Water Makes the World Go Round

Water is fundamental to human health, national security, and global economic prosperity. Despite its vital importance, this resource is often taken for granted. However, as global supplies face increasing strain, considerations regarding water will increasingly shape economic policies, political decisions, and corporate strategies. Firms must now integrate water risks into their investment decisions and risk assessments with greater seriousness than in the past.

Recent events have served as a stark reminder of both the importance and the fragility of water supplies. In the Gulf Cooperation Council countries, which provide drinking water for approximately 62 million people, desalination plants have been targeted by drones and missiles. These attacks occurred during a geopolitical conflict that these nations did not create, highlighting how critical water infrastructure is in times of unrest. The ability to draw water almost entirely from the sea has become a strategic vulnerability.

Meanwhile, in Central America, insufficient rainfall has been lowering water levels in the Panama Canal for several years. This shortage creates tension between the local need for fresh water and the global demand for transit through this vital shipping artery. The situation presents the same crisis from opposite perspectives. In Panama, a lack of fresh water restricts maritime trade, while in the Gulf, maritime conflict threatens drinking water supplies.

Water is, in the strictest sense, a security issue. Yet, the international community has not yet governed it as such. The consequences of inadequate water management are far-reaching and multifaceted. Diseases linked to unsafe water and poor sanitation represent a major public health risk. They are also a leading cause of death among children under five years old globally. Furthermore, water is a vital input for both agriculture and industry. Approximately 90% of global freshwater withdrawals support economic activity, while the remaining 10% is allocated for household use.