By 2030, nearly half the world’s population will face water shortages. As supplies dwindle, droughts intensify, and demand escalates, we stand at the precipice of a worldwide water emergency according to the latest World Water Development report. The report underscores the stark reality of deviation from achieving Goal 6 of the UN Sustainable Development Goals (SDGs) — to “ensure availability and sustainable management of water and sanitation for all”.

Causes and impacts of water scarcity

Many factors have plunged the planet into a water crisis. Climate change disrupts weather patterns and melts glaciers, while pollution from industry, agriculture, and sewage taints freshwater supplies. At the same time, populations grow, development intensifies, and demand escalates. This toxic combination means that by 2030, the world could face a 40% shortfall between water supply and demand.

The impacts are already severe. The UN’s Food and Agriculture Organization has declared water scarcity is becoming endemic. Today, according to UNICEF, 4 billion people – two-thirds of the global population – endure severe shortages for at least one month per year. Additionally, 700 million people could be displaced by intense water scarcity by 2030.

No country or region is immune. Droughts are an increasing phenomenon across the world, regardless of status as a “developed” or “developing” country. In regions with typically abundant supplies, forecasts predict these supplies will decline.

However, the effects in areas that already experience a shortage of supply will be profound as they contend with deepening crises. This is nowhere more relevant than for arid areas such as the Middle East and the Sahel, where the World Bank estimates that climate change effects on water may have a negative impact on GDP of 14%, and 11.7% respectively.

The impact on peace and stability are just as concerning; as access to clean and stable water supplies becomes increasingly fragile, it is predictable that these tensions will escalate into localised and cross-border conflicts. Varied water users, including nation states, provinces and diverse stakeholders such as local communities and corporations within those areas, may face irreconcilable differences in water usage, leading to unrest. Recognising this problem, the UN World Water Day 2024 has adopted the theme ‘Leveraging Water for Peace’.

Global action to safeguard water

The gap between current water management practices and UN sustainability targets underscores the need for immediate global action. No single entity can tackle this alone – success requires all stakeholders to step up.

Governments must prioritise investments in water infrastructure, efficiency and conservation through policy and regulation. For example, recent legislation in the US, UK, France and Italy aims to stimulate water infrastructure upgrades and incentivise reduced usage.

Corporations, which account for over two-thirds of consumption, also bear significant responsibility to drive necessary changes. Their investments and expertise will prove critical in finding new solutions and scaling existing ones.

Regulators and policymakers play a crucial role as architects of a regulatory framework incentivising sustainable water management practices and encouraging corporate investments in water scarcity solutions. In doing so, they create the market conditions which allow the private sector to fully play its part in advancing the goals of UN SDG 6 and addressing water scarcity.

With coordinated efforts from all stakeholders, significant progress can be made toward the UN Sustainable Development Goal of ensuring water availability and security for all.

Private sector solutions

Effective global water management demands a combination of strategies. On the supply side, water utility companies will need to invest heavily in upgrades to reduce water losses through leak detection and flow control, and to improve water quality. They will also increasingly need to look towards technological solutions such as desalination and atmospheric generation.

To solve the mismatch between future supply and demand, we cannot only rely on improving existing systems and developing technological supply-side solutions to offset rising consumption. We must also curb demand.

Businesses will need to adopt novel solutions to reduce their water consumption and wastage, including through capturing run-off and greywater recycling.

For example, the ABN Amro Aegon Global Impact Equities fund targets investments aligned with UN SDG 6. This includes an approximate $12.5bn to $13bn (£9.8bn to £10.2bn) investment into water infrastructure in a US water and wastewater utility company to enhance infrastructure resiliency and energy efficiency of the US water supply infrastructure. The fund also invests in water treatment products and technology programmes for cooling, wastewater and process water applications to help firms across a wide range of sectors to optimise their water usage.

If we fail to act, the taps will run dry for billions worldwide. The gap between current practices and UN targets underscores the need for immediate global action. With coordinated efforts, progress can be made to safeguard the world’s water sources.

Rhydian Campbell is a responsible investment associate at Aegon Asset Management.

This story first appeared in our sister publication, PA future.