Climate-Driven Water Scarcity Could Affect Economic Growth

According to the World Bank, water scarcity, exacerbated by climate change, could spark conflict, spur migration, and cost some regions up to 6% of their GDP.

The report, High and Dry: Climate Change, Water and the Economy, states that the combined effects of rising incomes, growing populations, and expanding cities will see demand for water rising exponentially, while supply becomes more erratic and uncertain.

The key findings of the report conclude that:

• Water will soon become scarce in regions where it is currently abundant, such as Central Africa and East Asia, and in regions where water is already in short supply such as in the Sahel in Africa and the Middle East, scarcity will greatly worsen and the growth rates in these regions could decline by as much as 6% of GDP by 2050 due to water related impacts on health, agriculture, and incomes;

• Freshwater availability combined with competition for freshwater from agriculture and energy could further be depleted by as much as 66% by 2050;

• Water insecurity in drought-affected regions will cause food prices to spike, which could inflame latent conflicts and drive migration. This has happened in various regions where economic growth is impacted by rainfall and episodes of droughts and floods, and has included spikes in violence within those regions;

According to World Bank President Jim Yong Kim, “Water scarcity is a major threat to economic growth and stability around the world, and climate change is making the problem worse. If countries do not take action to better manage water resources, our analysis shows that some regions with large populations could be living with long periods of negative economic growth. But countries can enact policies now that will help them manage water sustainably for the years ahead.”