Autor: Nermin Sefić
While climate debates dominantly focus on carbon dioxide and temperature, a quieter but equally existential crisis is brewing in the background — freshwater scarcity already affecting billions of…
While climate debates dominantly focus on carbon dioxide and temperature, a quieter but equally existential crisis is brewing in the background — freshwater scarcity already affecting billions of people and which, according to most projections, could become one of the most significant geopolitical and economic challenges of coming decades.
Although Earth is covered in water, less than three percent of it is fresh, and most of that freshwater is locked in glaciers and underground reserves that are difficult to access for everyday use. Available freshwater from rivers, lakes, and easily accessible groundwater sources represents only a fraction of the planet's total water resources, and that limited quantity must meet the needs of a growing global population, increasingly intensive agriculture, and rapidly growing industrial demand.
Agriculture remains by far the largest consumer of freshwater globally, using the vast majority of available resources for crop irrigation. This reality creates a direct tension between the growing food needs of a still-growing global population and the limited availability of water needed to produce that food, a tension further worsened by climate change altering precipitation patterns in ways that often reduce water availability precisely in regions already under water stress.
Water scarcity isn't an evenly distributed global problem, but a strongly regionally concentrated challenge. The Middle East and North Africa represent the region with the most intense water stress on the planet, where a combination of arid climate, rapid population growth, and, in some cases, long-running conflicts over cross-border water resources creates an environment where access to water becomes a direct national security issue.
Rivers crossing multiple national borders — like the Nile, the Tigris and Euphrates, or the Indus — are becoming increasingly significant sources of geopolitical tension as upstream countries build dams and irrigation infrastructure that reduce water flow available to downstream countries. Ethiopia's dam on the Blue Nile, for instance, has become a source of long-running diplomatic tension with Egypt, which depends on the Nile for practically all its freshwater, illustrating how infrastructure projects in one country can directly threaten another's water security.
Alongside the visible crisis of rivers and lakes, an equally, if not more, worrying crisis is unfolding beneath the surface — depletion of underground aquifers at rates significantly exceeding their natural replenishment rate. Regions like northern India, parts of the United States, and the Middle East are pumping groundwater for agriculture and urban consumption at rates that, if continued, could exhaust some of these aquifers within a few decades.
This crisis is particularly worrying because it unfolds mostly invisibly, without dramatic visual signals like dried-up rivers that might prompt urgent public and political reaction. Groundwater levels decline gradually, measured through satellite data on gravitational anomalies, in a way that remains mostly invisible to the everyday observer until consequences — like sudden drops in agricultural productivity or land subsidence — become drastically visible.
Water scarcity carries direct economic consequences going beyond the obvious costs of agricultural damage. Industrial sectors dependent on large quantities of water — from semiconductor chip manufacturing, which requires exceptionally pure water in large quantities, to power generation, where many plants require water for cooling — face increasing risk of operational disruption in regions under water stress.
Taiwan, the global hub for manufacturing the most advanced semiconductor chips, occasionally faces serious droughts directly threatening production continuity critical to global technology supply chains, illustrating how a seemingly local water problem can have global economic consequences given the concentration of critical industrial production in regions exposed to water stress.
Desalination, the process of removing salt from seawater to produce drinking water, is often presented as a technological solution that could solve water scarcity for coastal regions. While the technology is becoming increasingly efficient and cheaper, desalination remains an energy-intensive process generating significant costs and environmental consequences through disposal of concentrated saline waste, limiting its applicability as a universal solution, particularly for countries lacking access to cheap energy needed to power desalination plants at scale.
Improving irrigation efficiency, shifting toward drought-resistant crops, and pricing mechanisms that more accurately reflect the actual value and scarcity of water represent additional strategies that can mitigate the crisis, but no single solution offers a complete answer to the structural problem of growing demand meeting limited, and in many regions increasingly unpredictable, supply.
The concept of "virtual water" — the amount of water consumed producing a good that's subsequently exported — offers a useful framework for understanding how global food trade effectively redistributes water resources worldwide in ways that remain invisible in traditional trade-policy discussions. A country exporting water-intensive crops like rice or cotton, even if itself suffering water stress, effectively exports its scarce water in the form of that crop, while a country importing food instead of producing it domestically effectively saves its own water resources that would otherwise be needed for that production.
