Investments aligned with this Strategic Goal aim to keep more and cleaner water in freshwater ecosystems by improving industrial and municipal water practices.
The sections below include an overview of the strategy for achieving desired goals, supporting evidence, core metrics that help measure performance toward goals, and a curated list of resources to support collecting, reporting on, and using data for decision-making.
Over the past 50 years, the world’s population has doubled and global GDP has grown tenfold, with booming agricultural and industrial output and expanding cities (1). Excessive water abstraction, pollution, and diversion—driven by growing agricultural, industrial, and domestic water use—have diminished the quality and quantity of water available for people and ecosystems (24). Increased climate variability places even more stress on water resources. Reducing the amount of water consumed by industrial and municipal uses and improving the quality of water discharged can reduce pressures on these resources.
Investments aiming to improve industrial and municipal water practices can:
Global water use has increased by about 1% per year since the 1980s, driven by a combination of population growth, socioeconomic development, and changing consumption patterns (2). The United Nations World Water Assessment Programme expects worldwide water demand to continue increasing near this rate until 2050, an increase of 20–30% above current levels of use primarily caused by rising demand in the industrial and domestic sectors (23).
Industrial water use, accounting for roughly 20% of all global withdrawals, is dominated by energy production (approximately 75%) and manufacturing (the remaining 25%) (27). According to the Organisation for Economic Co-operation and Development (OECD), from 2000 to 2050 water demand for domestic use will increase by 400%, 140%, and 130%, respectively (9). Although agriculture will remain the largest overall use of water demand is likely to grow much faster than agricultural demand (26).
Inadequate management of municipal and industrial wastewater accounts for much water pollution, particularly in low-income countries, where only around 8% of such wastewater undergoes treatment of any kind (21).
Freshwater ecosystems: Animals and plants in streams, rivers, and lakes need certain water flows and levels over the course of the year to support critical stages of life (13). Investments that reduce water withdrawals and consumption can help maintain the more natural flow regimes to which native aquatic species are adapted. Aquatic species also benefit from investments that reduce the discharge of industrial and municipal pollutants into freshwater ecosystems, either by changing production processes or treating waste.
Rural and urban communities: Rural and urban communities that use untreated or insufficiently treated water benefit from strategies that reduce the contamination of surface or groundwater with industrial or municipal pollutants.
Industrial water users: Reducing the amount of water used in manufacturing, power generation, and other industrial uses can reduce industry’s dependence on water, reducing risk exposure and costs as competition for available water supplies increases (25). Increasing water use efficiency and reusing water where possible can help businesses to adapt to a future of increased competition for water, including by avoiding the need to find new sources of water. Investments in municipal water utilities—to both provide and treat water—can avoid costs for businesses that would otherwise need to provide their own water supplies (18, 4).
Municipal water utilities: Less water wasted in transmission and delivery within municipal systems can reduce the total amount of water needed to meet current demand by municipal water users, which can also reduce the need for new capital investment.
Population growth drives increasing water demand both directly (for drinking water, sanitation, hygiene, and household uses) and indirectly (through growing demand for water-intensive goods and services, including food and energy) (23). Global population reached 7.6 billion people in June 2017, and the United Nations expect it to reach about 8.6 billion by 2030 and 9.8 billion by 2050 (20). Africa and Asia account for nearly all current population growth, although Africa is projected to contribute most of the growth beyond 2050 (20).
Projections by the Water Futures and Solutions Initiative predict overall industrial water demand will increase across all regions except North America and Western and Southern Europe (5). Industrial demand could increase up to eight times (in relative terms) in sub-Saharan Africa, where industries currently account for a very small proportion of total water use (26). Industrial demand is also likely to increase significantly (up to two and a half times) in South, Central, and East Asia (5).
Domestic water use, which accounts for roughly 10% of global water withdrawals, is expected by the United Nations World Water Assessment Programme to increase significantly from 2010 to 2050 nearly everywhere except for Western Europe (26). In relative terms, the greatest increases in domestic demand should occur in African and Asian sub-regions, where demand could triple; in Central and South America, demand could double (5). This anticipated growth in demand is driven primarily by an anticipated increase in water supply services to urban settlements (26).
Opportunities vary by country and region. Several countries and regions expected to collectively comprise a large portion of future global water demand offer some examples. In 2030, China, India, South Africa, and the state of São Paulo in Brazil will collectively account for 42% of projected global water demand (1).
