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1、Navigating the WatersStrategic Solutions for Water ResilienceSeptember 2023By Torsten Kurth,Dean Muruven,Jester Koldijk,John Staunton Sykes,and Adam WlostowskiWith major contributions from Stuart Orr and Richard Lee of the WWF Freshwater Practice Coordination Team and from the WWF Water Risk Filter
2、team1 NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE Navigating the WatersStrategic Solutions for Water ResilienceReaders might react skeptically.Hasnt access to freshwater steadily improved for decades?And didnt the recent United Nations Water Conference address this problem?Why sho
3、uld we worry about water when other challenges seem harder to solve?The reality,however,is both worse(because we are facing a global water crisis)and better(because new ideas and emerging technologies can help overcome the challenges)than many people imagine.Part I:The Water CrisisThe Water Crisis:M
4、yths to Clear Away Many responses to the crisis echo common myths,so lets begin by addressing these misconceptions.Myth 1:The Water Crisis Is Like the Carbon CrisisUnlike carbon emissions,water issues are hyperlocal.One region might face severe drought,while another a few hundred miles away has an a
5、bundant supply of water.Quality varies widely,too:the groundwater in one area might be undrinkable,while neighbors who benefit from a different geology can drink freely from their wells.That hyperlocality complicates efforts to coordinate global action.Its much easier to set national limits on fungi
6、ble emissions that flow freely into the atmosphere.Not sur-prisingly,we have a global framework for measuring and disclosing carbon emissions,but not for gauging and up-holding water standards.Likewise,we cant create emis-sions markets with offsets for water.These challenges help explain why the rec
7、ent UN Water Conferencethe first in almost 50 yearsalthough groundbreaking in itself,yielded far fewer results than the several gatherings on carbon emissions.Instead of produc-ing a“Paris moment”of accelerated solutions,the gather-ing in New York City in March 2023 served mainly as a forum for disc
8、ussion,and it drew few(9%of the total)new commitments from companies.1(See Exhibit 1.)We need regular gatherings to share success stories,discuss ongoing challenges,and drive action.The water crisis demands creative thinking and action to address local challenges.The world is facing a pervasiveand m
9、ountingwater crisis.Many people lack ready access to drinkable freshwater or are afflicted by severe flooding.Communities have too little water,or at times too much,or the water isnt clean.Already under pressure,the ecosys-tems and infrastructure that sustain water resources are now vulner-able to d
10、isruptions from climate change.1.UN Department of Economic and Social Affairs,“Water Action Agenda”(April 7,2023).BOSTON CONSULTING GROUP +WORLD WIDE FUND FOR NATURE 2Of course,the water crisis and the climate change crisis are related,and water problems are often a visible mani-festation of climate
11、 change resulting from high carbon emissions.But each crisis calls for its own separate solutions.Myth 2:Governments Alone Are Responsible for Providing Resilient Water Supplies Governments play a critical role in providing leadership and regulations to ensure the adequate,equitable,and sus-tainable
12、 management of water resources.Yet effective water management requires the involvement of diverse stakeholders,including the private sector,local communi-ties,and civil society.Two-thirds of companies say that water problems could lead to substantive changes in their business,putting$225 billion at
13、risk.2 This is because the private sector depends on water supplies to transport goods over rivers,to serve as a key ingredient for beverag-es,or to act as an input for agriculture.Crucial innovations must come from both for-profit and nonprofit organizations in those regions.Organizations can draw
14、on advances from elsewhere,but they must adjust every new tool,technique,or process to the local context.Hence the need for competent governance to provide proper incentives to these nongovernmental actors.For-profit companies need to seize the water opportunity,since the cost of inaction is likely
15、five times as high as than the cost of action.3Myth 3:Water Comes from InfrastructureMany people assume that potable water is simply a finan-cial or engineering challenge.As long as a community has the capital and expertise,it can build a water supply sys-tem to meet its needs.But water doesnt just“
16、come from the tap.”It depends on natural ecosystems.Planners must factor interconnected freshwater environ-ments into development in order to ensure water system resilience.Since 1970,one-third of the worlds wetlands have disappeared,the number of long,free-flowing rivers has declined by two-thirds,
17、and the populations of freshwater species have declined by four-fifths.Too many grand engi-neering projects have fallen short of expectations over time because they undermined those ecosystems.Hydropower development,for example,can hamper food production,harm biodiversity,displace communities,and en
18、danger public safety as dams age.It can also block migratory fish and prevent sediments needed to sustain deltas from flowing downstream.In some cases,the dam-age is so greatincluding to climate adaptation servicesthat it outweighs the climate mitigation value of the renew-able electricity generated
19、.We therefore argue that future water management systems must work with nature,through nature-based solutions,to sustainably manage ecosystems.We see many promising innovations in the water sector,with numerous state-of-the-art solutions now in scalable and pilot phases.Yet these innovations can add
20、ress the water crisis only in conjunc-tion with freshwater ecosystems.Exhibit 1-The Recent UN Water Conference Led to Few New Commitments from the Private SectorSources:UN Department of Economic and Social affairs(April 7,2023);BCG and WWF analysis.1Includes national,regional,and local governments,a
21、s well as intergovernmental and multilateral bodies.2Includes such entities as civil society,philanthropic organizations,and partnerships.2722386754100Number of newcommitmentsPublic sector1Other2NGOsPrivate sectorAcademia2.https:/ NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE Myth 4
22、:Weve Already Largely Solved the Problem of Water AccessThe percentage of people who lack clean water for drink-ing,cooking,and sanitation has been falling for decades.And today,proportionately fewer people are dying from preventable diseases linked to unsafe water and poor sanitation.4Nevertheless,
23、1.4 million people die each year because they lack access to safe and affordable drinking water,adequate sanitation,and suitable hygiene facilities.Just under half of the worlds 8 billion people still lack ready access to sanitation.And 2 billion people still struggle to obtain drinkable water.As po
24、pulation growth,rising eco-nomic output,and changing climate patterns increase pressure on freshwater supplies,the progress made in recent decades is under threat and could be reversed.The UNs Sixth Sustainable Development Goal(SDG6)calls for universal access to clean water by 2030.Without such acce
25、ss,regions will struggle to achieve other develop-ment goals.To meet this goal for SDG6,we need to boost the current pace of progress by six times.In 2030,at current rates of progress,one-fifth of the world will still live without safely managed drinking water,one-fifth without basic hygiene facilit
26、ies,and one-third without safe sanitation.Meanwhile,climate change is poised to disrupt ongoing efforts to improve water access in many places,making future advances more difficult.Both droughts and flooding are likely to become more common,and the higher rate of disruption will increase risks to wa
27、ter quality.The current slow rate of improvement under the status quo might even go negative.And as water risk grows,the challenge of reducing carbon emissions absorbs much of the worlds attention and creativity.Instead of doing more of the same,we need to adopt a new approach.This report will lay o
28、ut ideas for accelerat-ing the expansion of access to clean water while making water supplies resilient against climate change.Myth 5:Water Should Be Free to EveryoneThe UN recognizes access to adequate water and sanita-tion as a fundamental human rightone that is critical to health,dignity,and pros
29、perity.5 Water is the basis of all life on Earth,and freshwater is critical to many ecosystems.It is also vital to business operations in many industries.This doesnt mean,however,that water should be free and access should be limitless.Water pricing calls for a com-plex balance between equity and ef
30、ficiency.Given that water is a human right,it should be inexpensive,but peo-ple should also have an incentive to conserve it.With careful pricing,governments can work with providers to promote both equity and efficiency.Market-based mech-anisms,adaptive pricing,and other policies can promote conserv
31、ation and stimulate sufficient financing while also meeting the needs of vulnerable populations.Pricing was a key issue at the 2023 UN Water Conference,and must be a continuing focus of planning as regions around the world face freshwater shortages.We delve into pricing considerations in Part II of
32、this report,along with other market-based mechanisms.Myth 6:Investors Have the Information They Need to Make Sustainable Water Investments This myth is simply false.Investors have far too little infor-mation about water efforts,often fail to recognize the magnitude of water-related risks,and lack un
33、derstanding of the effects of climate change on the water supplies.Investors need reliable information,but most companies provide few details about their water usage.The Carbon Disclosure Project(CDP),which collects data on carbon emissions,water use,and exposure to deforestation,re-cently surveyed
34、about 8,500 companies and found that only 46%of them disclose water-related data.6Many investors today pay no attention to water risks,either because they dont understand waters impact and depen-dencies or because they lack access to decision-useful data.Water is the key ecosystem dependency in most
35、 financial portfolios,yet fewer than half of those portfolios disclose their water-related risks.Jefferies,a US-based multinational investment bank,found that three of the five most material ecosystem service dependencies were water related.74.https:/www.sdg6data.org/en/node/1.5.https:/www.unwater.o
36、rg/water-facts/human-rights-water-and-sanitation.6.https:/ is most critical natural capital factor for investors,”Environmental Science(February 9,2023).BOSTON CONSULTING GROUP +WORLD WIDE FUND FOR NATURE 4Reality:The World Is Facing Severe Water Problems in Many Regions Overall,the world has not ma
37、naged water sustainably and equitablyand today four drivers are raising the stakes.8(See Exhibit 2.)Changing Climates Are Disrupting Freshwater SuppliesClimate change will exacerbate local risks of drought and flood,particularly in regions that already face water stress.According to the Global Commi
38、ssion on Adaptation,“The effects of climate change will most immediately and acute-ly be expressed through water.”9 The Intergovernmental Panel on Climate Change(IPCC)expects 50%more people to live under water stress if average global temperatures rise by 2C,rather than by 1.5C.As the climate change
39、s,it becomes less stable.Droughts are likely to quadruple and their intensity to double,while floods will more than dou-ble and become 30%more intense.10 In many regions,climate change will probably reduce freshwater availability as a consequence of changes in precipitation and increased evapotransp
40、iration.Higher temperatures and rising sea levels will likely intensify salinization(increased water-soluble salt concentration in soil),worsening water quality.Demand Is Increasing UnsustainablyEven as water supplies come under threat,demand for freshwater continues to grow rapidly.Thats especially
41、 true in BRICS countries(Brazil,Russia,India,China,and South Africa),where billions of consumers are joining the middle class and consuming much more water than they did when poor.They also eat more meat and consume a wide range of processed goods.Moreover,the UN expects the global population to exc
42、eed 9 billion people by 2050,with 60%to 70%of them living in urban areas.11 These demographic changes will further stress water infrastructure and intensi-fy local demand.Water is not a simple commodity.It is critical to house-holds but also essential for businesses and agriculture,which need to exp
43、and their output to meet increasing demand from consumers.Infrastructure Is Not Keeping UpWater infrastructure is critical for serving drought-prone areas,protecting communities from flooding,and providing public health services such as water treatment and sanita-tion.Yet water infrastructure is agi
44、ng and often suffers from deferred maintenance.Three key points are relevant here.Exhibit 2-Four Drivers,Underpinned by Failures in Governance,Are Central to Global Water ChallengesSource:BCG and WWF analysis.Intensifyingclimate changeUnsustainabledemand increaseInadequateinfrastructureFailures in g
45、overnanceDegradingwater ecosystemsClimate change alters the water cycle and precipitation patterns,which exacerbate both acute water challenges(such as severe droughts and floods)and chronic ones(such as water scarcity)Expanding global population,urbanization,and economic developmentparticularly in
46、Asia and Africaincrease water consumptionDeterioration of global freshwater ecosystems reduces freshwater uptake,increasing the risk of flooding and jeopardizing businesses and supply chainsAging water infrastructure and underinvestment or misapplied investment in infrastructure expansion increase t
47、he strain onwater resources8.https:/ Now:A Global Call for Leadership on Climate Resilience,”https:/gca.org/reports/adapt-now-a-global-call-for-leadership-on-climate-resilience/.10.IPCC AR6.11.https:/www.un.org/en/desa/world-population-projected-reach-98-billion-2050-and-112-billion-2100;https:/www.