This dynamic creates complex questions of global equity and strategy — countries with limited water resources face a choice between achieving greater food self-sufficiency, at the cost of further depleting already scarce water resources, or relying on food imports, thereby becoming dependent on global trade-flow stability for basic food security, a choice carrying its own geopolitical risks if global trade is disrupted.
Rapid urbanization worldwide, particularly in developing countries, creates an additional layer of water-security challenge extending beyond absolute water-resource availability. Cities growing faster than their water-supply infrastructure capacity face losses through leakage in outdated distribution systems that can amount to a significant share of total distributed water, losses representing an equally, if not more, significant challenge as absolute water-source scarcity itself.
Alongside the Nile, numerous other cross-border rivers are becoming sources of growing tension. The Mekong River, flowing through six Southeast Asian countries, faces increasingly intense disputes over dams China is building upstream.
According to the latest World Resources Institute (WRI) report from 2023, using their Aqueduct Water Risk Atlas — the first such country-level water risk assessment of its kind — 25 countries, home to roughly a quarter of the world's population, face "extremely high" water stress each year, regularly using almost their entire available water supply. Bahrain, Cyprus, Kuwait, Lebanon, and Oman are cited as the five most affected countries, where even a short-term drought carries the risk of completely exhausting water resources.
The broader picture is equally concerning — at least 4 billion people, or half the world's population, live under high water stress for at least one month per year. Global water demand has more than doubled since 1960, and WRI projects further growth of 20 to 25% by 2050. The financial dimension of this risk is equally dramatic — WRI estimates that by 2050, as much as $70 trillion of global GDP will be exposed to high water stress, compared to $15 trillion (24% of global GDP) in 2010. Just four countries — India, Mexico, Egypt, and Turkey — account for more than half of that exposed GDP projected for 2050.
A concrete example of economic damage is already visible in India, where lack of water for cooling thermal power plants between 2017 and 2021 resulted in a loss of 8.2 terawatt-hours of energy — enough electricity to power 1.5 million Indian households for five years. WRI estimates that failure to improve water resource management could result in GDP losses of 7% to 12% in India, China, and Central Asia, and 6% in the Middle East.
The most concrete, best-documented example of cross-border water conflict today is the Grand Ethiopian Renaissance Dam (GERD) on the Blue Nile — Africa's largest hydroelectric project, with a production capacity of 5,150 megawatts, worth an estimated $4-4.6 billion. Construction began in 2011, reservoir filling was completed on September 5, 2024, and the project itself was formally completed and ceremonially inaugurated in September 2025 — after Ethiopia unilaterally continued filling the dam despite the absence of a legally binding agreement with Egypt and Sudan on equitable Nile water allocation.
For Ethiopia, where an estimated over 52% of the population still lacks access to electricity, the dam represents a path toward doubling national power-generation capacity and potentially becoming a major regional energy exporter. For Egypt, which depends on the Nile for practically all its freshwater, the dam represents an existential threat — one academic estimate published in Defence Studies journal projects the water shortfall caused by the dam could cost the Egyptian economy $51 billion and cause the loss of 4.74 million jobs.
Tensions have escalated to the point that Ethiopia's foreign minister formally warned the UN Security Council in September 2024 about "repeated Egyptian threats to use force," while the United States has occasionally threatened to withhold development aid to Ethiopia if the dispute isn't resolved. Academic analysis published in the Fletcher Forum of World Affairs describes GERD as potentially the first modern armed conflict directly caused by water, given the combination of Egyptian military positioning, the absence of a neutral mediator, and a fundamental conflict of interest that doesn't allow easy compromise — Ethiopia prioritizes maximizing energy production, while Egypt prioritizes stable, predictable water supply, two goals that structurally collide during reservoir filling and management periods.
