Why are safe and reliable water resources essential for global economic growth and social prosperity?

Liang Jinhui

Executive Director of the World Economic Forum

This article was originally published inYicai Global

Worldwide, water systems that sustain ecosystems, nourish communities, and drive business and economic growth are facing unprecedented pressures.

As the impacts of water resources on industries, governments, and society continue to intensify, our need for systemic, collaborative action and the development of resilient systems has never been more urgent.

Multiple challenges facing water resources

The problems we’re facing now aren’t just about water being "too scarce"—they also include water being "too abundant" due to extreme weather and flooding, as well as "severely polluted," making it unsafe to drink or use.

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

These water-related risks are not only environmental hazards but also carry far-reaching economic implications.

Water is an indispensable contributor to more than 60% of global GDP, supporting industries ranging from agriculture and manufacturing to cutting-edge, technology-driven sectors like artificial intelligence (AI). These industries rely on facilities such as data centers for cooling and operations—and none of them could function without the vital role water plays. In fact, every single business depends on water resources.

For instance, Tesla’s factory expansion project in Germany was forced to delay in 2022 due to legal issues stemming from water resource constraints. The company had to redesign its infrastructure to reassure local authorities about the long-term sustainability of industrial and residential water usage in the future.

In Australia, floods have become the most costly natural disaster in terms of insurance payouts, prompting insurers to call on the government to establish a A$30 billion disaster resilience fund. This move comes as the financial burden on insurers continues to rise, aiming to safeguard businesses and communities in the face of increasingly frequent and severe weather events.

We need to enhance the resilience of water resources.

Building resilience in water resource systems means equipping ourselves with the ability to effectively and fairly predict, mitigate, adapt to, and recover from disruptions.

In terms of water resource systems, building resilience relies on innovation and cross-sector collaboration to mobilize long-term public and private investments. With the right policy frameworks and financing mechanisms in place, we can better prepare for future challenges.

Multi-stakeholder collaboration has successfully addressed global challenges, such as the 1987 Montreal Protocol, where governments, civil society, and businesses united to protect the ozone layer.

Today, we truly have the opportunity to build on our existing successes in freshwater conservation. The World Economic Forum, a global platform for dialogue on pressing challenges, has already identified several promising solutions led by its partners.

These include Brazil’s environmental services market, India’s river-cleaning initiative, Vietnam’s sustainable rice-farming practices, and the U.S.’s water-saving pilot projects. While each of these initiatives is unique in its own way, scaling up and encouraging active participation from the private sector will be essential if they are to achieve greater impact.

Five Ways to Achieve Water Resource Resilience

After discussions with more than 60 business partners from the World Economic Forum and reviewing over 100 reports, the Forum’s Water Resilience Community found that water resilience is not only critical for utilities but also has far-reaching implications for industries such as mining, real estate, agriculture, and manufacturing.

Government and business leaders, along with other public and private sector stakeholders, can jointly address the complex and interconnected risks threatening water systems, economies, and communities through the following five pathways.

1. Comprehensive Water Resources Assessment

The value of water is not limited to its market price—it should also encompass ecological, social, and economic values.

Adopting a more comprehensive assessment approach can help optimize decision-making, such as encouraging water resource recycling and protecting freshwater ecosystems. The private sector can play a critical role in data collection, quantifying water value at the corporate level, and conducting risk assessments—thereby guiding evidence-based decisions.

When water is recognized as a precious resource rather than a free commodity, it can inspire innovation in driving resource recycling and optimizing water use—ultimately safeguarding long-term water security.

2. Financing Aligned with the Target

Traditional financing methods struggle to meet the long-term investment needs of water resilience projects.

A financing mechanism tailored to the objectives should be established, leveraging diversified funding sources to ensure robust financial support throughout the project—from initiation to completion.

By collaborating with industry and government, we can align tailored financial solutions with specific water-resilience needs, effectively leveraging capital to restore infrastructure and safeguard freshwater ecosystems.

3. Ongoing competition-prevention basin-level partnerships

The water resource challenges are most acute at the local basin or watershed level, as groundwater flows into shared water bodies. To address these issues, fostering collaboration among multiple stakeholders is essential.

Collaborative models and partnerships can drive the expansion of best practices, enabling a more equitable and adaptive approach to protecting groundwater and freshwater resources. Regardless of their position in the water resource value chain, every stakeholder bears a shared responsibility.

By promoting the coordinated application of data, tools, and strategies at the watershed level, stakeholders can become "water guardians" of the areas where resources are sourced, communities live, and operations take place.

4. Adaptive Water Governance Approaches

Facing a constantly evolving environmental reality, we must respond with flexibility and speed to water resource management—from local to national levels.

The governance system must also recognize that the water cycle does not follow administrative boundaries, and that communities, regions, and nations are mutually dependent in their use of water resources.

Regulations and laws related to water resources should involve all stakeholders, ensure transparency, and integrate comprehensive water data and risk management tools—enabling informed decision-making, fostering accountability, and encouraging collaboration through cross-sector data sharing.

5. Policy Innovation Links in Collaboration

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

The government should develop strategic policies that align with emerging technologies, supporting the large-scale adoption of innovative water technologies such as rainwater harvesting and pollutant removal.

This approach can foster a more efficient collaboration mechanism between governments and innovators, ensuring that policies no longer hinder water resource innovation—but instead become a powerful catalyst for delivering safe, affordable, and equitable solutions.

Together, let's embark on the path to water resource restoration.

The urgency of addressing the global water crisis cannot be overstated. By 2050, more than half of the world's population is expected to live in water-scarce regions, leading to intensified resource competition, constraints on new development projects, and rising migration pressures.

Efforts to transition to water-dependent energy sources will weaken, leading to a decline in GDP by 2050—projecting an 8% drop in high-income countries and as much as a 15% decline in low-income nations.

The current trend is already cause for concern. Without shifting toward circular or water-free cooling for data centers, global AI computing power could consume 4 to 6 times Denmark’s total annual water usage by 2027.

To mark World Water Day, the World Economic Forum’s multi-stakeholder community, led by global leaders such as Grundfos, the Global Water Economy Council, Ecolab, Xylem, and Zurich Insurance, will select a series of projects aimed at scaling up their impact and accelerating implementation.

Facing the economic, community, and ecosystem impacts of water-related risks, we must act immediately. By embracing the five pathways outlined above, we can ensure universal access to water, foster economic stability, and drive sustainable environmental progress.

Water resource resilience is not just a goal—it's a critical investment in the future. Only through bold, collaborative action can we truly create a world where "every drop counts," ensuring that future generations have access to ample water resources and can thrive in health and prosperity.

This article was originally published inYicai GlobalFeel free to share this in your WeChat Moments; please leave a comment at the end of the post or on our official account if you’d like to republish.

Editor: Wang Can

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