Report | June 2023

Running dry

Climate change is intensifying an often under-appreciated but potentially existential threat—water scarcity. This report outlines technologies that can reduce urban water stress and provides a framework to determine the locally most impactful solutions. 

  • By Richard Mylles and William Nicolle

Executive summary

Cities are on the front line of climate change, which is intensifying an often under-appreciated but potentially existential threat to many cities—water scarcity. This report outlines a series of new and emerging technologies that can reduce urban water stress and provides a framework to arm cities with the tools to determine the most locally impactful solutions.

Urban water scarcity already has a large impact: Today over 12% of GDP is generated by large cities already facing high water scarcity. Moreover, this impact is set to grow, as currently water-rich large cities responsible for some 4% of GDP could move into stressed territory by 2050 under a high emission, high development scenario.

APAC exposure to urban water stress

Asia is particularly exposed to this issue. It contains 60% of the world’s population but only 28% of the world’s freshwater reserves. APAC contains many of the world’s largest cities by population, which already collectively face some of the highest water stress—the ratio of reliable water supply to demand. Rapid urbanization, population growth and rising living standards are likely to exacerbate these issues in APAC in the coming years.

What can be done?

While the above paints a gloomy picture, cities often demonstrate a remarkable ability to resist the threat of water scarcity, from the development of sewerage and hydraulic infrastructure to market policies like water pricing. Further efficiency gains are possible. In this report we outline a series of new and emerging technologies that can reduce a city’s vulnerability to water stress.

The next stage in urban water evolution

The evolution of urban water management can arguably be traced back several thousand years, from the first bore wells dug in the Yellow River area, to the first signs of sewerage systems in the Aegean Islands through to the first water treatment plants in Scotland in the 19th century. Today, urban water management is in another major evolutionary phase. Sensor roll-out, Internet of Things technology, automation, circular water system management and an integrated approach which looks at the water supply chain as a system rather than a sum of disparate parts, all raises the potential for reductions in usage, waste and pollution, and gains in efficiency and, ultimately, sustainability. For example, the use of sensors and Internet of Things technology in Malang City, Indonesia helped to reduce its water loss rate from 42% to 15.9% in ten years.

What governments and finance can do

Governments enjoy an outsized influence over urban water management because water utilities are often wholly or partly state-owned. Even where they are not, they set the rules in what is a heavily regulated sector. Infrastructure investment in APAC is typically government-led, but upgrading urban water infrastructure will also require significant input from private investors. The global cost of meeting Sustainable Development Goal (SDG) 6 (clean water and sanitation for all) could be USD 1.04tr (in 2015 US dollars) or 1.2% of global GDP through to 2030, with East Asia and Pacific accounting for USD 250bn per annum and South Asia for USD 150bn. Overall, that is three times the current level of investment. Global private investment in water infrastructure stood at a meagre USD 17bn out of just over USD 1tr of private infrastructure investment in 2020. The private sector can and should do better.

Where to start

Not all the solutions outlined in this report will suit every city. For example, some cities in countries at earlier stages in their development may need to prioritize basic sanitation over the latest technologies. Most cities will build up water resilience over time by prioritizing the most locally impactful solutions. We include two useful tools to help provide a framework for determining these: local stakeholder maps, and solution feasibility assessments. These tools send two important messages: First, the ‘right’ stakeholder relationships are critical. For instance, well-resourced utilities are possibly the only actors who can roll out infrastructural solutions like network sensors. Cities without well-resourced utilities may struggle to implement such solutions. Second, smart water meters, rainwater harvesting, and efficiency labelling and standards are arguably ‘low hanging fruits’ that generate significant impact with low barriers to implementation. 

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