Water scarcity is here to stay

Cape Town is on the brink of becoming the world's first big city to run out of water, but its predicament is far from unique.

Two years ago, a severe drought in the Brazilian metropolis of São Paulo brought it close to collapse, with water shortages igniting fighting, theft, and the looting of emergency water trucks in some suburbs.

The water levels in the city's main reservoir dropped as low as 5% and residents hoarding water in cannisters sparked an outbreak of the mosquito-borne Denge virus.

City officials managed to avert a complete meltdown before the rains finally came, but as São Paulo has a population of 21m - five times the size of Cape Town - and is the biggest metropolis in South America, it is possible to argue that the crisis there was worse.

There are many other examples of water-stressed or vulnerable cities worldwide, including Beijing, Cairo, Mexico City, Lahore and Bangalore.

In the developed world, California recently buckled under a severe five-year drought which resulted in water cuts for both farms and urban areas, costing the state's economy an estimated $2.7bn in 2015 alone.

Although spectacular rain and snow ended the crisis last year, experts warn that the threat is far from over, given the region's vulnerability to the drier and warmer weather caused by climate change, along with rising demand, neglect of infrastructure and poor management.

The story is similar everywhere and the statistics are alarming. Around 2bn people, or almost one-fifth of the world's population, live in areas where water is scarce, and the ratio is expected to climb to half by 2025.

Most of the world's population - an estimated 85% - live in the driest half of the planet and in the last century water use has been growing globally at more than twice the rate of population increase. Sub-Saharan Africa has the largest number of water-stressed countries of any region.

Drilling boreholes to compensate for drought is not a sustainable solution - according to a study by the National Aeronautics and Space Administration in the US, the water table is dropping worldwide and more than half of the planet's largest aquifers have passed the sustainability tipping point.

A few good rains won't address the problem as it takes between 500 and 1 300 years to fill an aquifer.

In October last year, a World Bank report described drought as "misery in slow motion" with the impact deeper and longer-lasting than previously believed.

For companies in urban areas, the economic cost of drought was four times greater than floods, as a single water outage in an urban firm was likely to cut its revenue by more than 8%, it said. The sales of a company in the informal sector could decline by as much as 35%.

To highlight the impact on agriculture, the World Bank said rainfall "shocks" since 2001 had led to a loss of produce sufficient to feed about 81m people every day for an entire year - which is equivalent to the entire population of Germany.

According to some estimates, food production will need to grow by 69% to feed rapid growth in the global population. Water withdrawal for cooling power stations will also surge.

There have been many warnings that water shortages will lead to armed conflict and mass migration, which some experts say has already happened in Syria.

The World Bank recommends taking steps to improve water infrastructure by plugging leaks, constructing new storage, and introducing better management.

Pricing water correctly to discourage overuse would help curb demand, and safety nets should be put in place to ensure the poorest consumers would weather a crisis, it advised.

New technology is also key to addressing water scarcity. One case in point is Israel, a desert country which has made water availability a security issue.

Over 40% of the country's agricultural water needs are supplied by effluent water, and the waste sludge is sent to an anaerobic digestion plant, which uses the methane as a fuel to produce renewable energy. Israel's water treatment systems recapture 85% of water that goes down the drain and half of the drinking water comes from desalination.

However, desalination is not a complete answer to the world's water scarcity challenges either. It is an expensive process which requires a huge capital outlay, sharply raises the cost of water, and requires a great deal of energy.

At the same time, pumping the salt back into the sea creates environmental problems, and in places like the Arabian Gulf where it is prevalent, desalination is making seawater either too salty to use or more expensive to desalinate.

This article originally appeared in the 1 February edition of finweek. Buy and download the magazine here.