The Importance of Water to the Global Economy

Water is humanity’s main source of hydration and an indispensable resource for human existence as it is required to grow food, bathe, manufacture, and create energy, amongst countless other things. Simultaneously, water is a limited resource worldwide and one that is becoming increasingly precious. Out of all the water available worldwide, approximately 97% of it is salty ocean water and only 3% of it is fresh, potable water. However, more than half of the 3% of fresh water in the world is found in glaciers. The remaining fresh water is found in aquifers, lakes, rivers, and rainfall. Water is not consistently distributed throughout the world’s geographic space. In fact, it is estimated that more than half of the planet’s water supply can be found in just ten countries, namely Indonesia, India, China, Russia, the Democratic Republic of the Congo, Canada, the United States, Colombia, and Brazil. Similarly, water consumption varies substantially from one country to the next. For instance, water consumption per capita in the United States is approximately 215 cubic meters per year, whereas in France it is 106 m³/year. On the other hand, the average Chinese citizen consumes 32 cubic meters per year, while the average person in West Africa uses up less than 5 m³/year. Furthermore, it is important to mention that Asia is by far the world’s most populous continent, therefore, the available water per capita is diluted substantially.

The Importance of Water to the Global Economy

The activities for which water is used varies from one country to another, particularly from developed to developing nations. In the case of agriculture, developing nations tend to use a higher percentage of water towards irrigation than developed nations. One of the reasons behind this tendency is that agriculture in developed nations employs more precision technology when it comes to agricultural irrigation. For example, India and China use more than 80% of their respective water consumption on agriculture, whereas France and the United Kingdom use less than 20% each. Another factor that might explain these percentages is that, in developing countries, well-off urban centers and institutional farmers might be the only ones with reliable access to a water grid. The second industry that uses most water worldwide is the manufacture and energy sector. In countries with developed energy processing infrastructures, power from sources such as coal, nuclear, gas, and oil require large quantities of water to function optimally. Needless to mention, hydro energy projects such as dams and river turbines utilize fresh water resources as well.

In developed regions such as Europe and North America, water is mostly used for energy, manufacture, and domestic consumption. Meanwhile, in Latin America, Africa, and Asia more than 50% of the available fresh water is employed in food and agriculture. New technologies, such as water desalinization, are being developed in order to cope with the increasing global demand for fresh water. Nevertheless, most of these technologies are still too expensive or inefficient. Ultimately, the fact remains that efficient and proper water management will be a key challenge during the 21st century.

(Read more about Ways of Investing Nationally and Internationally)