Water is vital to human existence and the water crisis happens to be a notable concern for business leaders, economists, and policymakers. The increased water scarcity is complex and dynamic, resulting from the joint influences of basin-level water resources, climate change along managed systems adaptive capabilities.
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According to studies, there would not be sufficient water available for meeting the global demand for both energy production and drinking by 2040. The shrink in freshwater resources and its increasing demand is likely to cause a negative ramification for people worldwide.
Drivers of Water Scarcity
The global water crisis happens to be a leading challenge for human development. It hinders the achievement of the worldwide sustainable development goal. While the water crisis is usually acknowledged as a regional river basin problem, the drivers of the same happened to be global. Various economic reasons prevail when it comes to the predicament of the water crisis.
With an increasing population, the demand for water keeps on increasing. As the human population has doubled in the last five decades, there has been a constant growth in economic development and industrialization which resulted in an increase in water usage, huge loss of biodiversity, and water ecosystem transformation.
Other than that, agricultural commodities, being the primary source of worldwide water consumption, are usually consumed and traded outside the areas they happen to be produced. Such economic business connections indicate that global transformations in water consumption results in an influence on regional water systems. Similarly, regional water system shocks can propagate globally.
Being a critical input to additional sectors like manufacturing, transportation, and energy, the changes in the local water supply can propagate throughout scales and sectors. Presently, more than 40% of the worldwide population resides in river basins that happen to be experiencing water shortages. An increase in population further highlights that an enhanced demand for food, clothing, and shelter puts additional stress on water supplies in energy and digestible commodity production.
Another thing that comes into play is the lack of proper water management systems. This contributes greatly to the increasing global water crisis. Other than that, groundwater management results in overpumping throughout the normal years and ultimately results in the restriction of the availability of groundwater in dry years. Alternatively, there is climate change, continued population growth, and globalization that add to the water scarcity impacts and drivers.
Water Crisis: Economic Implications
One of the main economic implications of the water crisis is the business impact globally leading to increased operating costs and remaining competitive. For firms worldwide, controlling costs happen to be challenging but it worsens when the water price increases exponentially. With that being stated there are numerous economic implications of the scarcity of water. Let us discuss the other implications below:
Effect On Agriculture
Water scarcity has a notable effect on agriculture as a key economic implication. While the agricultural industry contributes to the water crisis, it also happens to be highly dependent on the resource as well.
In areas like Morocco, deteriorating water supplies mean environmental harm and the overall loss of land use concerning agricultural purposes has been estimated at around 350 million dollars. Other than Morocco, the water crisis in parts of the Middle East, China, and India face severe drought conditions, leading farms to decrease their crop production and prices of food to spike severely.
Enhanced Global Conflict
Resources of freshwater are usually shared by one or more nations which might lead to more global conflicts as they become scarce. According to the United Nations, approximately 200 transboundary aquifers and 276 transboundary river basins have been identified as such.
While the treaties happened to outpaced acute problems throughout the last fifty years, there has been a warning about the overuse of water potential is threatening the national security of the United States.
Economic Slowdown
According to the United Nations, there has been an estimation that half of the global population will reside in areas of high water scarcity by the next two decades. It is challenging to possess a thriving economy when freshwater does not happen to be easily accessible for individual, farming, and industrial use.
Production of goods like food, clothing and cars can be restricted due to the lack of freshwater resources. This lack of water can further affect the productivity of workers by causing diseases and enhanced water costs for people can decrease the disposable income of households.
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Shortages Of Energy
The energy requirements of the world are rapidly enhancing with population growth and modernization, however, the production of energy is one of the greatest consumers of freshwater sources in the world.
As per reports from 2010 in the United States, thermoelectric energy plants accounted for 38% of freshwater consumption in the United States. The worldwide power demand is anticipated to increase by 70% by the year 2035 with China and India accounting for the maximum of the development. On the other hand, renewable energy sources like solar and wind energy demand far less water for producing a fraction of the energy production of today.
How To Rectify This Dire Situation?
Among the procedures to deal with water, the crisis is enhanced storage infrastructure, improved farming practices, water recycling, updating sewage systems, and desalinating plants. Governments need to invest in infrastructure for alleviating the water crisis problem in the future.
When government happens to respond to the water crisis by boosting allocation and efficiency, even 25% of water losses and more highly valued uses decrease dramatically and for particular regions may even eliminate together. The stewardship of improved water can end up with high economic dividends.