48、un.org/uk/desa/68-world-population-projected-live-urban-areas-2050-says-un.5 NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE First,water infrastructure is prone to leakage,even in regions vulnerable to water stressors such as prolonged droughts.For example,demand in South Africa will
49、likely outpace supply by 17%by 2030 even as one-third of the water that runs through existing infrastructure is lost to leaks.12 This is a problem in the global north as well.For instance,Italy has a leakage rate of 42%.13 In the US,a water main breaks every two minutes,resulting in the loss of 6 bi
50、llion gallons of treated water daily.Globally,leakage costs water utilities$14 billion every year.Leaks and other water disruptions were responsible for$50 billion in losses by the 11 most water-reliant industries in 2019.Second,aging infrastructure is a security risk.Most US levees and dams receive
51、d grades of D or F for safety from the American Society of Civil Engineers.14 Structural failure of any of these water containment barriers could devastate entire communities.Third,in the absence of proper water treatment and distri-bution,consumers risk bacterial contamination and chemi-cal polluti
52、on.In such situations,they must rely on ques-tionable surface or groundwater,leaving them much more vulnerable to waterborne illnesses.Freshwater Ecosystems Are DegradingSupplies depend on broad ecosystems.For example,peat-lands and wetlands perform crucial filtering and storage functions for downst
53、ream freshwater access.Yet a third of all wetlands have disappeared since 1970.Similarly,many rivers and lakes are being degraded,both qualitatively and quantitatively.Even seemingly dry forests improve water quality and flow through filtration and retention,while also creating atmo-spheric conditio
54、ns that led to rain elsewhere.Coastal mangroves provide natural flood protection.Yet many cities build over these nature-based resources.Even when many trees remain,disrupted flows can diminish vegeta-tion and prevent forests from retaining water and recharg-ing supplies.As cities and economies expa
55、nd at the ex-pense of these critical ecosystems,they weaken their own resilience to climate impacts.We need to explore models of development that work cooperatively with ecosystems to build resilience.The Water Crisis Ultimately Stems from Failed GovernanceMany regions lack the governmental capacity
56、 to manage freshwater resources effectively.They send out weak pricing signals,rely on outdated allocations,and in many cases do not consider the ecosystems wider ecology and hydrology.Effectively managing water use requires strong,impartial,and collaborative local governance.Governance structures o
57、ften lack broad-based legitimacy,since many historical agreements have excluded stakeholders.Moreover,munici-palities,water agencies,and other local governmental bodies struggle to enforce policies because they have inadequate technical capabilities and expertise in project management.A deep underst
58、anding of the water crisis in all its complexi-ty,and of how to meet the challenges,is critical to better governance.This report aims to provide that understand-ing.It offers guidance on strategic actions directed toward resilient ecosystems,economies,and societies.A Framework for Understanding Wate
59、r Impacts To reduce the complexity,we can chart each regions de-gree of crisis according to a three-by-three matrix.(See Exhibit 3.)In 2020,BCG introduced the Water Impact Matrix,which enables policymakers,environmentalists,executives,financiers,and other stakeholders to consis-tently assess a local
60、 situation and propose appropriate solutions.It starts with three basic issues:Too Little Water.Demand for water exceeds available supply,water infrastructure is inadequate,or institutions fail to balance everyones needs.Climate change is mak-ing dry areas drier and increasing the length and severit
61、y of droughts.Water scarcity hurts businesses as well as residents.This is the main problem in northern Africa and the Middle East,where rising demand is overwhelm-ing local resources.Too Much Water.Some regions are at risk for floods due to developments such as paving floodplains,or to climate-driv
62、en shifts in precipitation patterns.More frequent episodes of excessive rain can overwhelm rivers or cause storm surges that batter coasts.Flooding can disrupt businesses at various points in their value chainsclosing their main operations,shutting down suppliers,or raising transportation and capita
63、l costs.Coastal and riverine areas in places such as East Asia face the greatest impact from this threat.Too Dirty Water.This issue covers not just polluted water,but also water that is too rich in nutrients,too salty,or too warm.In much of the world,poor water quality due to industrial activity pos
64、es the main challenge to water access.12.http:/awsassets.wwf.org.za/downloads/wwf009_waterfactsandfutures_report_web_lowres_.pdf.13.https:/ CONSULTING GROUP +WORLD WIDE FUND FOR NATURE 6The Water Impact Matrix then maps these issues against three dimensions:Environmental.Freshwater is crucial for vi
65、rtually every ecosystem.When water is under threatwhether through scarcity,excess,or pollutionthese ecosystems are,too.Economic.Clean water is a crucial business input in many industries,from agriculture to pharmaceuticals.It also plays a global role in maintaining reliable supply chains.Social.Wate
66、r is a human right.All people deserve ac-cess to safe drinking water and dignified sanitation.This requirement is fundamental to the UNs Sustainable Development Goals and animates many water rights disputes around the world.The Water Impact Matrix gathers these areas into a single view.Stakeholders
67、can understand the likelihood and im-pact of each type of water challenge,and then identify a suitable path to action.The matrix focuses on the primary impacts,while also permitting deep dives into specific topics such as reputation-al and regulatory risks.Take the textile industry,for example.As co
68、nsumers become aware of environmental issues,they will push reputable companies to develop sustainable water practices.Government may adopt new regulations to ad-dress water pollution and water scarcity,which in turn may affect companies operations and profitability.To assess the extent of the water
69、 challenge,we combined the Water Impact Matrix with WWFs Water Risk Filter,a rigorous free tool that quantifies risks at high resolution with indicators from 32 external and peer-reviewed global data sets.We found that 4%of the worlds environmentally rich areas,30%of global GDP,and 34%of the worlds
70、population are in locations at high water risk.(See Exhibit 4.)By 2050,if we continue business as usual,7%of environmentally rich areas,43%of the global GDP,and 51%of the global popula-tion will be at high risk.Exhibit 3-The BCG Water Impact Matrix Helps Reveal the Likely Impact of Various Water Cha
71、llengesSource:BCG and WWF analysis.Note:The matrix shown here is a template version,with risk values not filled in.Water challenges can be acute(such as flash droughts)or chronic(such as long-term water scarcity).Both types are considered here.ChallengeImpactQualityQuantityRisk:Very high riskHigh ri
72、skMedium riskLow riskVery low riskEnvironmentalEconomicSocialToo little waterToo much waterToo dirty water7 NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE The matrix reveals that poor water quality is a key issue.More than half of the current global population and GDP today are in As
73、ian regions,including India,with high risks related to water qualityand that figure is likely to rise to 68%by 2050.Flooding,too,has severe social and economic effects.Worldwide,1.8 billion people face flood risks,and one-third of them have incomes of less than$2 per day.They have limited access to
74、financing for flood protection or recovery,much less insurance,which leaves them vulnerable to property loss,dislocation,and economic disruption.In economic terms,river flooding is the worlds most damag-ing form of disaster,at a cost of$115 billion per year.15 Climate change will probably increase a
75、nomalous flooding,with$15 trillion in economic activity at risk of flooding by 2040.16Regions and Sectors at Risk Focusing on global statistics gives short shrift to the chal-lenges faced by regions and sectors where water risks are acute.We can use the matrix and the risk filter tool to obtain more
76、 specific insights.(See Exhibit 5.)Regions The results show notable concentrations of water stress in northern India,northeastern China,the southwestern US,and the Mediterranean,among others.These regions must develop sustainable water management solutions to meet the needs of social and economic gr
77、owth as part of their long-term sustainable development plans.Northern India.17 India is now the worlds most populous country,and significant parts of its GDP and biodiversity are exposed to high water risks.Exhibit 4-Climate Change Will Put Much of the World at High Water Risk by 2050Sources:WWF Wa
78、ter Risk Filter;Wang and Su,“Global gridded GDP data set consistent with the shared socioeconomic pathways,”Sci.Data(2022);Wang,Meng,and Long,“Projecting 1 km-grid population distributions from 2020 to 2100 globally under shared socioeconomic pathways,”Sci.Data(2022);BCG and WWF analysis.Note:GDP an
79、d population estimates include changeincluding climate scenariosbased on latest projections.GDP is measured as purchasing power parity,in 2005 international dollars.BAU=business as usual.Because of rounding not all bar segments add up to 100%.Level of water risk for global environmentally rich areas
80、,GDP,and population(%)20202050optimistic2050 BAU2050pessimistic20202050optimistic2050 BAU2050pessimistic20202050optimistic2050 BAU2050pessimistic75273445972x2.0(2 million km2)Environmentally rich areasGlobal GDPPopulationx1.6($70 trillion)x1.7(3 billion pe
81、ople)2367023769238Low or very low riskMedium riskHigh or very high riskRisk:15.https:/ of climate change will most immediately and acutely be expressed through water9 NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE Indias rapidly worsening water situation is due mostly to issues of wa
82、ter scarcity and poor water quality,but the country also faces substantial risks of flooding.It ranks among the worlds most water-challenged nations,in part because of its high population density and inadequate water infrastructure.Groundwater levels are sinking as farmers,city residents,and industr
83、ies overdraw from wells and aquifers;overall availability has fallen by half over the past seven years.For 16%of the land,the groundwater level is declining by an alarming 1 meter per year.Much of the water that is available is polluted.India depends on its northern regions for supplies of rice and
84、wheat,both of which are water-intensive crops.The availability of clean water is shrinking as a result of both climate change and unsustainable water use by local producers.The federal government subsidizes electric pumps and places no limits on groundwater extraction,worsening an already precarious
85、 situation.Fewer than 10%of Indias groundwater districts provide water that is con-sidered safe to drink.Northeastern China.18 A large portion of the Chinas GDP is generated in areas of high or extreme water risk.Like India,China faces the twin challenges of poor water quality and mounting water sca
