For the first time water has topped the list in the World Economic Forum (WEF) 10th edition of the annual Global Risks report, which is published today, as the biggest societal and economic risk for the next ten years.
Looking at global risks in terms of their potential impact, the nearly 900 experts that took part in the Global Risk Perception Survey rated water crises as the greatest risk facing the world.
The report points out that global water requirements are projected to be pushed beyond sustainable water supplies by 40% by 2030. Agriculture already accounts for on average 70% of total water consumption and, according to the World Bank, food production will need to increase by 50% by 2030 as the population grows and dietary habits change. It also refers to the International Energy Agency’s projection that water consumption to meet the needs of energy generation and production will need to increase by 85% by 2035.
The biggest threat to the stability of the world in the next 10 years comes from the risk of international conflict, according to the report.
The report, which every year features an assessment by experts on the top global risks in terms of likelihood and potential impact over the coming 10 years, finds interstate conflict with regional consequences as the number one global risk in terms of likelihood, and the fourth most serious risk in terms of impact. In terms of likelihood, as a risk it exceeds extreme weather events (2), failure of national governance systems (3), state collapse or crisis (4) and high structural unemployment or underemployment (5).
Other top risks alongside water and interstate conflict in terms of impact are: rapid and massive spread of infectious diseases (2), weapons of mass destruction (3) and failure of climate change adaptation (5).
"Strikingly little progress made" on environmental risks - from climate change to water crises
The report singles out as noteworthy the presence of more environmental risks among the top risks than economic ones. The report has seen a shift over past years away from economic risks in general to environmental risks – ranging from climate change to water crises. However it states:
“While this highlights a recognition of the importance of these slow-burning issues, strikingly little progress has been made to address them in light of their far-reaching and detrimental consequences for this and future generations.”
This comes as a result of a marked increase in experts’ negative assessment of existing preparations to cope with challenges such as extreme weather and climate change, rather than owing to a diminution of fears over chronic economic risks such as unemployment and underemployment or fiscal crises, which have remained relatively stable from 2014.
In addition to assessing the likelihood and potential impact of these 28 global risks, Global Risks 2015 examines the interconnections between risks, as well as how they interplay with trends shaping the short- to medium-term risk landscape. It also offers analysis of three specific cases which emerge from the interconnections maps: the interplay between geopolitics and economics, the risks related to rapid and unplanned urbanization in developing countries and one on emerging technologies.
The risks interconnections map shows how survey respondents perceived the nexus of food, water, energy and climate change to be related also to other risks, including large-scale involuntary migration.
On urbanization, the report considers how best to build sufficient resilience to mitigate the challenges associated with managing the world’s rapid and historical transition from predominantly rural to urban living.
“Without doubt, urbanization has increased social well-being. But when cities develop too rapidly, their vulnerability increases: pandemics; breakdowns of or attacks on power, water or transport systems; and the effects of climate change are all major threats,” said Axel P. Lehmann, Chief Risk Officer at Zurich Insurance Group.
The report also provides analysis related to global risks for which respondents feel their own region is least prepared, as well as on the global risks on which they feel most progress has been made over the last 10 years. It also presents for the first time country-level data on how businesses perceive global risks in their countries, which can be accessed here. The report also features three examples of risk management and resilience practices related to extreme weather events.
The report also concludes that decision-makers will be forced to make tough choices about allocations of water that will impact users across the economy.
Chairman of Nestlé warns of widespread problems ahead
Commenting on the issue of water for the environment in his blog about the report, Peter Brabeck-Letmathe, Chairman of global food company Nestlé said drying rivers destroy human livelihoods and sinking groundwater tables threaten human settlements.
On the issue of water for food in the report, said:
“We start seeing the first problems in regions where natural buffers – groundwater reservoirs – have been used up in times of normal rainfall. In other words: media will see drought as the problem, but droughts come and go. The real problem is that we destroyed the ‘natural’ safety nets by overusing groundwater. So without a change in the way we use water, the global growth in population and prosperity are rapidly leading us into massive shortfalls in global cereal production.”
He also added that some episodes where power generation in thermal plants had to be slowed down because of lack of cooling water may be early signs for more widespread problems ahead.
Click here to download the full report