The water paradox
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This article was published in the Nedgroup Investments Responsible Investment Report 2025.
Download the full report here
As I take a sip of water at my desk, I realise how fortunate I am. The privilege in such a simple act and often a habit rather than true thirst, yet essential to life itself. Comprising 60% of our bodies, water supports everything around us: our food, our environment, and the cleanliness that protects us from disease. Flowing through every corner of life, water quietly sustains people, plants, animals, and entire ecosystems.
Yet, for billions of people, this basic necessity remains out of reach. According to the United Nations, 2 billion people, which is nearly a quarter of the global population, lack access to safe drinking water. Even more shocking, almost half of the world’s population lacks adequate sanitation, a critical element of health and hygiene.
The devastating impact of water scarcity is tragically clear: every 90 seconds, a child dies from a water-related disease. Unsafe water and poor sanitation fuel the spread of infectious diseases, stunting human development and trapping communities in cycles of poverty. During the Covid-19 pandemic, we were reminded just how essential something as simple as handwashing is in preventing illness. The burden also falls disproportionately on women and girls, who spend a staggering 200 million hours every day collecting water. This is time that could be spent on education, work, or rest. Water, once considered abundant, is rapidly becoming one of the planet’s most precious commodities.
The demand for water is soaring and driven by rapid population growth, urbanisation, and rising living standards. In fact, in just 70 years, the global population has tripled. As people adopt wealthier lifestyles, water consumption increases, whether it's for water-intensive products like cotton clothing, high-demand crops, or electricity, much of which relies on water for cooling. Agriculture alone consumes 70% of the world’s freshwater supply and often uses outdated, inefficient irrigation systems. With demand set to rise by another 20-30% by 2050, the pressure on this vital resource is only intensifying.
Where water stress will be highest by 2050
Projected ratio of human water demand to water availability (water stress level) in 2050
On the supply side, while 70% of the planet is covered in water, the vast majority is saltwater, with only 3% being freshwater. Of that, most is locked in glaciers and ice caps, leaving a mere 0.3% accessible for human use.
Freshwater makes up a very small fraction of the Earth’s water
Source: USGS
To make matters worse, climate change is disrupting global water cycles. Glaciers are melting, droughts and floods are becoming more frequent, and rainfall patterns are shifting. Regions that once relied on predictable rainfall now face severe water shortages, while others endure devastating floods. Poor governance and inadequate investment in water management systems only exacerbate the crisis. In fact, aging infrastructure in the US alone causes around 16% of treated water to be lost through leaks before it even reaches consumers.
Population growth and Water demand in comparison (bn; bn km3)
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Source: Organisation for Economic Co-operation and Development (OECD)
So, what can be done? Tackling the global water crisis requires a multifaceted approach that integrates infrastructure development, technological innovation, governance reforms, and community engagement. First, modernising water distribution systems, sewage treatment plants, dams, and irrigation methods is essential to improving supply reliability and reducing waste. Desalination, the process of removing salt from seawater, is also crucial and particularly for water-scarce regions. While recent advances have made desalination more energy-efficient and affordable, challenges like brine disposal and high energy consumption still need to be addressed.
Water reuse and recycling offer another promising solution. Treating wastewater for use in the agriculture industry can significantly reduce reliance on freshwater. Investment in water recycling technologies is vital to help close the gap between supply and demand. Governance reforms are equally important. Transparent policies that reduce corruption and ensure fair distribution can transform water management. Lastly, community-based initiatives that empower local stakeholders to manage water resources foster long-term sustainability. For example, projects that teach water conservation techniques or establish local governance structures can boost resilience to scarcity. By combining these efforts, we can move toward a more sustainable global water system, one that benefits consumers, businesses, and governments alike.
At Nedgroup Investments, we are proud to play an active role in addressing the global water crisis through our sustainable portfolios. By investing in the clean water theme, we support companies developing innovative solutions to the world’s water management challenges. These businesses, whether in technology, engineering, utilities, or other sectors, are leading the way toward a more sustainable water future. Our investments provide direct exposure to a diverse range of companies that are essential to the purification, treatment, and responsible management of water resources. By backing these solutions, we are contributing to a future where access to clean water is safeguarded for generations to come.
Sources:
The Water Crisis: Shortage, Problems & Solutions | Water.org
Water scarcity and health (essentialneed.org)
The global water crisis, explained (concernusa.org)
L&G Clean Water UCITS ETF | LGIM Fund Centre
Chart: Where Water Stress Will Be Highest by 2050 | Statista
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