Investment opportunities in these countries span all sectors; in aggregate, the measures that require the most capital in each country are municipal leakage reduction in China and India and water transfer schemes in São Paulo and South Africa. Drip irrigation shows promise for both lending and equity investments in India – analyses conducted by the Water Resources Group imply that proliferation of the technology will grow 11% per year through 2030 (1). In China, however, unlike in most other large economies, industrial demand for water dominates overall growth in demand (1).
There is no single water crisis (1). Different countries, even in the same region, face very different problems. Though generalizations are difficult, countries that withdraw more than 25% of their renewable freshwater resources are defined by the FAO as water-stressed (6). As of 2011, water-stressed countries totaled 41, up from 36 countries in 1998 (6). More than two billion people live in countries experiencing high water stress, and about four billion experience severe water scarcity at least one month each year (23). Water stress will continue to increase as demand for water grows and the effects of climate change intensify.
The amount of change depends on the water use practices and technologies that are currently in use. Locations with less water-efficient current practices will yield greater benefits from reducing water use and loss by improving industrial and municipal water use practices.
Increasing water use efficiency in all major sectors (agriculture, energy, industry, and municipal/domestic) can also lower overall demand and thus free water for other users, including ecosystems (23). Examples include:
Change that results from the adoption of new technologies or practices is likely to last as long as those technologies or practices are properly maintained and supported, provides cost savings for their owners and operators, and supports continued local industrial and municipal water uses. Realized ecosystem benefits of water conserved in the environment (and not extracted to meet new or additional demand) will last as long as regulations and enforcement mechanisms ensure no new or additional withdrawals.
Evidence Risk: Investors may lack the consistent, reliable data needed to inform their investment decisions. Data on water use by region and economic sector are often the least reliable and most inconsistent of all data regarding water resources (19). Investors can mitigate this risk by catalyzing the development of data needed to inform an evidence-based vision for water resources (1).
Alignment Risk: Because most water supplies are subsidized, businesses often lack sufficiently strong signals and incentives to prompt more efficient and productive use of water (1). Institutional barriers, lack of awareness, and misaligned incentives may hinder the implementation of affordable solutions in both the private and public sectors. In cooperation with policymakers, other financiers, conservationists, and the private sector, investors can mitigate this by developing and promoting innovative financial tools to ensure those willing to improve their water footprints have the opportunity to do so (1).
External Risk: Realized water savings may not remain in the environment unless regulations and enforcement mechanisms adequately monitor and manage withdrawals.
Unexpected Impact Risk: Increases in water use efficiency can have unintended consequences (9). Investments in water technology and engineered systems focused on human water security can add to existing threats to biodiversity and ecosystem function by increasing the appropriation of surface water flows that are essential for environmental needs or increasing the extraction of possible non-renewable groundwater resources (28, 17). Water reuse or recycling can in some cases actually worsen water scarcity within a stressed basin by making more water available for consumptive use instead of returning wastewater to its original source. This can further diminish environmental flows (9). Water transfer schemes, meanwhile, can cause negative social, economic, and environmental impacts, besides having a high demand for energy. Investors can mitigate this by identifying opportunities for public and private investments and partnerships across catchments, aligned to the water management and reuse guidelines set by regional and local planners; and investing in a portfolio of projects across a basin, informed by hydrologic modeling that accounts for the water needs of ecosystem functions and biodiversity in that basin, as well as pursuing the legal and regulatory protections necessary to secure those environmental water needs.
Investments based on inaccurate or inconsistent water use data or deployed in a region lacking the proper incentives to reduce water use may not reduce water use and loss where most needed. If the potential unintended effects on biodiversity and ecosystem function are not considered or not understood, investments that successfully reduce industrial and municipal water use and water waste could lead to more industrial and municipal water use overall and exacerbate negative impacts on freshwater systems.
Resonance Industrial Water Infrastructure Limited is an investment fund that aims to invest in small- to medium-sized greenfield and retrofit industrial water treatment and resource recovery infrastructure. The fund acts as a financial partner, offering equity investments on an industry standard Build–Own–Operate–Transfer model to allow industrial water partners to grow their core businesses without financing the large amounts of capital these projects require. The key drivers of return for the fund and the industrial water users are the recovery of resources (energy, nutrients, metals, or specialized chemical substances used in manufacturing processes) and technology upgrades that improve plant efficiency and reduce operating costs. This non-recourse equity financing substantially reduces technology risk for industrial water users (31).