86、rcity,driven by rapid popu-lation shifts,economic growth,heavy industry(steelmak-ing,smelting,and paper and chemical production),and electricity generation,along with climate change.The northeastern part of China is an important agricultural producer,but that area holds just 4%of the countrys freshw
87、ater.The region relies on ever-depleting and increas-ingly polluted groundwater for household use as well as for industry and agriculture.Chinas electricity generation is water-intensive,comprising 12%of national water consumption.Much of it comes from coal-fired plants that require large volumes of
88、 water for cooling.Two-thirds of the countrys coal plants are in northern provinces and other areas of high water stress.Exhibit 5-BCGs Water Impact Matrix Identifies HotspotsSources:WWF Water Risk Filter;WWF and BCG analysis.EnvironmentalEconomicSocialToo little waterSouthwestern USToo much waterTo
89、o dirty waterEnvironmentalEconomicSocialToo little waterMediterraneanToo much waterToo dirty waterEnvironmentalEconomicSocialToo little waterMiddle EastToo much waterToo dirty waterEnvironmentalEconomicSocialToo little waterNorthern IndiaToo much waterToo dirty waterEnvironmentalEconomicSocialToo li
90、ttle waterNortheastern ChinaToo much waterToo dirty waterRisk:Very high riskHigh riskMedium riskLow riskVery low risk18.https:/www.lowyinstitute.org/the-interpreter/water-scarcity-challenges-china-s-development-model.BOSTON CONSULTING GROUP|SUB-BRAND 10Chinas heavy industry is another major consumer
91、 of the countrys freshwater,with a use-to-value-added ratio that far exceeds that of peer countries.Southwestern US.The Colorado River Basin has been under stress for two decades,especially as a result of consumption in California,which is home to 39 million people and 15%of the USs GDP.The main cha
92、llenge here involves water scarcity due to growing demand without a commensurate increase in supply,amplified by rising temperatures and worsening drought driven by climate change.19 The rivers flow has fallen by one-fifth since 2000,and a 2C increase in average temperature(over pre-industrial level
93、s)by 2050 could reduce it by 40%.In response to the longstanding drought,the regions state governments recently agreed to substantially reduce their allocations.(See“Case Study:The Colorado River Basin.”)Mediterranean.The Mediterranean attracts tourists from around the globe,drawn by its fine weathe
94、r and beautiful nature.The region also produces grapes,olives,and nutsall water-intensive crops.Yet the region has seen five consecutive years of drought,along with record-breaking high temperatures.This trend is likely to continue and worsen in coming years.In 2022 and 2023,temperatures sometimes r
95、ose to 4C above average,due to long-lasting heatwaves.20 The combination of drought,high water demand from agriculture and tourism,and record heat has reduced river flows.Spain is experienc-ing pervasive water shortages,particularly in Andalusia,where water reservoirs languish at one-quarter of capa
96、city.Farm yields are falling,and forecasters expect even lower yields in the future.Severe droughts and water scarcity are already having political repercussions.Drought-struck Andalusia,specifi-cally the province Huelva,is the worlds largest exporter of strawberries.The regional government wants to
97、 legalize farms and irrigation in the watershed that surrounds Doa-na national park.Illegal operations already in place con-tributed to the parks losing more than half of its pond network from 1985 to 2018,and legalization would worsen the situation.21 The potential damage is so great that German ac
98、tivists have called for boycotting Andalusian strawberries.An extreme case of politics outside the Mediterranean involves the Horn of Africa,where years of conflict,local-ized violence,and refugee camps have combined with climate-related shocks to render 82 million people food-insecure.Aid agencies
99、such as the World Food Program have worked with partners to ameliorate these conditions,but the regions worsening climate is likely to intensify future floods and droughts.The long-term solution is not expanded food aid,but investment in resilient food sys-tems,which in turn depend on long-neglected
100、 water sup-plies.Engineering alone wont sufficethe region needs to adopt nature-based solutions and social innovations and build graywater infrastructure to create resilient water systems.SectorsThroughout the world,water is critical to the operation,profitability,and sustainability of agriculture,t
101、extiles,min-ing,and energy production.(See Exhibit 6.)Agriculture.Because agriculture depends on water more than any sector does,it is especially vulnerable to water risks.At the same time,it heightens such risks through depletion and pollution.According to the World Resources Institute,agriculture
102、accounts for two-thirds of global freshwater withdrawals,and 40%of the worlds food comes from areas with high water stress.22Agricultural production requires large quantities of water,even in regions where resources are limited.Aside from issues related to water scarcity,floods and water pollution c
103、an damage soil fertility and irrigation systems,leading to higher input costs or greater production losses and atten-dant food insecurity.These problems have knock-on effects in sectors such as food and beverage production and tex-tiles.Another contributor to scarcity is the virtual water trade.(See
104、“The Virtual Water Trade.”)Water pollution arises mainly from excessive agrochemical use and inadequate wastewater management.Agricultural runoff of pesticides,fertilizers,and animal waste can con-taminate local water sources,making the water unfit to drink and hurting aquatic life.19.https:/www.nat
105、ure.org/en-us/about-us/where-we-work/priority-landscapes/colorado-river/colorado-river-in-crisis/#:text=Temperatures%20in%20the%20Basin%20are,by%20another%2010%20to%2040%25.&text=In%20addition%20to%20causing%20soaring,threatens%20rivers%20and%20water%20supplies.20.https:/joint-research-centre.ec.eur
106、opa.eu/jrc-news-and-updates/severe-drought-western-mediterranean-faces-low-river-flows-and-crop-yields-earlier-ever-2023-06-13_en.21.https:/www.wwf.eu/?10136966/Donana-emergency-European-Commission-must-stop-destructive-law.22.https:/www.wri.org/news/release-one-third-all-irrigated-crops-face-extrem
107、ely-high-water-stress.11 NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE The Colorado River supplies drinking water to 40 million people in the southwestern US and Mexico.It supports$1.4 trillion in commerce,16 million jobs,15%of US farm-land,and 30 tribal nations.Without the river,Ar
108、izona alone would lose 2 million jobs and see its gross state product fall by one-third,or$185 billion.1 The high stakes involved in maintaining the Colorado River Basins health have led stakeholders to adopt four of the six strategic moves de-scribed in Part II.Seven state governments represented i
109、n the basin are balancing the water demands of municipal,commercial,cultural,and ecological end users,all competing for low-cost water.The largest user is agriculture,which takes up three-quarters of the supply,so stakeholders have been looking to farmers to reduce their usage without compro-mising
110、the sectors economic viability.Metropolitan areas in the region have grown rapidly and are struggling to ensure the availability of supplies sufficient for continued growth.Often,they accomplish this by buying water rights from farms(“buy and dry”),a tactic that removes land from production and dama
111、ges rural communities.Allocations of Colorado River Basin water were set a centu-ry ago,with an incomplete understanding of climate vari-ability and without the participation of stakeholders such as indigenous peoples and fisheries.The 1922 Colorado River Compact apportioned the water between Upper
112、Basin and Lower Basin states,with the remaining flows going to Mexico.The compact created two groups:senior users such as California,and junior users such as Arizona.In times of scarcity,junior holders get cut first.Because 1922 was a time of anomalously high flows,compact par-ticipants had a false
113、sense of the arrangements sustain-ability.Since then,several droughts have strained relation-ships among basin users and forced some to question the compact.They point to such flaws as a“use it or lose it”provision that discourages conservation.Today,junior rights holders are trying to renegotiate t
114、he compacts terms,but senior rights holders have little in-centive to go along.The seven basin states recently agreed to a series of cuts in Colorado River water usage,and now the federal government is assessing whether those cuts are adequate in light of climate change.Over the past two decades,the
115、 rivers stream flows have fallen by one-fifth,and experts predict an additional drop of 9%per Celsius degree of higher temperature.2 Water levels in the basins reservoirs are dropping at an alarming rate,threatening not just water supplies but also hydro-electric power generationa cornerstone of the
116、 regions energy.The current water allocation of 20.4 billion cubic meters per year exceeds the long-term average annual streamflow of 18 billion cubic meters by more than 10%.3 From 2000 to 2022,the annual natural flow decreased to 15 billion cubic meters,which suggests a 30%deficit.Three Critical M
117、oves Agencies and other stakeholders are working on various solutions to put the basin on a path to water resilience:Accelerating agricultural innovation,especially in the ar-eas of precision irrigation,water-efficient crop selection,and regenerative agriculture Deploying market-based mechanisms to
118、encourage basin users to share water temporarily by reducing transaction costs for water leasing and other measures New water-efficient technologies to intensify residential conservation,for both indoor and outdoor usageThese three moves could save about 2.3 billion cubic meters of water per year(Se
119、e the exhibit.)Stakeholders could also seek equitable governance practices based on new legislation,new forms of block pricing,new partner-ships,and new drought planning and disclosure mandates.Lets delve into each of the three immediate moves avail-able to stakeholders.Accelerating Agricultural Inn
120、ovationCrops destined for cattle feed consume more river water than crops harvested for direct human consumption.Beef and dairy products are therefore the leading driver of water shortages(and fish imperilment)in the region.4 But sales of these products are unlikely to fall in the near future.So sta
121、keholders have focused on two innovations:precision irrigation and better soil management.Case Study:The Colorado River Basin1.https:/ CONSULTING GROUP +WORLD WIDE FUND FOR NATURE 125.https:/pacinst.org/wp-content/uploads/2013/05/pacinst-crb-ag.pdf.6.https:/www.scienceforconservation.org/assets/down
122、loads/Market-Based_Mechanisms_for_Env_Water_TNC_2017.pdf.7.https:/digitalcommons.unl.edu/cgi/viewcontent.cgi?article=1064&context=wffdocs.8.https:/www.auroragov.org/residents/water/innovation;https:/dnrweblink.state.co.us/CWCB/0/edoc/212963/ATM%20Status%20Report.pdf.Farms are moving away from flood
123、irrigationalthough four-fifths of basin cropland still relies on itand toward sprinkler and drop systems.Even better are drip irrigation and AI-driven sprinklers that optimize the timing and loca-tion of delivery,thereby minimizing evaporation from the soil surface.To augment this precision applicat
