Water scarcity could dry up economic opportunities
Life is dependent on water – and so is the economy. The agricultural sector needs it to grow the food that we eat. The energy sector needs it for cooling and cleaning. Manufacturing needs it for processing. Every single industry needs water to operate.
The World Bank recently released a new report, High and Dry: Climate Change, Water, and the Economy, which warns that climate change is causing water scarcity issues that could significant economic challenges around the world. According to the report, some regions could see a 6% drop in their GDP by 2050 because of water-related issues.
Although the report states that economies in western Europe and North America will likely be spared, it cautions that water scarcity issues is still likely to adversely impact the economies of water-rich nations if the world continues to operate without adequate water policies and water management practices.
Canada, for example, has roughly 7% of the world’s renewable freshwater and its measurable contribution to the national economy can range anywhere from $7.5 to $23 billion per year. Droughts during 2001-2002 amounted to a total GDP loss of $5.8 billion. A similar story can be seen in California, where droughts cost the agricultural sector $2.2 billion in 2014.
The report offers three solutions to help nations create climate-resilient economies and become more water secure. The most controversial solution, number one, is to optimize the use of water through better planning and incentives to reduce water use, such as water permits and pricing. The second is to expand the water supply through the use of dams or water recycling. And lastly, countries need to reduce the impact of extreme weather events by "water proofing" economies through better urban planning, risk management, and citizen engagement.
This post first appeared in TINAN 71.