Water Futures: Mobilizing Multi-Stakeholder Action for Resilience (McKinsey & Company)

Summary

• 4 billion people face severe water scarcity for part of the year, and an additional 3-4 billion people could experience freshwater physical water scarcity under 2-4°C of global warming.p.5
• The total quantifiable economic use-value of water is estimated at $58 trillion a year, equal to ~60% of global GDP.p.7
• If water supply is not protected, the GDP of high-income countries could fall by an average of 8% by 2050, and 10-15% for lower-income countries.p.8
• By 2050, approximately 5 to 6 billion people are expected to live in water-stressed areas, and 40% of global water demand will be unmet by 2030.p.9
• Global insurance losses from water-driven events are expected to average $200 billion annually by 2034, with potential losses reaching $350 billion.p.9
• Total capital deployed for water security is projected to increase threefold and exceed $13 trillion in the next decade, with ~70% of the increase expected from private capital.p.10
• The report draws on more than 55 partners and a literature review of more than 100 papers, identifying 15 recurring themes.p.6

Key insights

1. Total water withdrawal per capita has increased by more than 650% globally in the past three decades.p.7
2. A one-megawatt (MW) data centre can use up to 25.5 million litres of water a year just for cooling.p.8
3. Weather, climate and water-related disasters caused economic losses totalling $4.3 trillion from 1970 to 2021.p.8
4. The number of water-related conflicts globally has increased by more than 250%.p.8
5. Water-related green bonds grew 30 percentage points faster than the overall green bonds market from 2020 to 2023.p.21
6. With 85% of utilities serving under 10,000 people, subscale cost-efficiency challenges require dialogue between governments and stakeholders.p.21
7. Five pathways to water resilience are proposed: holistic water valuation, fit-for-purpose finance, sustained basin-level partnerships, adaptive water governance and a collaborative policy-innovation nexus.p.16