124、ion,farms are exploring regulated deficit irrigation(RDI),which limits deliveries of water when crops can tolerate water stress.The goal is to conserve water while minimizing adverse impacts on yield.According to the Pacific Institute,employing RDI can reduce annual irrigation in the region by 1.1 b
125、illion cubic meters.5 The Pacific Institute also estimated that switching 10%of alfalfa plantings in the Colorado River Basin to cotton or wheat could save about 300 million cubic meters of water annually.Related to RDI is conservation-oriented tillage and mulch-ing,a method that limits evaporation
126、to keep more water in the soil.Besides saving water,this approach can increase overall soil health.Relying on MarketsSeveral agencies with stakes in the Colorado River Basin have established market-based mechanisms for water sharing.California hosts one of the worlds largest water markets,with appro
127、ximately 1.7 billion cubic meters traded annually.6 Colorado is pioneering“alternative transfer mechanisms”that work in much the same way.These mechanisms encourage voluntary water-sharing agreements among users and can handle permanent as well as temporary transfers to the optimal allocation.In exc
128、hange,users receive compensation and greater legal protection of their remaining water rights.For example,farmers receive financial incentives for the voluntary,temporary,rotational fallowing of farmland.Esti-mates suggest that rotational fallowing of 20%of cattle-feed irrigated land from July throu
129、gh September would yield water savings of 300 million cubic meters per year.7 Farmers can also enter into an interruptible water supply agreement with a municipal or industrial user.Under such an agree-ment,the user leases water from the farmers for three out of every ten years of drought-tightened
130、supplies.In those years,the farmers curtail their water use by fallowing or engaging in deficit irrigation,in exchange for a fee.8Interventions to Overcome Deficits in the Colorado River Basin,Enabled by Equitable GovernanceSources:Congressional Research Services,“Management of the Colorado River:Wa
131、ter allocations,drought,and the federal role”(February 2023);Richter et al.,“Water scarcity and fish imperilment driven by beef production,”Nature Sustainability(2020);BCG analysis.Water availability,allocation,and upside(billions of cubic meters)0 5 10 15 20 25Existing waterallocationNatural annual
132、 flow Deficit35PrecisionirrigationCrop selectionand regenerativeagricultureRotationalfallowingDomestic water savingsCurrent allocationminus selectedinterventions Directional and non-exhaustive20.415181.10.30.30.518.2In May 2023 three states proposed saving 3.7 billion cubic meters of water,bringing
133、the basin closer to a sustainable flow 13 NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE Scaling Household SavingsTotal household water usage in Colorado River Basin states amounts to 3 billion to 4 billion cubic meters,with 55%outdoor and 45%indoor usage.9 With“smart”applications su
134、ch as WaterSense,engineers estimate that households can save up to 45%of indoor and 70%of outdoor usage.If we assume a 20%to 30%incremental adoption rate of these applications,the Basin could save up to 500 million cubic meters annually.That figure excludes urban growth trajectories,however,and the
135、southwestern USs popula-tion is likely to increase in coming decades.Much Depends on Governance The region has made good progress in recent decades.Today,southern California uses less water than it did in the 1980s,despite having 50%more people.But to sustain these efficiencies over the long term,go
136、vernance must improve.The goal following the unexpected flooding from heavy rains last year is to store currently abundant water for later use.Infrastructure changesespecially the ability to bank and transfer waterare essential.This should happen with a combination of greenwater and graywater soluti
137、ons.For its part,the federal government is encourag-ing substantial investment in water infrastructure through the Inflation Reduction Act.Governance must also promote deeper shifts in water allocations.Farmers(including agricultural companies)need incentives not just for temporary transfers,but als
138、o for permanent transfers that facilitate investments in water-efficient equipment and conservation.And of course,the region needs an updated compact governing water management on the basis of terms negotiated across all stakeholders,including recreational users,ecosystem-based sectors,and tribes.Th
139、ose voices are at risk of being suppressed by large consumersagriculture,municipali-ties,and industry.Beyond big-picture changes,each municipality or locality must set up its own drought planning and demand man-agement.Each must also develop a long-term supply portfolio strategy that plans for a war
140、mer,drier,and ulti-mately uncertain water future.9.https:/ CONSULTING GROUP|SUB-BRAND 14Agriculture is particularly sensitive to climate impacts.Shifting climate trends can alter rainfall patterns,increase evaporation,and raise the frequency and intensity of ex-treme weather events such as droughts,
141、heat waves and flash floods.The IPCC expects crop yields to fall substan-tially as a result of these weather changes,even as popula-tion continues to grow.Deltas,which are among the most productive agricultural regions,are shrinking in response to several factors:sea level rise,groundwater pumping,a
142、nd reduced sediment flow in rivers due to sand mining and trapping by upstream dams.23Food insecurity may reverse its current downward trend and become a growing global problem,intensified by cli-mate change and population growth.For agriculture gener-ally,much of the worlds five most popular cropsw
143、heat,corn,rice,soybeans,and cottonis grown in areas of high-water scarcity,and this is likely to increase substan-tially by 2050.(See Exhibit 7.)In the case of wheat,which occupies the most hectares globally,farms in areas with a high risk of water scarcity will likely rise from 25%to 42%,a 68%incre
144、ase.Other crops see similar trends.For example,corn will see an increase in high-water-risk plantings from 12%to 27%.The textile industry may be particularly hard hit:44%of cotton production already occurs in heat-stressed areas,a propor-tion that is likely to increase to 70%.Exhibit 6-The Agricultu
145、re,Fishing,Food and Beverage,Paper,Textiles,Mining,and Construction Sectors Are at Highest Risk of Water ChallengesSource:WWF Biodiversity Risk Filter,2023.1World Bank Development Indicators,2020.2Includes automotive,electronic equipment,machinery,electronics and semiconductors,and general manufactu
146、ring.3 Includes retail,professional services,transport services,telecommunications(including wireless).RiskAgricultureIndustryGlobal GDP(%)1Scarcity425531554866111QualityFishing and aquacultureFood and beverage productionPaper and forest productionTextiles and luxury goodsMetals and miningConstructi
147、on materialsEnergy productionChemicals,pharma,and biotechHospitalityManufacturing2Oil and gasOther3Risk:Very high riskHigh riskMedium riskLow riskVery low risk23.https:/weblog.wur.eu/fnh-ri/combined-insights-stimulate-sustainable-food-production-in-deltas-under-pressure/.15 NAVIGATING THE WATERS:STR
148、ATEGIC SOLUTIONS FOR WATER RESILIENCE Agriculture accounts for much of the worlds virtual water tradethe buying and selling of water-intensive products.This trade can occur internationally or within a country.It becomes problematic when a water-scarce region exploits its water supplies unsustainably
149、 to support such products.A study conducted in 2019 found that 15%of global water consumption went to the international crop trade.1In 2015,the US,India,Pakistan,Mexico,and Spain accounted for two-thirds of the international water-stressed crop trade.The US is the largest exporter,with 22%of unsusta
150、inable(business as usual)virtual water transfers,followed by India(19%),Pakistan(14%),Mexico(7%),and Spain(5%).China is the largest importer of these crops,followed by the US,Turkey,Mexico,and Japan.About 60%of this trade involves cotton,sugar cane,fruits,and vegetables.Virtual water trading also ta
151、kes place inside many large countries,with electrical generation and chemical produc-tion contributing to the transfer totals.In China,from 2002 to 2012,the share of interregional trade to total water withdrawal doubled,from 20%to 40%.2 Virtual water flows from agriculture,electricity,and chemicals
152、accounted for 83%of the total.Paradoxically,much of the trade went from the water-scarce northwest and northeast to water-rich provinces in southern China.Much of the virtual water trade is due to large variations in crop water intensity and to the inefficient distribution of these crops around the
153、world.Nuts,spices,and stimulants use much more water than vegetables and fruits.(See the exhibit.)Water intensity varies within categories,too:avo-cados,for example,use nine times as much water as car-rots.Location is another variable.If the region is water scarce,then Raising water-intensive crops
154、in a water-scarce region has far more impact on the local water situation than raising them in a water-abundant region.Animal products are the most water-intensive outputs of all.Beef uses 15,415 cubic meters of water per ton,while chicken uses 4,325 cubic meters.3 The disproportionate water demands
155、 of animal products remain true even when gauged by caloric density:beef uses 10 liters of water per kilocalorie,compared to 0.5 liter per kilocalorie for cereals and 1.3 liters per kilocalorie for vegetables.The Virtual Water TradeWater Intensity Varies Enormously by CropSource:Mekonnen and Hoekstr
156、a,The Green,Blue and Grey Water Footprint of Farm Animals and Animal Products,UNESCO-IHE(2010).Note:As defined by the Water Footprint Network,“greenwater footprint”is water from precipitation,“bluewater footprint”is water that has been sourced from surface or groundwater resources,and“graywater foot
157、print”is the amount of freshwater required to assimilate pollutants to meet specific water quality standards.Global average water footprint of crops(cubic meters per ton)Oils,nuts,stimulants,and spicesFruits,vegetables,and cerealsSpices,nuts,and stimulants use significantly more water per ton than c
158、ereals,fruits,and vegetables do Within the fruits,vegetables,and cereals category,avocadoes use about 9x more water than carrots doWater usage per crop depends heavily on location and final product,refined sugar for instance uses 1,782 cubic meters per ton15,89715,52614,2184,0283,3662,9262,2702,1441
159、,9811,8261,6741,6041,222790347287209195 CoffeeCinnamonCashewnutsCottonSunflowerseedsTobaccoRapeseedSoybeansAvocadosWheatRiceCherriesMaizeBananasStraw-berriesPotatoesSugarcaneCarrots+916%5,00010,00015,000020,000GreenwaterBluewaterGraywater1.https:/iopscience.iop.org/article/10.1088/1748-9326/ab4bfc/p
160、df.2.https:/pure.rug.nl/ws/portalfiles/portal/79507015/1_s2.0_S0959652618330919_main.pdf.3.https:/www.waterfootprint.org/resources/multimediahub/Mekonnen-Hoekstra-2012-WaterFootprintFarmAnimalProducts_4.pdf.BOSTON CONSULTING GROUP|SUB-BRAND 16Textiles.Of all industries,textiles has the highest water
