Water underpins $58 Trillion in economic value (WWF, 2021) yet attracts less than 1% of climate-tech investment (Geschwind, 2023)1. This mismatch is becoming untenable as climate change and population pressures intensify, turning water into a material supply chain risk. Drought-driven shipping limits at the Panama Canal and production halts in Taiwan and Arizona show that water is no longer peripheral, it is a core driver of long-term value and a rising ESG priority.

Climate Change: Amplifying Water Stress

Climate change is the biggest long-term threat to global water markets, intensifying risks across supply chains. From 2001-2019, 74% of natural disasters were water-related, with floods and droughts affecting 3 Billion people at a cost of USD 700 Billion.

Hotter global temperatures are:

i. Evaporating surface waters in lakes and rivers

ii. Stripping soils of moisture, threatening agriculture

iii. Increasing urban demand for water via residents and power utilities

For investors, climate volatility compounds water scarcity, directly impacting agriculture, energy and urban infrastructure.

Why Water Risk Matters for Investors

Water risk is financial risk. CDP estimates that over $300 Billion in business value is at stake for the financial services sector alone, as droughts in California, floods in Southeast Asia and groundwater depletion in India disrupt global supply chains. Much of this exposure lies beyond direct operations, hidden in agricultural and manufacturing networks, where it drives revenue loss, higher capital expenditure and rising costs of goods sold.

According to the UN, agriculture consumes 70% of global freshwater. Agribusiness and food chains are highly exposed, while mining, semiconductors, apparel and beverages also face mounting pressure. The World Economic Forum ranks water crises among the top five global risks by impact, yet most financial institutions still fail to integrate water metrics into ESG risk models, leaving a major blind spot for investors.

AI’s Hidden Water Footprint

Beyond agriculture and manufacturing, the digital economy is now facing a similar reckoning. Water risk is no longer confined to traditional industries. The rapid expansion of AI and data centres has introduced new strains on water-stressed regions. In 2022 alone, Google, Microsoft, and Meta consumed an estimated 580 Billion gallons of water for cooling and power, equivalent to the annual needs of 15 Million U.S. households. Much of this water evaporates instead of being returned to local systems, worsening stress in drought-hit regions like Arizona and Oregon. Even technology companies, often perceived as “clean,” face exposure to local water constraints that can disrupt operations, increase costs, and damage reputations.

Aral Sea: The Ripple Effects of Water Risk

The Aral Sea, once the fourth-largest saline lake in the world, has dramatically shrunk due to water diversion for cotton cultivation in the 1960s. This has created a long-term ecological and socio-economic crisis such as:

Environmental Impacts

1) Water levels dropped by ~23 meters, accelerating evaporation and raising temperatures.

2) Desertification intensified, with vegetation loss of at least 40%, stronger winds, and frequent dust storms.

3) Soil salinization and erosion have degraded land and air quality.

4) Nearby mountain glaciers are shrinking due to reduced snowfall and dust/salt deposition.

Social & Economic Consequences

1) Agriculture now requires up to four times more freshwater to compensate for salinized soils.

2) Croplands are flushed repeatedly, depleting essential minerals and increasing operational costs.

3) Public health has suffered, affecting over 5 Million people with rises in tuberculosis, typhus, and paratyphoid.

4) Over 100,000 people have been displaced, highlighting the social toll of water mismanagement.

Hence, the Aral Sea serves as a powerful reminder that water mismanagement can create long-lasting risks across ecosystems, communities and business operations. Sustainable water practices are an essential consideration for resilient supply chains.

Infrastructure and Urban Vulnerability

Ageing water systems are another hidden risk. Globally, USD 39 Billion in water is lost annually through leaks and breaks, while the U.S. alone faces a USD 270 Billion repair bill for outdated infrastructure. Beyond financial losses, leaky pipes allow contaminants to infiltrate supplies, endangering public health.

Meanwhile, urbanisation worsens flood risk. Asphalt and concrete surfaces prevent absorption, forcing excess water into overwhelmed drainage systems. Without resilient infrastructure, such as permeable pavements, catch basins and engineered wetlands, cities remain vulnerable to costly storm damage.

Intel’s Water-Positive Ambitions

Despite the many challenges posed by water scarcity and climate stress, some companies are taking bold steps to address the issue. Intel, a global leader in semiconductor manufacturing, operates in one of the most water-intensive industries. Recognising this, the company has committed to achieving net-positive water use by 2030 as part of its 2030 Corporate Responsibility Strategy.

Key Initiatives:

i. Conservation: Over the past decade, Intel has conserved 44 Billion gallons of water through operational efficiency and partnerships with local municipalities, with a target to conserve 60 Billion gallons cumulatively by 2030.

ii. Restoration: Intel invests in water restoration projects designed to restore more freshwater than the company consumes globally. Current projects are expected to restore over 1.6 Billion gallons annually.

iii. Innovation: The company deploys advanced technologies such as recycled water for cooling, evaporative cooling towers and smart building designs (e.g., LEED Platinum offices in Israel using 75% less water than typical buildings).

Impact and Recognition:

i. Intel achieved a 38% reduction in water use per unit compared to 2010 levels.

ii. Data centre and onsite water reclaim projects reduced cooling-related operating costs from 49% to 6% of total expenses6.

iii. The company’s efforts are publicly reported via the Carbon Disclosure Project (CDP), receiving top ratings for supply chain engagement6.

Intel’s ambitious water-positive goals demonstrate that even the most water-intensive industries can lead in sustainability. Through a combination of conservation, restoration and innovative technologies, the company is not only reducing its own water footprint but also contributing to the replenishment of freshwater resources globally. Projects from smart buildings to advanced cooling systems show that strategic water management can coexist with operational efficiency and technological advancement, setting a benchmark for responsible water stewardship worldwide.

Turning Water Risks into Opportunities

Water is no longer just a resource; it is a strategic driver of resilience, innovation and sustainable growth. Industries and communities face increasing pressures from climate change, urbanisation and regulatory requirements, but these challenges are also spurring groundbreaking solutions.

Key Opportunities and Innovations:

- Advanced Technology: Nanomaterials, high-efficiency membranes and smart water analytics are enabling higher levels of wastewater recycling and more precise monitoring of consumption and leaks.

- Nature-Based Solutions: Green roofs, urban wetlands and permeable pavements help absorb rainfall, replenish aquifers and provide co-benefits such as biodiversity and urban cooling.

- Low-Cost Resilience Measures: Rainwater harvesting, solar-powered pumps and precision drip irrigation empower communities and farmers to access and conserve water efficiently.

Beyond operational and technological responses, water remains a cross-cutting enabler of sustainable development. It underpins key SDGs, supporting clean water and sanitation (SDG 6), human health (SDG 3), resilient infrastructure (SDG 9), sustainable cities (SDG 11), responsible production (SDG 12), and ecosystem protection (SDG 14 & 15). Without secure and well-managed water resources, progress across nearly all sustainability goals is compromised.

For investors, businesses and policymakers, this landscape presents a dual opportunity: to mitigate risk and to unlock value. Companies that proactively adopt water-smart strategies stand to enhance operational stability, reduce costs, meet regulatory expectations and create long-term competitive advantage. By embracing both technological and nature-based solutions, stakeholders can help shape a future where sustainability, resilience, and growth flow hand in hand. In the era of climate volatility, companies that treat water not as a utility cost but as a strategic asset will define the next frontier of resilient growth.