(Yicai) March 21 -- Globally, the water systems that sustain ecosystems, nourish communities and drive business and economic growth face unprecedented pressure.

As industries, governments and society confront the escalating impacts of water-related disruptions, the need for systemic, collaborative action and resilient systems has never been more urgent. 

Water’s multi-front challenge

The problem is not just about “too little” water but also “too much” by way of extreme weather and flooding, as well as “too polluted” when it is unsafe for consumption or use. 

The impacts of climate change, population growth and industrial demand have pushed water systems to the brink, threatening the availability of clean water for billions of people.

These water-related risks are not only environmental – they are profoundly economic. 

Water is integral to over 60% of global gross domestic product (GDP), supporting every industry, including agriculture, manufacturing and even tech-driven sectors such as artificial intelligence (AI) through data centres, all of which rely on water for cooling and operations. Every business depends on water.

For instance, legal challenges over water constraints delayed Tesla’s 2022 German factory expansion, requiring infrastructure redesign to reassure the local government about future availability of water for industry and residents.

With floods being Australia’s top insured weather disaster, insurers urged the government to establish a $30 billion defence fund to safeguard businesses and communities as coverage becomes less affordable.

The need for water resilience

Building resilience means anticipating, reducing, adapting to and recovering from disruptions efficiently and equitably.

For water systems, resilience depends on innovation and cross-sector partnerships to mobilize long-term public and private resources. With the right frameworks and financing, we can better prepare for future shocks.

Multi-stakeholder collaboration has solved global issues before, as seen in the 1987 Montreal Protocol, where governments, civil society and businesses united to protect the ozone layer.

There is a real chance now to scale up proven freshwater initiatives. The World Economic Forum, a hub for discussing global challenges, has identified promising solutions led by our partners.

These include Brazil’s environmental services market, river clean-up initiatives in India, Vietnam’s sustainable rice farming practices, and water efficiency pilots in the US. Each solution is unique, but all require scaling for greater impact, and significant involvement from the private sector.

5 pathways towards water resilience

After discussions with more than 60 World Economic Forum’s business partners and reviewing over 100 reports, the Forum’s Water Futures community found water resilience crucial beyond utilities, impacting industries such as mining, real estate, agriculture and manufacturing for the long term. 

The Forum’s government and business community, as well as other public-private sector players will engage through five pathways to tackle the complex and inter-connected risks endangering water systems, economies and communities.

1. Holistic water valuation

Water needs to be understood more broadly than just its market price, including its ecological, social and economic value. 

A more holistic approach to valuing water can lead to better decision-making, promoting practices such as water recycling and treating freshwater ecosystems. The private sector is well positioned to accelerate data collection, quantify the value of water and risk at the corporate level and ultimately guide informed decision-making. 

When water is recognized as a vital resource, not just a commodity or a free resource, it can spur innovations that promote circularity and optimize water use for long-term water security.

2. Fit-for-purpose financing

Traditional financing models often fall short in supporting water resilience projects requiring long-term investments. 

Fit-for-purpose finance mechanisms must be developed, using diverse financial sources to ensure cradle-to-grave project funding. 

Aligning tailored financial solutions with unique water resilience needs through industry-government collaboration can mobilize the necessary capital to restore infrastructure and protect freshwater ecosystems.

3. Sustained pre-competitive basin-level partnerships

Water challenges are most acute at the local basin or watershed level, where groundwater flow into a common body of water. To address these problems, multistakeholder collaboration is crucial. 

Collaborative models and partnerships can be leveraged to accelerate best practices towards the widespread implementation of equitable and adaptable preservation of ground and freshwater resources. Every player has a role to play, no matter where in the water value chain they may be active.

Through coordination and widespread adoption of innovations in water-related data, tools and strategies at the basin level, stakeholders can successfully serve as custodians in the basins where they source resources, live, operate and benefit.

4. Adaptive water governance approaches

In the face of shifting environmental realities, local to national water governance must be flexible and responsive.

It must also encompass an appreciation that the water cycle does not adhere to administrative boundaries and that communities, regions and nations are interdependent in their use of water resources. 

Regulations and laws around water should involve all stakeholders, be transparent, and integrate comprehensive water data and risk management tools to help inform choices, promote accountability, and encourage collaboration by sharing data across sectors. 

5. A collaborative policy-innovation nexus

A thriving water management ecosystem requires close collaboration between policymakers and innovators. 

Governments must implement strategic policies that align with emerging technologies and innovative water solutions – such as rainwater harvesting and contamination removal – to catalyze their development and deployment at scale. 

This pathway can foster effective collaborative approaches between government and innovators. Policy, therefore, no longer becomes a barrier to water innovation but an enabler of safe, affordable and equitable solutions. 

A collective path to water resilience

The urgency of addressing the global water crisis cannot be overstated. By 2050, more than half of the world’s population is forecasted to live in water-stressed areas, leading to competition for resources, restrictions to new developments and more migration. 

Energy transition efforts, which depend on water, will decline and gross domestic product will fall by 2050 (8% for high-income countries and up to 15% for low-income countries). 

Our trajectory is already worrying. Unless we switch data centres to circular or no-water solutions, in 2027, global AI capacity is predicted to demand more than four to six times the total annual water withdrawal of Denmark.

In marking World Water Day, the Forum’s multi-stakeholder community, spearheaded by global leaders such as Grundfos, the Global Commission on the Economics of Water, Ecolab, Xylem and Zurich Insurance, will select a broad range of projects to upscale and accelerate. 

With water-related risks threatening economies, communities and ecosystems, the time to act is now. By embracing these five pathways, we can secure water access for all, promote economic stability and support environmental sustainability.

Water resilience is not just a goal but a critical investment in the future. Taking bold, collective action can help us create a world where every drop counts and ensure future generations have access to the water they need to thrive.

(By Gim Huay Neo, Managing Director at the World Economic Forum)