161、-related financial impact,as costs vary from 2%to 4%of revenues.24 Manufacturing consumes large quantities of water for dyeing and finishing.WWF has found that it takes 2,700 liters of water to produce a single cotton t-shirt.25Heightening the strain,much of the worlds textile manu-facturing takes p
162、lace in water-stressed regions,such as southern Europe,India,and China.The industry is also a major contributor to water pollution because wastewater from textile manufacturing contains hazardous chemicals,dyes,and heavy metals.The resulting pollution harms aquatic ecosystems,damages human health,an
163、d reduces the supply of clean water.The UN estimates that one-fifth of global industrial water pollution comes from textiles.26Energy.The energy sector faces risks related to both water quantity and water quality.Globally,power generationparticularly thermoelectric poweris among the largest consumer
164、s of freshwater.According to both the CDP Global Water Report 2020 and the International Energy Adminis-tration,the sector is second only to agriculture in water usage globally,accounting for 10%of withdrawals.27Water use in energy production,such as to cool thermal plants or to extract and process
165、fossil fuels,involves large quantities of water and contributes to water pollution.Wastewater from generation and processing may contain hazardous chemicals and heavy metals,and extraction and transportation can entail spills and leaks.The UN finds the sector responsible for 30%of global industrial
166、water pollution.Exhibit 7-More Agricultural Land Will Be at Risk of Water Challenges by 2050,with Wheat,Corn,Rice,and Cotton Particularly VulnerableSources:WWF Biodiversity Risk Filter,2023;International Food Policy Research Institute,2019;BCG and WWF analysis.Note:BAU=business as usual.1World Bank
167、Development Indicators,2020.2Includes automotive,electronic equipment,machinery,electronics and semiconductors,and general manufacturing.3Includes retail,professional services,transport services,telecommunications(including wireless).Level of water scarcity in areas where key global crops are grown(
168、%)4742386828202027742320202050pessimistic2050 BAU20202050pessimistic2050 BAU20202050pessimistic2050 BAU20202050pessimistic2050 BAU20202050pessimistic2050 BAUWheat199 million hectaresCornRiceSoybeansCotton151 million hectares113 millio
169、n hectares98 million hectares31 million hectaresLow or very low scarcityMedium scarcityHigh or very high scarcityWater scarcity level:24.https:/ can develop greater resilience to the water crisis by combining green and gray forms of infrastructureBOSTON CONSULTING GROUP +WORLD WIDE FUND FOR NATURE 1
170、8The damage caused by this sector isnt limited to fossil-fueled power generation.Renewable energy technologies,such as hydropower and bioenergy,can stress water sup-plies as a result of poor siting of dams and broad changes in land use.Some dams reduce the risk of floods and improve water supplies,b
171、ut incorrectly sited dams and those that fail to work with natural ecosystem can increase water risks.The proportion of hydropower dams located in basins with a high flood risk is likely to increase from 2%to 36%by 2050.28 Meanwhile,many hydropower facilities are suffering from diminishing reservoir
172、s in drought-stricken areas.Mining.Another industry sector that ranks as a heavy water user and contributor to water pollution is mining.Drawing on vast amounts of water for mineral processing,dust suppression,and other activities,it is the most water-intensive of all industries.The 2020 CDP found m
173、ining to be the third largest user of water globally,accounting for 8%of water withdrawals.29In some water-stressed countries that rely on mining,the industry accounts for a significant proportion of the coun-trys water consumption.In South Africa,for instance,one-tenth of consumption goes to mining
174、.And because mining discharges contain heavy metals,acids,and other pollutants,they can degrade water supplies.The UN ties mining to 10%of global industrial water pollution.The mining sector has ample room for improvement sim-ply by adopting existing solutions and technology.South Africa,for example
175、,could address acid mine drainage(the outflow of acidic water from metal and coal mines)to make water flows drinkable.By accelerating investment in water treatment in the Witwatersrand gold region,the country could make 220 million cubic meters of additional water per year potable,according to the c
176、urrent master-plan.30(See“Water Risk in a Hydrogen Driven Future.”)Part II:Resilient Solutions for a Sustainable FutureNext-Generation Water Management People have traditionally used,valued,and governed fresh-water as an inexhaustible commodity.To boost access to water through adoption of climate-re
177、silient systems,we need a long-term systems-level approach that includes natural processes for groundwater and aquifer recharge.(See Exhibit 8.)This approach will not only sustain primary access to freshwater,but also provide secondary services to economies and people.For example,rivers are crucial
178、to many ecosystems,delivering sediment that makes deltas highly productive for agriculture and fishing.Often,howev-er,stakeholders do not understand,recognize,and value these benefits appropriately.We propose six strategic shifts in water management for the public and private sectors.(See Exhibit 9.
179、)Foster and accelerate technological and social innovations.Anchor corporate strategy and decisions to the water crisis.Expand nature-based solutions to manage and restore ecosystems.Enhance valuation,pricing,and water allocation.Improve water financing frameworks.Develop a local foundation of gover
180、nance and regulatory enforcement.28.J.Opperman et al.:“Using the WWF Water Risk Filter to Screen Existing and Projected Hydropower Projects for Climate and Biodiversity Risks”(2022).29.https:/ NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE Partly in an effort to lessen their contribu
181、tion to climate change,many countries are working to reduce their reli-ance on fossil fuels for energy production.One promising path is green hydrogen,which involves having factories use renewable energy to convert purified water into hydrogen fuel.The downside of this approach is that it could stre
182、ss local water supplies.If the world were to transfer to a fully hydrogen-based economy,the additional freshwater consumed would amount to 2%to 3%of current withdrawals,or 10%of total industrial water usage.1 Of course,the actual usage would vary by location.If Singapore relied entirely on locally m
183、ade hydrogen for energy,it would use almost half of its available freshwater for that purpose,whereas the corre-sponding figure for Tajikistan would be only 1%.Typically,desert and island nations would have to draw the largest proportion of their local water supply to generate their own hydrogen fue
184、l,so they would be more likely to import hydrogen instead.They would gain the bonus of a flow of clean freshwater,effectively imported from better-endowed regionsa beneficial water trade.Green hydrogens water footprint also depends on the source of energy used in its production.Solar and wind power
185、have a minimal water footprint,while nuclear power requires eight times as much water as those sources.2Abundant and inexpensive hydrogen could prompt the spread of desalinization plants,which are energy intensive and therefore too expensive for most countries.Hydrogen-powered desalinization could y
186、ield large quantities of freshwater.Although it is appealing for water-scarce re-gions,desalinization requires safeguards to avoid undesir-able consequences such as those that can result from dumping high-saline water back into oceans.Water Risk in a Hydrogen-Driven Future1.https:/www.weforum.org/ag
187、enda/2022/09/how-a-transition-to-a-hydrogen-economy-will-affect-water-security/.2.https:/itm-power-assets.s3.eu-west- CONSULTING GROUP +WORLD WIDE FUND FOR NATURE 20Exhibit 8-For a Water-Secure World,We Must Mitigate the Impacts of Water-Dependent Value Chains and Build Resilience to Water HazardsSo
188、urce:BCG analysis.Note:The following domains were not considered in this description:transboundary agreements on water,marine ecosystems,and the human right to water.1Includes drinking water supply and provision of sanitation.2Refers to environmental flows.1122334455Adapt and build resilience to nat
189、uralwater-related climate impactsSafeguard and optimize engineered water value chainsFor all of its major uses:DroughtsFloodsIncreased water scarcityPoor water qualityDegrading freshwater ecosystemsSupplyDistributionTreatmentEfficient useAgricultureMunicipal1EnergyIndustryEnvironment2Exhibit 9-Six S
190、trategic Moves to Address the Water Crisis and Build ResilienceSource:BCG and WWF analysis.Foster and accelerate technological and social innovationsAnchor corporate strategy and decisions to the water crisisEnhance valuation,pricing,and water allocationImprove water financing frameworksExpand natur
191、e-based solutions to manage and restore ecosystems Develop a local foundation of governance and regulatory enforcement21 NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE Foster and Accelerate Technological and Social InnovationsAlthough technological gains garnered little attention at
192、the recent UN Water Conference,they will provide the tools for a water-resilient future.They include improve-ments in collecting water,monitoring and forecasting flows,distributing water effectively,using water efficiently,lower-ing the cost of reusing water,and protecting against water-related haza
193、rds.Weve mapped these innovations along the water value chain in three buckets:digital innovation,infrastructure innovation,and other.(See Exhibit 10.)Our analysis identi-fies many promising developments.Some of these ideas will fail,but we expect that enough will succeed to acceler-ate gains in acc
194、ess and quality while reducing water-related hazards.The pressures of climate change make these improvements urgent,and they must come largely from the private sectorwhich makes the sectors meager representation at the UN Water Conference especially disappointing.Exhibit 10-Innovations Will Enable t
195、he Next Generation of Water ManagementSources:Expert interviews;company websites;StartUs,“Top 8 Water Management Trends&Innovations in 2023”(2023);Tracxn,“Water and Waste-water Management Tech”(2023);WEF Uplink,“UpLink at the UN Water Conference”(2023);RecyclingStartups,“Top 10 Water Saving Startups
196、”(2023);BCG analysis.Water sourcingWater useNon-exhaustiveDisposal/reuseWater treatment and distributionWastewater collection and treatmentWater resource managementWater storage and streamflow forecasting Real-time water quality monitoringMarket-based innovationMarket-based mechanisms to enable trad
197、e of water Bankable water solutionsBlue bondsOptimization of efficiencyPrecision irrigation and farming techniques Wastewater reuseWastewater reclamation andre-use technologyWastewater to energy solutionsSmart water usageConnected meters enabling insights on usageResidential and industrial water sav
198、ing appliances Low consumption usageLow water-demand agricultureWaterless hygiene productsDecentralizedwater accessModular off-grid water purificationPoint-of-use filtration technology Advanced water treatmentCost-efficient(biological)wastewater processing Micropollutant and biopollutant filtrationR
