How water became the riskiest global asset of all
Last year it was Cape Town, this year Chennai has run dry. “Day zero”, a time when the taps are turned off, is hitting another vast swathe of humanity. This time, a weak monsoon and bad water management are to blame. The frightening prospect is that 21 other Indian cities face a similar fate. There are increasing signs that a global water crisis is morphing into a climate emergency.
“Unfortunately, there are many other water-stressed and parched spots on Earth, from Somalia to North Korea,” says Callie Stinson, leading the Water Initiative at the World Economic Forum.
“But while some places wrestle to fend off ‘day-zero’ situations, others, like Jakarta, struggle with the combined challenges of flooding, pollution and sea level rises. Today’s climate and water issues are not separate or parallel threats, they are increasingly intertwined. Look at the headlines any day of the week and you see signs of climate change manifesting itself through water crises.”
The importance of water resilience
For eight consecutive years, water has stubbornly hit the top five risks in the World Economic Forum’s Global Risks Report, as highlighted by 1,000 experts. The top risks for 2019 also include extreme weather events, failure of climate-change mitigation and adaptation, biodiversity loss and ecosystem collapse, and natural and human-induced disasters.
“Environmental risks are not only intensifying as weather patterns change, they are also becoming more closely interconnected, creating an increasingly complex challenge to our economic and societal resilience,” explains Ms Stinson. “And water cuts across most of today’s top risks; it’s the ultimate nexus issue.”
It’s also a costly one. The World Bank and the Organisation for Economic Co-operation and Development forecast that global flood losses in coastal cities, exacerbated by climate change, will escalate to $52 billion a year by 2050. Add in the risks from sea-level rises, sinking land and flood damage for large coastal cities and this could top $1 trillion a year if they fail to adapt.
“Fortunately, there are a lot of new and exciting initiatives that are doing great work to build water resilience to climate change, in terms of disaster risk reduction or longer-term adaptation strategies. These draw upon innovative technology, data, finance and policy. People are waking up to the fact that water resilient societies are a big part of the climate equation,” says Ms Stinson.
For instance, the Dutch government has created a resilience design challenge to address the issues tied to urban water stress in Asian cities. In the United States, the newly launched Adrienne Arsht-Rockefeller Foundation Resilience Center is working to provide a billion people with resilience solutions to climate change, migration and security-related challenges by 2030.
Emerging investment to improve water resilience
From the private sector, a global coalition of insurance companies, investors, asset owners, engineering firms and ratings agencies is emerging. These are being joined by governments and development institutions to mainstream and properly price climate risk into infrastructure investment decisions.
Such examples underscore the fact that water cannot be tackled in a silo. A business-as-usual approach won’t help mankind address the risks around water in the coming decades.
“We can’t think about droughts or flooding beyond their impact on food security, migration, health or ecosystems. Yet the persistence of water and other environmental risks suggests that as these threats become increasingly intertwined, we need a more systemic and cohesive response,” says Ms Stinson.
“Mobilising a joined-up approach to public-private collaboration is vital. It must be one that takes an integrated view of the challenges and the solutions. This will be critical for building water resilience across the global economy. This is not an option for the years ahead, it is a must-do.”