Cape Town in 2018 provided the most concrete example of how close a major city can come to completely running out of water, and simultaneously a rare example of successfully averting catastrophe through coordinated public action. After three consecutive years of insufficient rainfall, dam levels supplying the city of four million residents fell to 27% capacity by January 2018, with a projected drop to a critical 13.5% by April 12, 2018 — a date that became known as "Day Zero," when city taps would be shut off for everyone except critical services, forcing residents into daily rations of 25 liters per person at one of 200 collection points.
The city avoided this scenario through a combination of aggressive measures and the fortunate circumstance of returning rain in June 2018. City government steeply raised tariffs for heavy users, banned filling pools and watering lawns, reduced water pressure across the system (this measure alone saved roughly 10% of total municipal consumption), and diverted water from the agricultural sector toward the city — a move that bought an additional month but caused the loss of over 30,000 agricultural jobs. Residents cut water use by nearly 60% relative to 2015 levels, with average household consumption falling from 183 liters per person daily before the drought to just 84 liters by 2018 — a dramatic 54% reduction, reaching one of the lowest per-capita water consumption rates of any major city in the world.
The Cape Town case became a reference study for urban water management worldwide precisely because it shows technical solutions alone weren't sufficient — critical was the combination of transparent, continuous communication with citizens (including electronic signs daily displaying how many days of water remained), pricing incentives, and, according to University of Cape Town researchers, broader cooperation among authorities, the business community, and individual citizens extending beyond purely technical expertise.
In contrast to dramatic crises like those in Cape Town or the Nile conflict, Israel offers a rare, well-documented example of a country successfully solving its own structural water scarcity through massive, long-term investment in desalination. Facing the worst drought in 900 years in 1998, and a 20% decline in natural water supply over the prior 30 years, the Israeli government launched a long-term seawater reverse-osmosis desalination construction program in 1999.
The result is an unprecedented transformation — use of desalinated tap water rose from 0% to 65% within just 15 years, according to Israeli water experts. Today desalination supplies between 55% and 80% of Israel's drinking water, depending on source and measurement methodology, through a network of five large plants on the Mediterranean coast (Ashkelon, Palmachim, Hadera, Sorek, and Ashdod) plus dozens of smaller plants purifying brackish groundwater, mostly in the Negev desert. Sorek, the world's largest reverse-osmosis plant when built in 2013, alone supplies 1.5 million people, while its successor Sorek 2 (2025) set a new world record for lowest water production cost, reducing carbon footprint by 30% through an innovative steam-driven design.
This transformation enabled Israel to become a net water exporter despite its geographic location in one of the world's driest regions — the country supplies Jordan with 100 million cubic meters of water annually from the Sea of Galilee, covering 20% of Jordan's water needs and strengthening the peace agreement between the two countries, while mandated West Bank water supply under the 1995 Oslo II Accords represents an additional dimension of regional water diplomacy enabled by Israel's technological surplus.
Still, the Israeli model isn't without limitations restricting its universal applicability. Desalination requires significant energy consumption — projections suggest Israel will need an additional 11 terawatt-hours of electricity annually by 2065 for desalination alone, while coastal plants remain exposed to military attack risk in a conflict-prone region. For countries lacking access to cheap energy at scale or financial resources comparable to Israel's GDP per capita, replicating this model remains considerably harder, despite the approach's technical proof of concept.
The water crisis deserves considerably more attention in global sustainability debates than it currently receives, partly because, unlike climate change which has become a dominant global topic, water scarcity remains mostly regionally perceived as a local problem of individual countries, rather than a connected, systemic challenge requiring a coordinated global response comparable to efforts directed at climate change.
#WaterScarcity #WaterSecurity #ClimateRisk #Infrastructure #NerminSefic #GNKASG #GNKDINAMOLtd #Economics #GlobalMarkets #Innovation #Leadership #BusinessStrategy #RiskManagement
Cjelovit tekst i izvor: https://gnk-asg.hr/en/publications/global-water-scarcity-next-crisis/
Autor i urednička odgovornost: Nermin Sefić. Izdavač: GNK ASG d.o.o..
#GNKASG #GNKDINAMOLtd #NerminSefic #BusinessIntelligence #waterscarcity #watersecurity #climaterisk #desalination #infrastructure #NerminSefić
