuring access to clean water, improving water efficiency, valuing and governing the hydrological cycle as a global common good and strengthening global water governance are all vital actions for securing a water-resilient future.
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