199、esilient water systemsReal-time monitoring and forecasting of floodingMobile stormwater remediation systems Drought resistant seeds to reduce water needs Diversification of supplyCost-effective desalination operationsGreen and graystorage capacitiesand transmissionRainwater and graywater collection
200、optimizationHarvesting water from humid airInfrastructuremaintenanceDigital leak detection and monitoring Infrastructure modeling and simulation software BOSTON CONSULTING GROUP +WORLD WIDE FUND FOR NATURE 22In terms of social innovation,these initiatives make new technologies or collective action a
201、cceptable in the relevant cultural,economic,and political contexts.(See“Innovating Technologically and Socially.”)In general,they prioritize improving society over generating return on capital.They come from startup enterprises,from teams within large organizations,and from collaborations across mul
202、tiple bodies.(See Exhibit 11.)Precision irrigation,for example,uses hardware(drip lines,sprinklers,timers,sensors,and satellites)and software(equipped with AI decision making)to apply water only where and when crops need it.Farmers and agricultural companies already have access to various digital to
203、ols to facilitate this approach.BCGs Center for Earth Intelligence(CEI)has extensive knowledge about how to maintain crop yields while minimizing the quantities of water and other inputs used.For instance,to set suitable irrigation parameters,farmers must determine a crops health with high granulari
204、ty and accuracy.The CEI developed a tool to determine vegetation health down to areas of 3 square meters.From there,farmers can optimize their use of water and other inputs.With water-efficient crop selection,farmers can move toward crops that better match future constraints.Crop shifting is especia
205、lly appropriate for the Lower Colorado River Basin,which has a much greater diversity of crops grown,and where half of all agricultural water goes to feed cattle.By shifting from alfalfa to wheat and cotton,the region would save 300 million cubic meters of freshwater.31Regenerative agriculture is an
206、 adaptive farming approach that applies proven,science-based practices to improve and maintain soil and crop health.Its goals include strengthening yield resilience,reducing carbon emissions,preserving water supplies,and enhancing biodiversity.A study in Germany suggested that scaling these practice
207、s would reduce water demands and nitrate pollution,with annual benefits totaling 500 million.32Anchor Corporate Strategy and Decisions to the Water CrisisMost corporations depend either directly or indirectly on water in their supply chain,leaving them vulnerable to risks today and increasingly so i
208、n the future.The water crisis can damage their bottom line and introduce reputa-tional risk.To build resilient strategies for long-term growth,they must factor the water crisis into their deci-sions and investments.We offer a four-step approach.(See Exhibit 12.)Exhibit 11-Social Innovations Are Clus
209、tered Along Lines of Entrepreneurship,Intrapreneurship,and ExtrapreneurshipSources:Paul Tracey and Neil Stott(2017)“Social innovation:A window on alternative ways of organizing and innovating,”Innovation 19(1);company websites.Social entrepreneurshipApproach to social changeExamples:South AfricaThe
210、process of creating and growing a for-profit or nonprofit venture,where the entrepreneurs motivation is to address social challengesSocial intrapreneurshipThe process of addressing social challenges from inside established organizationsSocial extrapreneurshipThe process of interorganizational action
211、 that facilitates alternative combinations of ideas,people,places,and resources to address social challengesCreates change by founding new organizations(to catalyze action)Clear Water,a South African startup,is focusing on developing a closed-circuit system toilet to organically recycle toilet black
212、water to render it suitable for use in flushingSouth African Breweries(SAB),a key water user in South Africa,is,tackling water scarcity challenges from within,working with communi-ties on such projects as reducing alien plant species Strategic Water Partners Network,a leader in South Africa in multi
213、-stakeholder approaches to water resource management,offers the public and private sectors an engagement platform for shared learning and engagementCreates change by leveragingthe resources and capabilitiesof established organizationsCreates change through platformsthat support collective effort wit
214、hin and between new and established organizations31.https:/pacinst.org/wp-content/uploads/2013/05/pacinst-crb-ag.pdf.32.https:/ NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE Parametric flood insurance and water-efficient sanitation are two examples of innovation that combine technol
215、ogical and social entrepreneurship.Parametric Flood Insurance.This novel approach to insurance aims to reduce risks for home and business own-ers.Instead of reimbursing owners after documented losses,these policies give owners a fixed amount of cash that the insurer calculates on the basis of the ov
216、erall sever-ity of flooding in the area,using satellite data as well as local information.Because insurers have more information on weather patterns and better modeling,they can offer policies with payouts that avoid costly and contentious inspections.Owners get cash quickly so they can immedi-ately
217、 rebuild or get on with their lives.Because parametric flood insurance promises to lower premiums and boost access,it can change the industry.Most flood damage worldwide occurs on uninsured proper-ty.Both the economic activity onsite and the assets them-selves are rarely coveredthe rate of coverage
218、is only 20%worldwide,and less in developing countries.Insurers have been reluctant to offer affordable policies in much of the world,but with parametric flood insurances ability to predict likelihoods in specific areas,they can do more.Insurers have long relied on flood prediction models,but these m
219、odels tended to be thin on data and didnt account for aging water infrastructure or climate change.New technologies enable insurers to greatly improve their models.Floodbase,for example,offers insurers a comprehensive data monitoring and modeling service.1 Its real-time moni-toring feature enables i
220、nsurers to pay policyholders quickly in case of disaster.Besides supporting insurers and reinsur-ers,it works with governments and nongovernmental organizations,helping them move quickly with data-driven decisions.In 2018,Floodbase provided insights for safely settling 11,000 refugees who had immigr
221、ated to the Republic of the Congo.It found that 7,000 of the refugees had settled in a high-risk area,so it recommended moving them to a safer spot.Ten months later,the old site was completely inundated in a flood.Parametric flood insurance can also reduce upfront risk for business owners.In Latin A
222、merica,farmers often take out loans to acquire seeds for seasonal products.By destroying their collateral,flooding can send farmers into bankruptcy because they can no longer obtain new loans.Floodbase has worked with lenders on a loan forgiveness program tied to flood risks.Water-Efficient Sanitati
223、on.Popular household products that use lots of water,such as toilets,showers,and dish-washers,are not fit for purpose in water-stressed regions.For context,one-fourth of the domestic water consumption in the US goes to toilet flushing.Rapid development and deployment of water technology and social i
224、nnovation is crucial in these regions to ensure that vulnerable popula-tions have access to clean water and sanitation.Take South Africa,one of the thirty driest nations in the world,where 11 million people(one-sixth of the popula-tion)lack access to good sanitation.Water-efficient or even waterless
225、 toilets exist,but inadequate financing makes them challenging to deploy at scale.A solution came from the national governments Water Research Commission.The agency developed the South African Sanitation Tech-nology Enterprise Programme,bringing private companies,public agencies,and NGOs together to
226、 fast-track the adop-tion,commercialization,and industrialization of next-generation sanitation technologies.It is essential to pursue these steps locally because people often resist new sanita-tion equipment for cultural reasons.Here are three examples of technological and social inno-vation for ho
227、usehold water consumption:“Racing heart”is a low-maintenance,water-efficient toi-let designed for tight spaces.The system can biodegrade the wastewater.“Clearwater”uses a closed-circuit system to organically recycle most of the blackwater(water with sewage)and make it suitable for flushing.Because i
228、t relies on solar panels for energy,the models can go anywhere off the electrical grid.“NEWgenerator”recycles 95%of blackwater.Because the toilets operate off the electrical and sewage grid,they can be fitted inside shipping containers,are easily installed,and generate nutrient fertilizer as well as
229、 gray-water(nonpotable water cleared of sewage).These and other improvements are enough to deliver dignified sanitation to everyone by 2030.The next step is to find the investment needed to produce them at scale,because most users cant afford the upfront cost at current prices.Innovating Technologic
230、ally and Socially1.Parametric(or index-based)solutions are a type of insurance that covers the probability of a predefined event happening instead of indemnifying actual loss incurred.It is an agreement to make a payment upon the occurrence of a triggering event,and as such is detached from an under
231、lying physical asset or piece of infrastructure.For instance,an insurer would pay a certain amount for every millimeter of cumulative rainfall above a certain threshold in a specific area.(Swiss RE:“What is parametric insurance?”August 1,2018.)BOSTON CONSULTING GROUP +WORLD WIDE FUND FOR NATURE 24St
232、ep 1:Diagnose the baseline.First,companies need to define and quantify their current water usage,dividing it into three components:direct(from sources owned or controlled);main indirect(all other usage in facilities);and other indirect(usage by suppliers or customers,which in many cases accounts for
233、 the bulk of total water usage).Second,since water is hyperlocal,executives must identify risk hotspots on the basis of where the facilities are locat-ed.Outside tools and data sourcessuch as WWFs Water Risk Filter and BCGs Water Risk Matrixcan be very helpful in this regard.Third,they must factor i
234、n the types of water challenges(flooding,scarcity,or poor quality)that are most likely to take place,and the ways in which these may affect the local economy,society,and environment.Step 2:Set ambitions.From the baseline established in step 1,companies can identify contextual,science-based targets f
235、or water use.They can reduce their water usage and water pollution footprint,especially from direct sourc-es,and increase their water resilience,usually through collaboration with suppliers(including shippers,as droughts and floods can impede transportation)and con-sumers.Besides taking into account
236、 the obvious physical and operational risks,they must consider reputational and regulatory risks,both of which are becoming increasingly important.But the water crisis also brings opportunities,so the goals need to factor in technological innovation and potential growth markets.Step 3:Create a plan.
