Climate change is likely to force many countries to modify how they use resources, particularly water, a new report from S&P Global Market Intelligence has found.
With drought and flood events in recent years highlighting the importance of water as a strategic global resource, the report 2024 Sustainability Outlook: Water, global operational challenges, notes that ‘water stress’ is likely to significantly impact both governments and businesses in the coming years.
Effect of ‘water stress’
“Physical risks will play a key factor in business investment decisions, including the effects that water stress will have on manufacturing and on many countries’ plans to diversify their economies,” commented Veronica Retamales Burford, senior research analyst at S&P Global Market Intelligence.
“As the world adapts, companies will need to prepare for heightened water use scrutiny, not just by regulators but also by local communities.”
Fluctuating weather pattens – not to mention the El Niño climate pattern – are likely to compound measures S&P Global Market Intelligence addd, particularly in markets that rely on water as an essential resource. It noted that Mexico, southern Argentina, India, the MENA region, South Africa, Spain, Italy and Australia are likely to be particularly affected.
Water and economic diversification
The report also notes that access to an adequate water supply is essential for long-term economic diversification plans.
Governments and businesses are likely to face increased risks due to water stress, leading to challenges in electricity generation, agricultural losses, and disruptions in supply chains. As a result, authorities will need to implement policy interventions and support businesses dealing with water stress.
The development of desalination infrastructures may become more common as pressure mounts on high-water-usage companies and sectors to contribute or relinquish water supplies for domestic use.
