The Water Crisis and Your Business

Authored by Amna Ahmed, Hayden Davis King, and Shaila Vester-Skinner

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Cambridge International Advisory Group, Natural Resources Insights

The Water Crisis and Your Business

Authored by Amna Ahmed, Hayden Davis King, and Shaila Vester-Skinner

Introduction

Water scarcity has been a developing problem in recent decades as populations have increased, industrialization has intensified, and the climate has changed.

The causes and consequences of water scarcity vary throughout the world. For billions of people around the world, water is in short supply, and the crisis is expected to intensify.[1] 

In less acutely water-strained regions, the increasing scarcity of water may still cause conflict between industries, the government, and the general public over water rights.

The implications for business are highly dependent on industry and region. Water-intensive industries will likely face pressure to invest in technologies that improve efficiency. Governments will likely face pressure to invest in water infrastructure and preserve natural sources of freshwater.  In addition to the ongoing water crisis, water is heavily interdependent with the broadly encompassing energy business field, specifically the oil and gas industry.

Water serves to be an essential component in petroleum productions and is also the biggest waste product in oil and gas productions. Thus, financial burdens in recent years regarding water management have occurred along with other environmental implications. In recent years, attempts to quantify water in oil and gas wells have emerged in aiding water management.

The Problem of Water Scarcity

The costs of collecting water in water scarce regions are great, and improved access has the potential to be an economic boon.[2] Studies show that the water and ecosystems value is equivalent to 60 percent of the global domestic gross product as of 2021. $50 trillion is used for biodiversity, inclement weather events, and storing carbon. Over 50 million citizens succumb to outcomes of drought per year. Water is an essential component and product of all oil and gas operations signifying its economic and environmental potency. Climate adaptation is underfunded and water is essential to mitigating climate change. Every day usage: agriculture, households, and in most industries.

Impacts of Water Scarcity

When freshwater is constrained to the point that personal use is constrained, political unrest is likely to follow. Low water levels in rivers and canals can cause issues for waterborne transportation of goods. Prolonged drought may diminish the electricity output of hydroelectric dams. Water scarcity may cause conflict over water rights between countries, industries, and subnational governments such as states and municipalities. Agriculture, being the most water-intensive industry, is most acutely affected by water shortages.

How Can You Adapt?

• Rainwater catchment and greywater reuse systems can significantly reduce water use for non-water-intensive facilities.
  

• If your business uses heated water, connecting to a district energy system can provide an additional source of revenue.

• Drip irrigation significantly reduces water use compared to sprinklers.

• Moving water-intensive production processes away from water-stressed regions can reduce water costs and lessen environmental impact.

• Investment in advanced water infrastructure can protect certain water sources from adverse environmental changes.

• Production of storable goods can be temporally shifted to periods when water is abundant and away from periods when water is scarce.

• Traditional landscaping can be replaced with xeriscaping – the use of slow-growing drought-tolerant plants.

• Additionally, it is vital to fully comprehend the entire scope of the recent water crisis and how that affects especially agricultural and energy industries.

• Then allocating a clear and reliable step by step plan for water management is integral- which has been made much more quantifiable with recent data metrics aimed to project a numeric depiction of water management according to geographic regions and specific formulas.[3]

Conclusion 

CIAG consultants can help analyze the water needs of your business. We understand that there is no one-size-fits-all solution to increase water efficiency, decrease water supply vulnerability, or address any issues that may arise from increasing water scarcity. Apart from increasing long-run profitability and reducing risk, adaptation to water scarcity can have significant intangible benefits. Having a sustainable economic impact is an increasingly important part of your public image as a business. As water becomes more scarce, businesses that use water wastefully will face increasing public pushback. Adapting your business to the changing climate is an important part of ensuring its continued health. Replenishing and restoring our natural resources such as wetlands, bodies of water, and surrounding habitats would be arguably the best jumpstart to diminishing the water crisis. In order to influence consumers to use water responsibly and adequately, the implementation of local guides and sustainable water infrastructure would be useful. Companies releasing their water consumption reports, risk assessments, and water pollution reduction reports are beneficial to the economy. Obtaining this data from major companies within the painting and coating industries increases the knowledge needed to keep water consumption levels from increasing.[4] If there isn’t a turn around, by 2050, at least 2 billion citizens will be victims of water scarcity. Water management has also been a significant economic issue however new metrics suggest various ways management can be streamlined to be as effective, cost saving, and efficient in mitigating the water crisis. 

[1] World Wildlife Fund (2024). Water Scarcity. World Wildlife Fund. https://www.worldwildlife.org/threats/water-scarcity 

[2] Tinsley, J. (2023). Economic impacts of water scarcity explained. Water.org. https://water.org/our-impact/water-crisis/economic-crisis/

[3] Mitchell, C. (2023, November 1). Water for oil & gas: Market trends and forecasts, 2023–2030. Bluefield Research. https://www.bluefieldresearch.com/research/water-for-oil-gas-market-trends-and-forecasts-2023-2030/

[4] Root, R. L. (2023, October 16). Ignoring water crisis could cost global economy, research says. devex. https://www.devex.com/news/ignoring-water-crisis-could-cost-global-economy-research-says-106394

[5] Salas, E. B. (2023b, February 6). Water-intensive industrial sectors in the U.S. 2020. Statista. https://www.statista.com/statistics/1175813/water-intensive-industrial-sectors-united-states/#:~:text=Paint%20and%20coating%20manufacturing%20is,gallons%20per%20dollar%20output%2C%20respectively.