Water Industry News

Why Doing Nothing About Droughts Has A Far Bigger Cost

Water security has been an important talking point over the past few years as extreme weather phenomena have become significantly more common to the point of becoming the new normal.


The year 2023, in particular, with several hottest days on record, has been a wake-up call for many business leaders, government groups and other stakeholders on the importance of preparing contingency plans for periods of water scarcity and droughts.


The largest announced plan is a €2.2bn package of measures greenlit by the Spanish government aimed at managing an unprecedented drought period in the country.


This is not a surprise, as it is one of the countries that was directly mentioned in a World Bank report as a hotspot at risk of droughts and desertification.


Whilst there are a lot of consequences for this from an ethical and humanitarian standpoint, it is also important to emphasise the economic devastation caused by water scarcity, particularly when discussing the cost of measures to secure water supplies for generations.


Ensuring water security and planning for contingencies often requires a not-insignificant initial investment, but as has already been seen, the cost of inaction is far greater.

Most Of The World Is Affected


More than two-thirds of the global population live in a country that faces water stress for at least part of the year, which can manifest as minor restrictions and hosepipe bans on one end of the scale and severe drought on the other.


The most severe consequences are already seen in the most arid regions of the world, and as global temperatures increase, these existing conditions will become more extreme, weather patterns will become more erratic and water scarcity is projected to get worse.

It Is Not Just About Low Rainfall


In the Summer of 2023, many countries not used to water scarcity faced unprecedented heatwaves that taxed water infrastructure not designed with water scarcity in mind.


Conversely, many countries that have historically managed drought and water-scarce conditions dealt with severe rainfall, deluge and even flooding, with the most extreme effects seen in Greece and Libya.


Part of the reason for this is that warmer global temperatures and climate change lead to more variable and extreme rainfall, and one of the greatest flood risks is severe rainfall after a dry shock, as dry soil does not absorb water as quickly, increasing the risk of flash flooding.


The World Bank’s report on the economic effects of droughts highlights that there is a unanimous agreement amongst various climate change models that variability in rainfall is set to increase as it has over the past five decades.


Creating accommodations to severe long-term water scarcity issues as has been seen in

Nevada and other desert cities is easier than adapting to variability in rainfall, as it requires two contrasting approaches to be implemented at the same time.


On the other hand, floods are acute events and there are many mature flood mitigation and defence options available to protect against a very visible and short-term form of disruption.

Droughts are, to quote the World Bank report, a slow-moving form of misery that can be hard to distinguish from a conventional heatwave and have somewhat gradual effects up until a tipping point.


However, droughts can manifest in much more long-term financial consequences, with businesses in urban areas in drought hotspots facing an impact four times greater from water scarcity than from a flood, with shortages of water, regular power outages and economic stalling having long-lasting impacts.

Droughts Exacerbate Existing Financial Vulnerabilities


The connection between nations vulnerable to drought conditions and low-income nations is particularly strong, with 85 per cent of the population affected by droughts living in countries classified as low or middle-income countries.


According to data from the World Bank, a moderate drought reduces economic growth by 0.39 per cent, whilst an extreme drought reduces it by 0.85 compared to an average 2.19 per cent growth rate.


Part of the reason for this is that many countries in drought hotspots that are classified as low- or middle-income have an economy predominantly reliant on agriculture, an industry that is exceptionally water-reliant and affected by rainfall most.


Another part is that it becomes more difficult to build infrastructure to improve resilience and create more diverse economies, making countries more vulnerable to the effects of droughts over time.

Droughts Have An Impact That Spans Generations


The impacts of droughts, whilst difficult to initially see, can have a footprint that spans an exceptionally long time, affecting people longer after the dry shock has ended.


According to a 2019 Hyland and Russ study cited by the World Bank, a child born in rural Africa who faces a dry shock within the first 1000 days of their life tends to be less educated, is physically shorter and has lower economic prospects, with their children at greater risk of malnutrition.


The reasons for this are both physiological and psychological. Education is correlated with economic prospects, but during an emergency such as a drought, the priority of the families of these children is ensuring they have enough food to eat and water to drink.

What Can Be Done To Manage Droughts?


One of the most effective ways to help mitigate the impacts of droughts is to emphasise the importance of protecting green water, which is the water stored in soil, in plants, trees and forests.


There is a correlation between soil moisture levels and lower GDP growth impacts caused by dry shock, so an important strategy for protecting nations vulnerable to droughts as well as potential flash flooding is to invest in measures to protect forests.


Forests absorb heavy rainfall and slowly release it during drier periods, reducing the intensity and duration of droughts.


As well as this, there is an importance in taking a proactive approach, developing early warning systems, evaluating and developing mitigations to country-specific vulnerabilities, and preparing contingency plans for increasingly common drought conditions.


Investing in water is an investment in life and one that pays significant dividends by avoiding worsening dry spells in the upcoming years.