Describe the importance of water conservation for agriculture in present scenario?
Water is the foundation of both life and livelihoods. It is crucial to any sustainable
development practices. Despite the looming threat that it poses, water
insecurity and the risk that comes with it can often be overlooked. Water stress,
and its impact on water security, occurs when demand exceeds the available
supply. Understanding water risk and the importance of water conservation in
agriculture is fundamental to ensuring a balance of sustainability and profitability.
Various environmental factors will impact the world’s water supply, from smaller
climatological shifts to macro-scale weather events. This impact on global supplies
may lead to disruptions in availability and directly impact production across a vast
array of industries. Climate change is set to disrupt rainfall, raise sea-levels,
increase fire probability, and affect runoff patterns, which will dramatically alter
accessibility to freshwater globally. Additionally, factors such as pollution, wetland
development, and other forms of ecological disruption will accelerate these
changes, exacerbating water security risks rapidly.
Water Security and Risk
Water insecurity represents a potentially catastrophic risk to both land production
and land value itself. Understanding these risks and their potential impact is
essential for ensuring strong portfolio health, and may help guide better
agricultural investment and production practices in the future. There are several
key data points and figures that help to illustrate the scope of the potential risk
caused by water insecurity.
According to CDP Worldwide’s 2019 Global Water Report, the combined business
value at risk is projected to be as much as $425 billion. These figures may even be
underreported due to a lack of disclosure by a majority of respondents.
In their research, nearly 45% of respondent companies have reported exposure to
substantive risks caused by water insecurity. These risks threaten core production,
supply chains, financial stability, and their ability to grow. The key drivers of water
risk include increased water stress and scarcity, as well as flooding, drought, and
declining water quality, among others.
The World Resources Institute’s Aqueduct Project aims to highlight the problems
that come with watersecurity,stress,scarcity, and risk. According to their research,
nearly 56% of global food production currently occurs in areas experiencing high or
extreme water stress.
The project also highlights several additional water risks currently impacting
production globally. Factors such as increased competition for water are leading to
extreme rationing and water-rate increases,such as price hikes as high as 300% for
industrial users. Watershortages will disrupt production, impacting opportunity for
growth across a vast array of industries. Water risks are set to change revenues and
earnings in less-than-predictable ways, leading to declines in production and
profitability that may not be projected in revenue growth forecasts.
Even with heavy usage and imminent risk to freshwater supplies, demand has risen
at a rate of 1% annually over the last several decades, according to data from the
United Nations 2020 World Water Development Report.
Industrial and commercial activity remains the primary driving force of freshwater
usage and consumption globally. According to data from CDP’s 2018 Global Water
Report, a handful of key industries account for nearly 70% of global usage, with
residential and office usage making up the remainder. This increase in demand,
paired with disruptions to freshwater supplies, will likely disrupt global economic
activity in unexpected ways. The importance of water conservation in agriculture is
increasing dramatically.
While many agricultural business stakeholders are becoming increasingly aware of
the water risks in their portfolios, there is still work to be done in improving risk
analysis and mitigation strategies. Regulatory bodies and the industry as a whole
are pushing for greater disclosure of water and other agricultural supply chain risks
across the board. Proper analysis and mitigation strategies are vital to water
security, ensuring productivity, profitability, and sustainability.
Solutions For The Future
Investor engagement is central to improving risk disclosure, which helps guide
investor decision-making and their ability to assess the strength of their portfolios
effectively. At AQUAOSO, we offer a suite of tools through our advanced water
security platform to help identify and monitor your water risk, helping guide wise
decisions. Unfortunately for investors, water insecurity is going to be an extensive,
evolving global development over the coming years.
AQUAOSO offers a suite of tools through the Water Security Platform that helps
identify and monitor water risk, aiding wise investment decisions. AQUAOSO’s
platform assists land deals through a clear risk understanding, enhanced
relationships, and portfolio monitoring all from a single, easy-to-use dashboard.
