water: shortages are inevitable. How ready are we?

investment viewpoints

water: shortages are inevitable. How ready are we?

Carolina Minio-Paluello, PhD - Global Head of Solutions, Limited Partner, LOIM

Carolina Minio-Paluello, PhD

Global Head of Solutions, Limited Partner, LOIM

Demographic changes, together with rising global temperatures resulting from climate change, are set to have a profound impact on the supply of freshwater, leading to widespread water shortages.

The summer of 2018 was one of the hottest on record in countries all over the world. Ireland recorded its hottest temperature in 42 years, deadly wildfires tore across Greece and California, while the heatwave in Japan was severe enough to be classified a natural disaster, following the deaths of 65 people.

It is tempting to view this spike in global temperatures as a quirk; a summer oddity which will soon fade to a memory. The reality is quite different and the unpalatable truth is that rising temperatures are set to become a fixture, not an aberration. Consequently, water shortages are also set to become an increasingly frequent occurrence.

The World Health Organisation (WHO) estimates that water scarcity already affects four out of every 10 people, worldwide. It is not hard to see evidence of this in the press. Eastern Australia found itself in the grips of a severe drought over the summer, one which prompted the federal government to issue a $190m relief package for affected farmers.

If the situation today is unsettling, the projections are far from reassuring. By 2025, UNESCO estimates that 1.8 billion people will be living with absolute water scarcity, while two-thirds of the world population could be under water stress conditions. The United Nations expects water scarcity will have displaced between 24 million and 700 million people by 2030.

If we stand any case of averting this situation, large scale investment is required. In 2017, the LO Funds – Global Climate Bond invested in impact bonds which supported water management projects in 15 countries. It is estimated that projects backed by the fund treated 6,893m3 of wastewater every day – equivalent to more than two Olympic-size swimming pools.

Specifically, we have supported water and wastewater management company Severn Trent’s efforts to enhance its efficiency. The UK stands to suffer from significant water deficits by 2050 which is why it is so important to invest in preventative measures. As a result of this project, Severn Trent is aiming to reach 25 million litres of water saved per day within the near future.

It goes without saying that water and sanitation are critical to the survival of both the planet and ourselves. It is only by recognizing the need for change and supporting these types of projects can we hope to make a difference.  

 

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