237、Next,companies need to align their goals and targets with their overall strategy,especially on sustainability.They can integrate new targets into exist-ing KPI frameworks.Then they should formulate initiatives to attain their water ambitions,assess gaps in them,and prioritize high-impact options and
238、 locations,both to reduce risks and to capture new opportunities.After that,they can align timelines and dependencies with running initiatives.Step 4:Implement pilots and scale up.From there,companies should consider enlisting enablers to help achieve their goalssuch as establishing a governance str
239、ucture,monitoring for progress(aligned with frame-works such as the Taskforce on Nature-related Financial Disclosures),and building needed digital capabilities.Companies can leverage various funding opportunities within the public and private financing spaces to attain their ambitions.Partnerships a
240、nd coordinated effort are essential here,so companies should explore collective action and existing public/private sector efforts before undertaking initiatives on their own.Finally,given how rapidly the regulatory landscape is changing,companies will benefit from scanning the relevant subsidies and
241、 regulations.Exhibit 12-A Four-Step Approach to Including Water Resilience in StrategySources:BCG and Quantis analysis.Diagnose thebaseline Quantify water footprint:including direct usage,usage throughout supply chain,and pollution Identify risk hotspots:Determine specific regions/locations within s
242、upply chain with high water risks Define challenges and impacts:Use the Water Impact Matrix to identify location-specific impacts of water riskSet ambitionsUse three lenses to set ambitions and contextual science-based targets:Reduce water footprint,focusing on the organizations own operations Incre
243、ase water resilience,reducing regulatory,physical,and reputational risks Define water opportunities and contributions,such as technological innovationsCreate a plan Align with overall strategy:Link water ambition to corporate and sustainability visions Use fit-gap analysis and prioritization:Define
244、new and existing actions,compare them to water ambition,and prioritize Explore new water opportunities:Align them with water strategy,while managing water risks Determine a roadmap:Define timelines and dependenciesImplement pilotsand scale up Define enablers:Determine critical enablers(tech,governan
245、ce,monitoring)Identify financing opportunities:Consider options such as blended finance Explore partnerships and collective action:Find public/private partnerships,and join relevant action groups for coordinated initiatives Explore the regulatory landscape:Take into account relevant subsidies and in
246、centives25 NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE Expand Nature-Based Solutions to Manage and Restore EcosystemsA sustainable water plan will likely include green infra-structure,including nature-based solutions(NbS),which use natural components(such as trees,wetlands,coastal
247、 mangroves,bioswales,and urban rooftop gardens)to pro-tect,sustainably manage,and restore natural or modified ecosystems in order to address local challenges.The goal is to promote both human well-being and biodiversity.NbS complement the“gray infrastructure”that dominates most water systems,in whic
248、h communities rely on concrete and other artificial engineering to collect and distribute water,often without considering systemic and long-term impacts.We need both types of investments if we are to meet SDG6 and improve climate resilience.NbS can help build resilient river basins to address multi-
249、ple water challenges:inland flooding(overall risk as well as stormwater and urban floods),coastal protection,droughts,and degraded water quality.NbS can moderate economic and social exposure to changing rainfall patterns and flooding by buffering river flows and boosting groundwater storage.In South
250、 Africa,for example,communities and businesses have used NbS to manage forests and limit development in order to protect plains and wetlands that hold floodwaters.33As temperatures rise and microclimates shift,many forests are capturing less carbon than they once did,due to re-duced groundwater.The
251、severe 2022 drought in Europe caused an additional 200 megatons of CO2 to enter the atmosphere,accounting for 5%of total EU emissions.Using NbS to increase the store of groundwater can there-fore enlarge much-needed carbon sinks.34Exhibit 13 categorizes seven types of NbS:catchment and river basin m
252、anagement,wetland restoration and protec-tion,reconnection of floodplains,sustainable restoration and management of forests,expansion of riparian buffer zones,development of“sponge cities,”and cultivation of coastal mangroves.In promoting NbS,every organization has a role to play:For-Profit Companie
253、s.Besides working to develop water-resilient plans and disclose water-related impacts,companies can invest in relevant technologies,as out-lined in Exhibit 10.Financial Institutions.In discussions with clients and investees,investors can integrate consideration of water-related risks and opportuniti
254、es in their steward-ship strategies.They can encourage disclosure of key water-related metrics,screen portfolios for water-related risks and opportunities,and establish investment funds that focus on promoting NbS.Banks can develop finan-cial products that reward investment in NbS.Nongovernmental Or
255、ganizations.NGOs can advise groups on the manifold values of water,identify and en-courage local technology and social innovation,identify potential public-private partnerships to increase revenue streams for NbS,and help de-risk projects in consulta-tion with stakeholders.Public Sector.Governments
256、can accord greater value to water,enable investments with public-private partner-ships,encourage adaptive(not just conventional gray)infrastructure,and offer blended financing.They should also consider NbS in public procurement processes.With these actions,and combining green and gray forms of infra
257、structure,regions can develop greater resilience in responding to the water crisis.Enhance Valuation,Pricing,and Water AllocationWater is simultaneously the most precious resource on Earth and the most undervalued one.Pricing water is difficult because it entails a precarious balancing act:prices ne
258、ed to be low enough to ensure access for low-income,vulnerable communities,but high enough to minimize profligate use and inadvertent freshwater contamination.35Real-world pricing of water is complex,but it rarely covers the full spectrum of values and costs involved.To balance social,economic,and e
259、nvironmental needs,governments often subsidize water,pricing it below its marginal cost.Large commercial water users in agriculture and industry often pay almost nothing for water while consumers pay much moreand yet consumers still pay less than the actual cost.33.https:/www.dffe.gov.za/projectspro
260、grammes/wfw.34.https:/www.nrc.nl/nieuws/2023/04/27/veel-bossen-trekken-het-s-zomers-niet-meer-dan-nemen-ze-geen-co2-meer-op-a4163062.35.https:/www.wearewater.org/en/what-is-the-value-of-water-and-its-price_349991;http:/ CONSULTING GROUP +WORLD WIDE FUND FOR NATURE 26There is no one-size-fits-all mod
261、el for water pricing.Deci-sion makers must consider efficiency and equity in the local context.36 Water is critical for agriculture and other economic sectors,and low prices can stimulate economic investment.Yet keeping prices lower for companies than for consumers may not be socially responsible.To
262、 address questions of equity and efficiency,policymakers might develop variable pricing according to type of user and volume of use.This form of variable pricing with metering can increase revenue and expand the public water network for consumers.Governments must also encourage conservation.Water is
263、 not a simple commodity,and aquatic ecosystems are not mere conduits for storing and moving water;both have multiple economic,societal,and ecological values.37 Pric-ing must take into account such nonmarket values as climate regulation,ecosystem functionality,and cultural services.For example,rivers
264、 reduce flood risks,sustain freshwater fisheries,and deliver sediment.Exhibit 13-Nature-Based Solutions for Water ResilienceSources:WWF,“Waterways to Resilience”(2021);WWF,“Bankable Nature Solutions”(2020);BCG and WWF analysis.Societal problem addressedType of nature-based solutionExamplesCoastalpro
265、tectionInlandfloodingWaterscarcityPoor waterqualityCatchment and river basin managementImproving the free-flowing capacity of a river,including managing sediments and sand flows,while preserving critical aquatic wildlife habitat Wetland and peatland restoration and protectionProtecting wetlands,whic
266、h restore water quality by reducing runoff of pollutants(e.g.,nitrates)for instance,near agricultural areasReconnection of floodplains Enlarging floodplains by moving dikes back,giving rivers more room to flow,reducing pressure on dikes,and providing wildlife habitat Sustainable restoration and mana
267、gement of forestsRemoving invasive alien plant species and enabling forests to naturally regulate flows of water,filter water,and supply downstream waterExpansion of riparian buffer zones Establishing a vegetated buffer area near streams and rivers to help protect the stream from land use,enhance wa
268、ter quality,and reduce floodingDevelopment of sponge cities Absorbing water naturally,by channeling away rainwater through terraces,wetlands,green roofs,and permeable pavements Cultivation of coastal mangrovesRestoring,sustaining,and expanding coastal mangrove forest to improve coastal protection ag
269、ainst flooding related to sea-level rise Vietnam:Mekong River Netherlands:Room for the River Kenya:Mau Forest Complex Indonesia:Central Kalimantan South Africa:Working for Water China:Yanweizhou Park Rwanda:Kigali Jamaica:Coastal defense Kenya:Coastal protection Peru:Datem del Maran UK:Ingoldisthorp
270、e Turkey:Byk Menderes36.https:/ managing water use requires strong,impartial,and collaborative local governanceBOSTON CONSULTING GROUP|SUB-BRAND 28These types of service deserve maximum protection.Policy-makers should consider future water use and a changing climate.Since water use today can deplete
271、 aquifers and limit water availability for future use,policymakers need to plan responsibly for long-term provisioning of water.In doing so,they must use models that incorporate forecast-ed droughts and changing precipitation due to climate change,rather than rely on outdated historical patterns.By
272、combining continual monitoring of flows and demand with agile policies,they can develop effective incentives to preserve and increase supplies for use in times of scarcity.Somehow,water prices must cover the costs of water to keep the system from degrading over time,without denying vulnerable commun
273、ities access to the resource.A number of approaches to variable pricing are possible.(See Exhibit 14.)Three are popular:Variable Tariffs.Uniform tariffs require all users to pay the same rate across sectors and locations,while variable tariffs differentiate.The latter adds a burden to administration
274、,but it also enables communities to set incentives for water-scarce regions or specific users.Tiered Pricing Based on Volume Used.A flat price charges the same rate regardless of the volume of water used.In contrast,tiered pricing encourages conservation by charging a higher rate for larger-volume u
275、sage.The latter approach requires additional capital expenses to install meters.Combination.Many communities use both tiered pricing and a variable tariff,in one of two ways.Either ev-eryone pays a standard yearly fixed usage fee,combined with a volume charge,or everyone pays a tiered volume charge
276、that is cheap at low usage but climbs substantial-ly as consumption rises.The goal in this case is to give companies and households a low basic rate,to ensure access,while discouraging heavy use.In setting prices,policymakers must take into account all stakeholdersnot just paying customers,but also
277、indige-nous peoples and communities that rely on ecosystem services,from fishing communities to residents of flood-prone areas.Different institutions inevitably have conflict-ing goals.Water utilities seek a return on investment,for instance,while policymakers seek reelection.But the fundamental bal
278、ancing act is between providing water as a human right and encouraging efficiency and conservation.Exhibit 14-Water Pricing OptionsSources:Grafton,Chu,and Wyrwoll,“The paradox of water pricing:dichotomies,dilemmas,and decisions,”Oxford Review of Economic Policy(2020);BCG analysis.TieredUniformVariab
279、leMostly developed economies Flat Highest transactional costs Incentivizes reduced water usage Differentiates between user types Medium transactional costs Incentivizes reduced water usage No differentiation between user types Low transactional costs Does not incentivize reduced water usage Differen
280、tiates between user types Lowest transactional costs Does not incentivize reduced water usage No differentiation between user typesMostly emerging economies29 NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE Besides adopting variable pricing,policymakers can pro-mote the use of market-
281、based mechanisms to share water.(See Exhibit 15.)Well-regulated markets can help solve the water allocation puzzle efficiently,while safeguarding social and ecological uses of water.By increasing supplies to higher-paying users,utilities can use the enlarged reve-nue stream to invest in supplies and
282、 infrastructure that lower prices for everyone else.The goal is to establish ways for users to trade allocated water permanently or temporarily.38Dozens of countries in water-scarce regions have begun to establish these markets.First,governments issue water rights,and then they permit reallocation o