Investors Kurita Water Industries Ltd., Cowles Company, Element 8, and the Urban Innovation Fund invested in Apana, which created the trademarked Intelligent Water Management Platform, a secure Internet of Things (IoT) solution that delivers smart water management as a service for facilities. Fetzer used Apana’s system to eliminate water waste at its Hopland, California winery, installing nearly 30 smart water meters that transmit water flow patterns to a virtual 24/7 water manager. The system uses Apana’s proprietary hardware and software to pinpoint leaky faucets and valve malfunctions in real time, as they occur. Fetzer aims to reduce its annual water footprint by 15%, avoiding 2.5 to 4 million gallons of water wasted each year.
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Bertule, Maija, Gareth James Lloyd, Louis Korsgaard, James Dalton, Rebecca Welling, Stefano Barchiesi, Mark Smith, et al. Green Infrastructure: Guide for Water Management; Ecosystem-Based Management Approaches for Water-Related Infrastructure Projects. Nairobi: United Nations Environment Programme, 2014.
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Browder, Greg, Suzanne Ozment, Irene Rehberger Bescos, Todd Gartner, and Glenn-Marie Lange. Integrating Green and Gray: Creating Next Generation Infrastructure. Washington, DC: World Bank, 2019.
Mirando, Dharisha, Debra Tan, Emily Chew, and Rebecca Mikula-Wright. Are Asia’s Pension Funds Ready for Climate Change? Brief on Imminent Threats to Asset Owners’ Portfolios from Climate and Water Risks. Hong Kong: China Water Risk; Manulife Asset Management; Asia Investor Group on Climate Change, April 2019.
City of Atlanta Department of Watershed Management. “City of Atlanta Department of Watershed Management Announces First Publicly-issued Environmental Impact Bond.” News release, February 21, 2019. https://www.atlantawatershed.org/first-publicly-issued-environmental-impact-bond/.
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Jha, Abhas, Jessica Lamond, Robin Bloch, Namrata Bhattacharya, Ana Lopez, Nikolaos Papachristodoulou, Alan Bird, David Proverbs, John Davies, and Robert Barker. “Five Feet High and Rising: Cities and Flooding in the 21st Century.” Policy Research Working Paper WPS 5648, Washington, DC, World Bank, May 2011.
“Low Impact Development Center (LIDC) Urban Design Tools.” LIDC (Low Impact Development Center), 2007. https://www.lid-stormwater.net/.
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This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.
Hood , Mark J., John C. Clausen , and Glenn S. Warner. 2007. “Comparison of Stormwater Lag Times for Low Impact and Traditional Residential Development.” Paper No. J05177 of the Journal of the American Water Resources Association (JAWRA) 43 (4): 1036-1046.
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Alves, Alida, Berry Gersonius, Zoran Kapelan, Zoran Vojinovic, and Arlex Sanchez. 2019. “Assessing the Co-Benefits of green-blue-grey infrastructure for sustainable urban flood risk management.” Journal of Environmental Management 239: 244-254.
Shifflett, Shawn Dayson, and Joseph Schubauer-Berigan. 2019. “Assessing the risk of utilizing tidal coastal wetlands for wastewater management.” Journal of Environmental Management 236: 269-279.
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Marando, Federica, Elisabetta Salvatori, Alessandro Sebastiani, Lina Fusaro, and Fausto Manes. 2019. “Regulating Ecosystem Services and Green Infrastructure: assessment of Urban Heat Island effect mitigation in the municipality of Rome, Italy.” Ecological Modelling 392: 92-102.
Soz, Salman Anees, Jolanta Kryspin-Watson, and Zuzana Stanton-Geddes. 2016. The Role of Green Infrastructure Solutions in Urban Flood Risk Management. Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/25112 License: CC BY 3.0 IGO.
Haq, S. . 2011. “Urban Green Spaces and an Integrative Approach to Sustainable Environment.” Journal of Environmental Protection 2 (5): 601-608.
Norton, Briony A., Andrew M. Coutts, Stephen J. Livesley, Richard J. Harris, Annie M. Hunter, and Nicholas S.G. Williams. 2015. “Planning for cooler cities: A framework to prioritise green infrastructure to mitigate high temperatures in urban landscapes.” Landscape and Urban Planning 134: 127-138.
Walsh, C. J., A. Roy, J. W. Feminella, P. D. Cottingham, P. M. Groffman, and R. P. Morgan. 2005. “The Urban Stream Syndrome: Current Knowledge and The Search For A Cure.” Journal Of The North American Benthological Society (North American Benthological Society) 24 (3): 706-723.
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See Collection Considerations.
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Water Discharge: Primary Treatment/Water Discharge: Total
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Water Discharge: Secondary Treatment/ Water Discharge: Total
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Water Discharge: Tertiary Treatment / Water Discharge: Total
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Organizations should footnote all assumptions used.
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