The 21st century will witness the collision of two powerful forces – burgeoning population growth, together with a changing climate. With population growth, water scarcity will proliferate to new areas across the globe. And with climate change, rainfall will become more fickle, with longer and deeper periods of droughts and deluges. This report presents new evidence to advance understanding on how rainfall shocks coupled with water scarcity, impacts farms, firms, and families. On farms, the largest consumers of water in the world, impacts are channeled from declining yields to changing landscapes. In cities, water extremes especially when combined with unreliable infrastructure can stall firm production, sales, and revenue. At the center of this are families, who feel the impacts of this uncertainty on their incomes, jobs, and long-term health and welfare. Although a rainfall shock may be fleeting, its consequences can become permanent and shape the destiny of those who experience it. Pursuing business as usual will lead many countries down a “parched path” where droughts shape destinies. Avoiding this misery in slow motion will call for fundamental changes to water policy around the globe. Building resilience to rainfall variability will require using different policy instruments to address the multifaceted nature of water. A key message of this report is that water has multiple economic attributes, each of which entail distinct policy responses. If water is not managed more prudently—from source, to tap, and back to source—the crises observed today will become the catastrophes of tomorrow.

The new report Uncharted Waters: The New Economics of Water Scarcity and Variability looks at how the increasing number of droughts and floods impact farms, firms and families in ways that are far costlier and longer lasting than known before. New research shows that while the consequences of drought are often invisible, they are significant and cause “misery in slow motion”.

With growing populations and greater affluence, the demand for water is growing while the global supply of water is constant, causing increased water deficits especially in areas of particularly high population growth which are also often poor, fragile or in conflict, exacerbating existing problems for vulnerable populations.
To compound the problem, with climate change rainfall will become more erratic, causing more frequent and intense droughts and floods with even more damaging impacts, as seen in 2017 across the United States, the Caribbean, in sub-Saharan Africa and elsewhere.
This report shows how today’s ways of managing water are outdated and proposes solutions to help the world avoid a thirsty and uncertain future.
Since 2001, rainfall shocks have caused a loss of produce sufficient to feed about 81 million people every day, for the entire year. That’s equivalent to the population of Germany. Because droughts destroy crops, new data shows that farmers are forced to expand their farmland into nearby forests to grow more food. But cutting down trees destroys watersheds, which causes rivers in the forest to dry up, decreasing the water supply that the farmers depend on. Deforestation also destroys carbon sinks, which worsens climate change and sets in motion a negative spiral, causing more droughts.
Richard Damania, Sébastien Desbureaux,
Marie Hyland, Asif Islam, Scott Moore, Aude-Sophie
Rodella, Jason Russ, and Esha Zaveri