283、f these rights through trade.39 Sensible government policies can ensure that urban and high-value agricultural users that pay top-dollar dont squeeze environmental and equity inter-ests and undermine water resilience.Left unchecked,water markets could descend into time/space water arbitrage,and thus
284、 into speculating on watera practice that many Western countries view as unethical.In establishing these markets,policymakers must consider the specific water-related problem or problems within the region.Deciding whether to encourage long-or short-term trades depends on whether water scarcity is ch
285、ronic or episodic.Should the markets be open to everyone from farmers to municipalities,or should it be limited to,say,farmers only?Is the main goal to reallocate water efficient-ly,or is it to decrease demand for water and encourage new supplies?Today,three main barriers limit market-based mecha-ni
286、sms:high transaction costs due to limited data on assets and pricing;equity concerns in situations where maximiz-ing revenue squeezes environmental or social goals;and inadequate monitoring of availability and consumption(especially in developing countries).Policymakers must overcome these barriers
287、before encouraging widespread adoption of market-based mechanisms.Better data collec-tion and information sharing platforms can help,but gover-nance and political concerns must be addressed as well.40Exhibit 15-Market-Based Mechanisms to Address Water ScarcitySources:The Nature Conservancy,“Market-b
288、ased mechanisms for securing environmental water in California”(2017);Richter et al.,“Water scarcity and fish imperilment driven by beef production,”Nature Sustainability(2020);The Nature Conservancy,“Water share:Using water markets and im-pact investment to drive sustainability”(2016).Temporary sol
289、utions to solve episodic scarcityIncreasesupplyOff-stream storage ponds and tanks to align supply and demandRotational fallowing of agricultural land for compensationInclining block rate pricing to incentivize water conservationLeasing of existing land or water rightsGroundwater cap and trade to all
290、ocate rights and allowpurchasesPump tax to increase cost of pumping and encouragereductionIrrigation efficiency to fund irrigation upgrades to secure waterAll-in auction to permit bidding for water rights andcompensation for rightsGroundwater mitigation to offset impacts of new pumpingPermanent acqu
291、isition of existing land or water rights Water neutrality,offsetting(corporate)water useForest thinning to restore health and increase water supplyDecreasedemandRedistributesupplyPermanent solutions to solve chronic scarcityGroundwater banking to store water for later use38.https:/www.scienceforcons
292、ervation.org/assets/downloads/Market-Based_Mechanisms_for_Env_Water_TNC_2017.pdf.39.https:/www.nature.org/content/dam/tnc/nature/en/documents/WaterShareReport.pdf.40.https:/iopscience.iop.org/article/10.1088/1748-9326/acb227/pdf.BOSTON CONSULTING GROUP|SUB-BRAND 30Improve Water Financing FrameworksI
293、n the private sector,business as usual creates an underes-timated portfolio risk for investors and an underestimated operational risk for economiesall the more so with the advent of climate change.As the investment bank Jefferies noted,“The greatest number of corporate product-making activities depe
294、nd on surface water,in addition to other water-related ecosystem services.”Freshwater access is“irreplaceable.”41In a recent open letter,major investors urged governments to“commit to ambitious,domestic short-term water tar-gets”and to implement“mandatory water disclosure requirements.”42 Very few c
295、ompanies currently disclose their water-related risks.Only about half offer any water-related data through CDP,though that represents a 16%increase from 2021,suggesting increased corporate inter-est in water-related risks.43 The CDP says that the EU and the UK are the only two G20 members that have
296、proposed comprehensive water disclosure regimes.44Several investment funds target water projects,but many funds lack the data necessary to track improvements in availability,quality,and efficiency.As one journalist pointed out,“From a sustainable point of view,it remains dubious whether many water f
297、unds really address the UN goal of clean water and sanitation for all.At best,they are tamely addressing it for the developed world,by buying utilities with stable returns.”45After responding to the immediate risks that business as usual poses to water supplies,communities must adapt to future clima
298、te change.More than half of the$330 billion in projected 2030 adaptation financing is water-related.46 That adds up to$200 billion,driven by the agriculture and disas-ter management sectors.Yet we currently see only$46 billion in climate adaptation finance flows.47How can we fill the gap?To increase
299、 water-related invest-ments,banks,companies,and investors must incorporate water into investment decisions.We propose that compa-nies and governments take the following actions:Improve the transparency and quality of reporting for water-related risks and opportunities.Financial institu-tions can lea
300、rn from carbon emissions reporting,which took years to develop.Set up a strong disclosure framework on the basis of common taxonomies and reporting mandates.Mod-els include the EU Corporate Sustainability Reporting Directive(CSRD)/EU Taxonomy,Science Based Targets for Nature(SBTN),and the Taskforce
301、on Nature-related Financial Disclosures(TNFD).Trace water-related financing needs,flows,and out-comes,and intervene structurally as needed with tax incentives,subsidies,and other tools.Investors should disclose the results of their efforts so that others can assess remaining gaps and engage with com
302、panies on pressing water-related topics.To map risks granularly at the company level,they can draw on tools and capabil-ities such as the WWF Water Risk Filter,the WRI Aque-duct,and Climate Central.As banks,companies,and investment funds set objectives and refine their selection criteria,they can he
303、lp conserve freshwater,reduce dirty water discharge,increase access to potable water,maximize water efficiency,and minimize the impacts of floods.They can go beyond traditional boundar-ies by collaborating with social investors and development banks to de-risk investments.Such action is especially i
304、mportant in developing countries,where macroeconomic,political,and project-specific pressures increase invest-ment risk,but where investment is even more critical than in the developed world.Blended or social financing can reduce the initial risk on these investments.41.Environmental science:Water i
305、s most critical natural capital factor for investors(February 9,2023).42.https:/ funds dilute the environmental message”(February 17,2023).46.https:/www.rockefellerfoundation.org/wp-content/uploads/2022/11/Climate-Finance-Funding-Flows-and-Opportunities-What-Gets-Measured-Gets-Financed-Report-Final.
306、pdf.47.https:/unfccc.int/sites/default/files/resource/cp2022_08_add1_cma2022_07_add.1.pdf.31 NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE Develop a Local Foundation of Governance and Regulatory EnforcementStrong,impartial,and collaborative local governance is essential to managing
307、the potentially conflicting interests of the many water users in a basin,often across jurisdic-tions.Upstream activities can greatly affect downstream supplies and quality,so collective action,agreements,and partnerships are crucial.The goal is to achieve both equity and efficiency.So far,governance
308、 has fallen short in several ways.It is often lacking in transparency and enabling legislation,and it is vulnerable to corruption.Many existing arrangements have excluded numerous stakeholdersnotably women and indigenous groupsfrom the decision-making pro-cess.Many municipalities and water agencies
309、lack the expertise and budget to oversee water systems effectively.Without full participation and information,governance wont possess the legitimacy and capacity to enforce its decisions.To strengthen local and regional governance in regions with high water risk,collective action is critical.Only fr
310、om a starting point of broad-based legitimacy can governments successfully oversee local resources at the catchment or basin level.Collaborative,inclusive governance bodies should include previously excluded stakeholders,especially members of small communities and those who depend on the ecosystem a
311、s a whole.Industry-wide and cross-industry water initiatives such as the Sustainable Apparel Coalition,the Beverage Industry Environmental Roundtable,the International Council on Mining&Metals,and the Strate-gic Water Partnership Network provide ready platforms to amplify efforts.To get started,muni
312、cipalities and other local governmental organizations need to identify existing resources,risks,opportunities,and stakeholders that are specific to their basin,determine the required capabilities,and start devel-oping them.Local governments typically need technical expertise to manage and support on
313、-the-ground projects and to ensure regular maintenance after a project begins operating.Governments should also invest in capabilities for next-generation water management,including the following:Granular flood and drought risk modeling Potential subsidies for NbS mapping and integration into public
314、 procurement processes Digital platforms for monitoring leaks in existing infrastructureWith better monitoring and data,decision makers can move toward evidence-based water management,rather than simply favoring the loudest or best-connected interest groups.That includes evaluating current resources
315、 in accordance with criteria such as“blue drop”(quantity per natural streamflow of water)and“green drop”(quality from wastewater processing).The global water crisis has crept up gradually,as people around the world built economies and societies that took access to freshwater for granted.With thought
316、ful,informed investments and policy shifts that encourage building inrather than building overnatural ecosystem services,we can better prepare ourselves for expected water constraints in much of the world.Above all,we need to work collaboratively to address the complexity of the water crisis.Governm
317、ents,financial institutions,nonprofit organizations,and corporations must work together in supportive,inclusive conditions to build resilient water systems that deliver on water as a human right,facilitate economic growth,and overcome the challenges of climate change.Water is simultaneously the most
318、 precious resource on Earth and the most undervalued one33 NAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE About the Authors Torsten Kurth is a managing director and senior partner in the Berlin office of Boston Consulting Group.You may contact him by email at .Jester Koldijk is a con
319、sultant in BCGs Amsterdam office.You may contact him by email at .Adam Wlostowski is a senior data scientist in the firms Boston office.You may contact him by email at .Dean Muruven is an associate director in the firms Amsterdam office.You may contact him by email at .John Staunton Sykes is a consu
320、ltant in the firms London office.You may contact him by email at .For Further ContactIf you would like to discuss this report,please contact the authors.AcknowledgmentsThe authors thank David Potere,Sophie Dejonckheere,Fleur de Wit,Louise Berrebi,Dustin Garrick,Jay Bhagwan,and the World Food Program
321、 Regional Bureau Nairobi for their assistance in developing this report.With major contributions from Stuart Orr and Richard Lee of the WWF Freshwater Practice Coordination Team and from the WWF Water Risk Filter team.For information or permission to reprint,please contact BCG at .To find the latest
322、 BCG content and register to receive e-alerts on this topic or others,please visit .Follow Boston Consulting Group on Facebook and X(formerly known as Twitter).Boston Consulting Group 2023.All rights reserved.9/23World Wide Fund for NatureWWF is an independent conservation organization,with over 30
323、million supporters and a global network active in over 100 countries.WWFs mission is to stop the degradation of the Earths natural environment and to build a future in which humans live in harmony with nature,by conserving the worlds biological diversity,ensuring that the use of renewable natural re
324、sources is sustainable,and promoting the reduction of pollution and wasteful consumption.Visit www.panda.org/news.About WWF and BCGSince WWF and BCG started their global partnership in 2012,we have embarked together on numerous projectsglobally,regionally,and locallyin support of WWFs mission to sto
325、p the degradation of our planets natural environment and build a future in which humans live in harmony with nature.Boston Consulting GroupBoston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities.BCG was
326、the pioneer in business strategy when it was founded in 1963.Today,we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholdersempowering organizations to grow,build sustainable competitive advantage,and drive positive societal impact.Our diverse,global te
327、ams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change.BCG delivers solutions through leading-edge management consulting,technology and design,and corporate and digital ventures.We work in a uniquely collaborative model across the firm and throughout all levels of the client organization,fueled by the goal of helping our clients thrive and enabling them to make the world a better place.BOSTON CONSULTING GROUP +WORLD WIDE FUND FOR NATURENAVIGATING THE WATERS:STRATEGIC SOLUTIONS FOR WATER RESILIENCE