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Water fundamentals

Water covers 70 percent of the earth’s surface – the volume of water on earth has remained unchanged for millions of years. However, 97 percent of the earth’s water is salt water, and less than 1 percent is fresh water in liquid form.

Available fresh water exists in three major sources: groundwater, surface water (rivers and lakes), and atmospheric water (clouds and rainfall).

The hydrologic cycle

The water on earth is in constant movement, driven by solar energy and gravity. The process through which water passes from vapor in the atmosphere through precipitation to land or water and back again through evaporation is referred to as the hydrologic cycle. The rate at which the various forms of fresh water change states has a greater impact upon water availability than the storage capacity of rivers, lakes and aquifers. Rivers and the atmosphere store a small amount of global water reserves that cycles from vapor to precipitation and back again in a matter of several days to a few weeks. Lakes store more water, but can take decades to completely exchange existing water for water that falls as rain and snow. Groundwater aquifers are by far the largest freshwater source. Water circulates through aquifers over thousands of years1. The amount of water that evaporates from the ocean and then precipitates as freshwater over land each year is estimated to be twice the volume of the U.S. Great Lakes – or equivalent to 10 times the world’s present demand.

Demands for water

When taken in total, the volume of fresh water on earth is enough to support the world’s population. But according to the United Nations, while “there is no global water scarcity as such, an increasing number of regions are chronically short of water.”2 Why is this?

Part of the reason is uneven resource distribution. Water is not always available where and when it is needed. Seasonal rainfall patterns can be impacted by cyclic droughts or floods, and a changing climate can affect seasonal patterns, as well. When water flows into aquifers, it can be out-of-reach or expensive to access.

Another reason is growing human demand. The world is expected to add another billion people between now and 2025, clustered almost entirely in urban areas3. The demand for all resources is expected to rise as more people rise out of poverty and increase their standards of living.

The United Nations further notes that shortages occur when and where “the aggregate impact of all users impinges on the supply or quality of water under prevailing institutional arrangements to the extent that the demand by all sectors, including the environment, cannot be satisfied fully. Water scarcity is a relative concept and can occur at any level of supply or demand.” In other words, even when there is enough resource to satisfy demand, scarcity may result when water is not supplied adequately to the people who need it. This is often due to human factors such as substandard water treatment and transportation infrastructure, poor water governance, economics, lack of institutional knowledge or adaptive capacity, war, culture, or impacts to water quality.

Since water scarcity may arise at any time from any combination of resource, demand or supply factors, it is difficult to predict when and where it will occur. We can get an idea of where scarcity is likely by mapping general trends in long-term resource availability over economic forecasts.

Still, we cannot capture all of the short-term or highly localized factors that can create – or prevent – acute shortages. Experts point to this complexity as the reason why a given water-management approach that works in one area may not work well in another4.

Physical and economic water scarcity
Chart — Physical and economic water scarcity

So rather than a global water challenge, we have many regions facing unique local challenges, exacerbated at times by global trends. In short, water is a local issue – but one with global consequences5.

Meeting forecasted growth in global freshwater demand will require local solutions, on both the supply and demand sides. No one solution will fit all needs, but through sharing best practices or technologies, education, infrastructure investments and policies to ensure the right water for the right use, we can begin to address scarcity factors in a region. Some argue that water should be priced, allowing market forces to drive it toward the highest value-added applications and incentivizing its conservation. Limited-scale water-trading exchanges and offset programs have been based on this principle.

National governments and international institutions have a role to play by providing data sources and assessment tools that enable sound, science-based risk assessment for use in decisionmaking by regulators, industry and society. Local rather than national water management better accounts for the specifics of regional hydrology, costs of delivery, water source substitution, and other local factors. Within this framework, business leaders can contribute by evaluating and managing their firms’ impacts on water quality and availability at a local level.

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