We all know there is a climate emergency. What is less well known is the significant impact it has on water scarcity.
Water scarcity threatens lives, livelihoods, and, therefore, the stability of societies everywhere. Funding and innovation are urgently required to avert disaster – and investors can play an important role by backing businesses that improve the supply and safety of one of the most valuable substances on Earth.
Why we cannot all wash our hands
One thing everyone around the world has been doing a lot more recently is washing our hands. As a mandated means of avoiding the spread of the deadly virus, rigorous handwashing has become second nature to most of us over the past two years.
This is, however, not the case in many parts of the world; you cannot simply just turn on the tap. At present, according to the United Nations, some three billion people lack basic handwashing facilities in their homes. In this age of worldwide pandemics, that figure has worrying implications for all folks.
In a worst-case scenario, the UN says, 2.2 billion people lack access to safe drinking water, while 4.2 billion lack proper sanitation facilities. As a result, water-borne diseases, such as typhoid and cholera, kill millions of people each year – most of them children.
From the relative comfort of a developed country, it is hard to understand a number of the challenges posed by water scarcity. Yet, in many tropical or arid regions, the impact of the threat is only too apparent. These water-related problems are not immune to a few; they will affect us if we do not take action.
Demographics and the climate crisis
One primary concern increasing the world’s water crisis is our growing population. Today, we as a species need six fold the quantity of water we did a century ago. Researchers say that by 2030, water demand is probably going to outstrip supply by 40%, with half of the world’s population facing water stress.
At a similar time, freshwater resources are being depleted at an alarming rate. In addition, changes to our climate, such as the disruption of longstanding seasonal patterns, come with disastrous consequences for vulnerable communities, including droughts and floods.
Higher temperatures also affect water quality. High temperatures reduce the amount of dissolved oxygen in water bodies. This constrains the ability of water bodies to purify themselves. In this way, climate change affects both the quality and quantity of the world’s water supply.
According to the UN, constraints on water supply are the primary way people experience climate change worldwide. Thus, water scarcity is not just being exacerbated by the climate crisis; it is the climate crisis for billions of people worldwide.
Fortunately, the UN recognizes the importance of water in its 17 Sustainable Development Goals (SDGs). Number six is ‘clean water and sanitation. Water scarcity is an issue that ripples across several other SDGs, including ‘zero hunger’ (SDG no. 2), ‘good health and well-being (SDG no. 3), ‘responsible production and consumption (SDG no. 12), ‘life below water (SDG no. 14), and ‘life on land (SDG no. 15).
How can investors turn the tide?
Many innovative companies are rising to the challenge to address water scarcity. They do this by helping communities adapt to the reality of climate change and its effects on water supply. In addition, some develop technologies that mitigate the worst effects of water scarcity and improve water quality and availability.
One way that investors can combine potential returns with real impact is by investing in water funds. An independent impact investor, Kenya Climate Venture has panned out its plans to invest in the country’s water companies by revenue across three crucial ‘clusters’: water treatment, utilities, and infrastructure.
As part of its four-year strategy, KCV seeks to invest US$ 50,000 – 200,000 worth of debt, convertible debt and/or equity in early-stage water enterprises targeting rural and peri-urban markets in Kenya. In addition to capital, KCV will provide technical assistance and business growth support to MSMEs to increase their chances of commercial and impact success during the three to seven years tenure of partnership and investment.