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Reports 2 Sep 2014

Evaporating Asset

Water Scarcity and Innovations for the Future

By Lindsay Clinton, Christina Wong and Lloyd Hicks

The World Economic Forum has identified “water crises” as one of the top ten issues of greatest concern to the global economy in 2014. What is causing these crises and how do we address them? Through research supported by the Rockefeller Foundation in 2014, SustainAbility explored the challenges faced by freshwater and freshwater ecosystems globally due to growing sectoral competition—between agricultural, industrial and municipal users—for limited water. This paper illuminates some of the most innovative approaches to protect, preserve and replenish freshwater ecosystems.

Following several months of research involving a review of over 90 reports, articles and papers, dozens of expert interviews and a convening with a global cohort of water experts, SustainAbility developed a number of observations about the global water crisis and what it means for the private sector.

  • Water stress will be a growing problem in the coming years due to population growth, urbanization, climate change and growing demands from agriculture, energy, and industry.
  • Critical system failures including siloed decision-making and an undervaluation of ecosystems and freshwater have exacerbated the problem.
  • Water issues are gaining momentum with increasing private sector awareness of water risk, a focus on the food/energy/water nexus across sectors, and greater investment in water infrastructure, green infrastructure and wastewater reuse.
  • There are several promising and innovative solutions that aim to protect freshwater and freshwater ecosystems, from watershed payments and natural capital management tools to the development of water markets and green bonds.
  • Companies can do more by extending beyond conservation and efficiency within normal operations and looking towards how they can engage in water management at the basin level. Of the 563 companies analyzed for the Carbon Disclosure Project’s (CDP) 2013 Global Water Report, only 3% of respondents set concrete targets or goals for watershed management.

While the outlook may seem bleak, in principle most countries have the water they need to support growth, but are simply not managing it appropriately. Too often the economic costs and benefits of water use are not accurately incorporated into water allocations, resulting in increasingly water-stressed situations. With a more balanced and systems-level approach to water management, where water allocations are no longer made in isolation from other economic decisions, there is hope that we can successfully navigate the water scarcity challenge.

This report provides an introduction to the context and causes of water scarcity, the growing momentum around addressing water issues and a look at what SustainAbility considers to be some of the more interesting solutions on the horizon.

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