7 FAQS About Drought Impacts For Business

Despite recent rainfall, concerns still persist about water resources in the UK, with the National Drought Group issuing a warning that preparations must now be put in place for ongoing drought in 2026, off the back of record-breaking dry weather in spring and summer.

According to the Environment Agency, England needs to see a minimum of 100 percent of average rainfall (482mm) by the end of March next year in order to largely recover from drought. Thus far, only two months this year have seen over 100 per cent average rainfall.

All sectors, including energy, navigation, agriculture and water firms themselves, are being called on to take action to increase resilience and properly prepare for drought.

The water sector will be promoting efficient water use and working on reducing water leaks, as well as ensuring that infrastructure (including reservoirs, pumps and pipes) all works well , with applications for drought permits submitted early to maximise water storage.

Elsewhere, farmers are being called on to check licences and discuss flexibility options with the Environment Agency if required, as well as increasing reservoir storage and investigating neighbourhood water sharing schemes wherever possible.

And the public is being called on to use water wisely, as well, turning off taps when not in use and harvesting winter rainfall with a water butt.

Helen Wakeham, National Drought Group chair, said: “We need a lot more rain this winter to fill up our rivers, reservoirs, and groundwater. Even if it is wet outside, I urge people to use water as efficiently as possible to protect the environment and public water supplies.

“The changing climate means we must prepare for more droughts. Securing our water resources needs to be a national priority. We expect water companies to continue their water-saving messaging, even through the winter, as well as carry on reducing leaks.”

For businesses across all sectors and industries, now’s the perfect time to think about how ongoing drought could affect you now and in the future.

So, with this in mind, here are some of the more frequently asked questions about drought impacts on business… and what you can do to mitigate the effects, ensuring that potential disruption and downtime is minimised as far as is practicable.

1. How does water scarcity affect business?

Water scarcity – where demand outstrips supply – can have a negative impact on businesses by driving up operating costs, disrupting supply chains (particularly in sectors like manufacturing, agriculture and energy) and even halting production altogether if your operations are heavily reliant on water.

Further costs can also be incurred by adopting specific measures to ensure business continuity if water supplies are interrupted.

Additionally, if supplies continue to see disruption over a prolonged period, business expansion plans can be affected as a result, putting a cap on growth.

You may also see your business reputation damaged if you’re a heavy water user and you aren’t seen to be doing all you can to act sustainably in the face of drought, which can again have an impact on profits.

Failure to proactively manage water usage and consumption can also put you at a competitive disadvantage.

2. How are factories affected by drought?

Factories make heavy use of water for a range of different production processes, including cooling, washing and diluting. When drought conditions arise, operations can either slow or be halted altogether.

For example, in 2018 a heatwave in Europe saw cargo ships struggle to navigate the River Rhine, which led to chemical and pharmaceutical production in Germany dropping by ten percent between September and November.

Elsewhere, in California – which experienced one of its most severe droughts in history last year – the state’s food processing, beverage manufacturing and semiconductor production factories were also badly affected.

Some sites in Silicon Valley, for example, found they had to pay up to 40 per cent more for water than in previous years.

And the energy sector saw hydroelectric output drop by 35 per cent because reservoir levels reached record lows, meaning that California had to then rely more on natural gas and imported electricity, pushing up prices for both consumers and businesses.

Other issues that factories can face as a result of drought include infrastructure damage as a result of soil shrinkage and coinciding subsidence.

3. Which sector will be most affected by drought?

As the biggest consumer of freshwater around the world, using around 70 percent of all freshwater resources, agriculture will be most affected by drought conditions. Most of the water used by this industry goes towards irrigation.

The impact of drought for businesses in this sector includes:

– Reduced crop yields and lower crop quality

– Crop failure

– Stressed plants (which can affect growth and function)

– Increased feed costs for livestock

– Herd size reduction

– The need to transport water to ensure livestock have sufficient resources

– Significant financial losses through crop destruction/yield reduction

– Higher food prices for consumers

– Supply chain disruption

– Soil degradation

4. How does drought affect the economy?

As climate change continues to take hold, drought conditions will become more frequent, potentially slowing economic growth, driving migration, affecting tourism and international travel and disrupting transportation networks.

As previously explained, agriculture will be one of the hardest hit by drought, with figures showing that the actor makes up for almost 50 percent of all economic losses linked to drought.

However, energy production can be severely hindered, as well, particularly for hydropower and thermal energy plants, both of which require ready access to water for electricity generation and cooling processes.

In China, for example, which was badly affected by drought in 2022, the Yangtze River saw water levels fall to record lows, forcing Sichuan province to reduce or suspend power supply to thousands of factories.

As for tourism and leisure, any businesses reliant upon water-based activities will see these rendered impossible if water levels drop, which will have an impact on visitor numbers, booking cancellations and inevitable lost income.

Similarly, hotels, shops and restaurants in tourism-dependent areas will be affected, having a significant impact on local economies.

Last year, Sicily was faced with widespread water shortages and tourists were turned away by hotels and guesthouses because basic amenities like showers and toilets couldn’t be guaranteed. The residents themselves had to ration water in response to restrictions, limited rainfall and ageing infrastructure.

5. How does drought affect business decisions?

Considering drought as a risk that will increasingly impact business operations is wise, influencing decisions such as:

– Location planning and where to build new facilities, taking into account climate risk

– Reevaluation of supply chains to ensure operations are resilient in the face of drought-related disruption

– Investment in water-efficient technologies and processes to reduce water consumption

– Emergency preparedness, with contingency plans developed to safeguard against disruptions (such as ensuring that there are alternative methods of production that can be used)

6. Do businesses have to close if they have no water?

If you don’t have working or running water at your place of business, it is typically not reasonable (or even legal, in some instances) to continue operating, particularly if you work in a sector that requires cleaning of any kind.

For most organisations, water supply disruption will mean a complete halt to operations, but office-based companies may still be able to continue business as usual.

How long a business can stay open without water will, again, depend on the nature of the work being done. Construction companies, for example, will likely have to close within a few hours if water supplies are interrupted.

The reason for the water outage is important to bear in mind. For example, if it’s down to a burst pipe you will need to have this resolved, either by calling the water company to come out and fix it if it’s on their network or by calling your own plumber.

You may also have to arrange alternative working options if working toilets cannot be ensured, as well as providing drinking water alternatives if the taps run dry.

Ultimately, you’ll likely find that if you are unable to provide access to clean running water for washing, drinking or flushing, then you’ll probably be breaching workplace welfare standards

Furthermore, if you operate a sensitive site (such as a medical centre, hospital or veterinary clinic), you will need to have contingency plans in place to prevent downtime if water shortages occur.

7. How can businesses save water?

Saving water as a business is an ongoing endeavour and it’s likely that you’ll have to adjust your conservation strategies over time as operational requirements change over time.

Different measures to adopt include rainwater harvesting, water leak detection and repair, greywater recycling and so on… but in order to identify the most effective methods, you’ll need to have a water audit of your site carried out so you can find the most vulnerable areas across your business.

If you’d like to find out more, get in touch with the SwitchWaterSupplier.com team today.