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Water, in many ways, is a proxy for life itself. Civilisations have sprung from fertile river valleys and along the trading routes of the seas. For NASA, when searching for extra-terrestrial life, the guiding principle has been to ‘follow the water’.
What is water scarcity?Quite simply, it is when available freshwater supplies fail to meet demand. But water scarcity is not confined to regions of low annual rainfall. It can arise from poor infrastructure or mismanagement. As populations soar, freshwater supplies are failing to keep pace. Almost half of the human race now live in water-scarce regions.
Only 3% of water in the world is freshwater. Of that, two thirds is locked in ice. The majority of the remaining 1% is subterranean, difficult to access and hard to replenish.1 The tiny fraction of water that we can access should be enough to sustain a growing population. Yet our starting point for water security is worrisome: 2.2 billion people still lack access to drinking water that is managed safely.2
Covid-19 has exposed years of underinvestment in water and sanitation. Only around 60% of people have facilities to wash their hands at home.3 This makes simple virus prevention measures impossible. The United Nations’ sixth Sustainable Development Goal calls for “the availability and sustainable management of water and sanitation for all”, yet in July 2020 the UN itself said that the pursuit of this goal is “alarmingly off track”.
Competition for water has been a source of human conflict throughout history. We may have exchanged the water mills of old for the Three Gorges Dam, but the relationship between mankind and water remains unchanged. As water becomes scarcer, conflict seems inevitable. Of the 500 water-related conflicts since 1900, half have occurred in the last 10 years.4
In Kashmir and Delhi, recent droughts have sparked violent demonstrations against the government, and similar stories are unfolding in Iran and Iraq. In Yemen, water is not so much a cause but a casualty of conflict in the ongoing civil war, with essential water sources targeted as a tactic for weakening the opposition. Trouble is also brewing with the Grand Ethiopian Renaissance Dam (GERD) on the Nile, where in 2020, Egypt threatened military action.
In the driest regions in the world, freshwater supplies have already reached the point of exhaustion. It is estimated that water scarcity could displace 700 million people by 2030.5
Five years of drought in the Central American dry corridor forced farmers into the US in search of work. In Syria, the civil war was pre-dated by the harshest national drought on record between 2006 and 2011.6 Water scarcity led to widespread crop failure and consecutive poor harvests, driving rural families into cities to seek employment. The strain on food resources and infrastructure led to outbreaks of violence.
The value of water, unlike gold, does not depend on its scarcity. Its value lies in its necessity.
* Felicity worked at Ruffer until February 2021
The views expressed in this article are not intended as an offer or solicitation for the purchase or sale of any investment or financial instrument, including interests in any of Ruffer’s funds. The information contained in the article is fact based and does not constitute investment research, investment advice or a personal recommendation, and should not be used as the basis for any investment decision. This document does not take account of any potential investor’s investment objectives, particular needs or financial situation. This document reflects Ruffer’s opinions at the date of publication only, the opinions are subject to change without notice and Ruffer shall bear no responsibility for the opinions offered. Read the full disclaimer.