Water scarcity is the situation in which the demand for water persistently exceeds the availability of renewable water resources in a given region. This shortfall can be physical (not enough water exists), economic (the resource exists but access is lacking) or institutional (there is insufficient capacity to manage it fairly and efficiently). It is a structural phenomenon that compromises the water, energy, food and health security of hundreds of millions of people worldwide.
According to the World Resources Institute (WRI), through its Aqueduct Water Risk Atlas, around a quarter of the world's population lives in countries facing extremely high water stress, where more than 80% of the available renewable supply is withdrawn each year. This pressure is intensified by population growth, rapid urbanisation, climate change and the overexploitation of aquifers.
Scarcity is not a single phenomenon; it can take several forms:
Occurs when there is not enough fresh water to meet the needs of ecosystems and users. It is typical of arid and semi-arid regions such as North Africa, the Middle East or south-eastern Spain. It can also appear in basins under high pressure from agriculture, industry or tourism.
Even where water is physically available, communities may lack access because of missing infrastructure, technology or financial resources. It is common in parts of the global South where structural poverty prevents the development of abstraction, treatment and distribution systems. Economic scarcity is, in essence, a governance problem.
Stems from poor planning, corruption, lack of coordination between levels of government or the absence of reliable data. It can be observed even in countries with sufficient resources but ineffective management, overlapping competencies or incoherent public policies.
Water scarcity results from multiple interrelated factors:
The implications of water scarcity are profound and cross-cutting. The most relevant include:
Water scarcity is not a future risk: it is a present reality with documented impacts in Latin America, sub-Saharan Africa, Central Asia and the Mediterranean.
The most widely used indicators to quantify water scarcity are:
These instruments help prioritise investment, design public policy and plan infrastructure based on realistic scenarios.
Water scarcity is not irreversible. Technical, institutional and social solutions exist to reverse it, especially when action is preventive:
From a corporate perspective, operating in water-scarce regions involves operational, financial and reputational risks. Companies should therefore integrate this factor into their materiality analysis, business continuity plans and investment strategies.
A growing number of reporting frameworks, such as CDP Water Security, the SASB Standards and the European ESRS E3, require indicators on water management, exposure to water-stressed areas and measures to guarantee equitable access.
Water scarcity is a physical limit to growth. Managing it proactively and fairly is a necessary condition for a resilient, regenerative economy. At Manglai we help companies measure their environmental footprint and identify exposure to water risk as part of their sustainability strategy. Discover how Manglai can help you.
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