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Water: The overlooked key to effective climate action

Investment Insights • Sustainability

3 min read

Water: The overlooked key to effective climate action

Water is essential to our climate system and plays a critical role in addressing climate change, yet its significance is often overlooked. With climate change disrupting the water cycle, we are seeing more intense floods and prolonged droughts, making water both a challenge and an opportunity. Through sustainable water management, we can mitigate disasters and strengthen resilience, turning potential crises into opportunities for a sustainable and prosperous future.

Melanie Beyeler
Melanie Beyeler

Climate change interferes with the water cycle, resulting in more frequent and severe water-related disasters. Excessive rainfall leads to devastating floods that impact communities and economies worldwide; over the past two decades, these floods have caused approximately 100,000 deaths, affected more than 1.5 billion people and inflicted over USD 800 billion in economic losses.1 Conversely, the frequency and duration of droughts have significantly increased in recent years, threatening food security and livelihoods. As of 2022, 2.4 billion people reside in water-stressed areas, with nearly 800 million experiencing high or critical water stress.2

These extreme fluctuations in water availability not only present immediate threats but also undermine ongoing efforts to combat climate change. Stressed water resources can lead to reduced production in hydropower and other sources of energy affected by the water cycle, and it can cause forests to release stored carbon, for example through drought and wildfires, thereby undermining mitigation efforts. Furthermore, some climate mitigation strategies may inadvertently alter land use, disrupt climate patterns and degrade water quality, resulting in unintended negative consequences.3
 

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As global warming continues, the stress to the water cycle is expected to intensify further, exacerbating the frequency and severity of both droughts and floods. Along with such extreme weather events, water cycle disruption will also likely result in increased instances of waterborne diseases, and irreversible losses in freshwater ecosystems. The economic costs associated with these extreme weather events are rising globally, placing additional burdens on societies and economies.1

Effectively tackling climate change requires making water a central component of our strategies at every level. Sustainable water management – including wastewater treatment and freshwater ecosystem protection – can significantly reduce greenhouse gas emissions. 

By carefully evaluating both current and future water availability across all sectors, we can enhance our climate actions and prevent issues caused by water shortages. Here are the key points on climate mitigation and water management to consider:3

  • Climate mitigation depends on water: Integrating freshwater availability into climate plans is among a number of essential factors in mitigating climate change. This requires coordinating water use across different measures and sectors.
  • Climate mitigation impacts water: Climate actions can both support and strain freshwater resources. It’s crucial to assess these impacts to prevent issues like water pollution or ecosystem damage when selecting specific mitigation methods. For example, the choice of renewable energy sources should consider their impact on water resources.
  • Effective water management reduces emissions: Suitable measures involve implementing advanced wastewater treatments, generating low-carbon energy from wastewater, expanding both centralised and decentralised treatment systems, recycling and reusing water, and enhancing the efficiency of water supply and distribution.

By integrating water considerations into climate actions, we can develop more effective and sustainable solutions to combat climate change. Prioritising sustainable water management not only mitigates the adverse effects of extreme weather events but also reinforces the resilience of communities and ecosystems. Ensuring a balanced and thoughtful approach to water resource management is essential for achieving a healthier, more sustainable planet for future generations.
 

1 UNESCO, The United Nations World Water Development Report 2024
2 https://mdgs.un.org/sdgs/report/2023/Goal-06/
3 Stockholm International Water Institute (SIWI), United Nations Development Programme (UNDP), and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Unpacking Freshwater’s Role in Climate Change Mitigation, Nov 2022

 

Melanie Beyeler

Melanie joined EFGAM Switzerland in August 2017 and is responsible for the Climate Transition strategy. Previously she held a variety of roles at Credit Suisse including equity institutional sales and client portfolio manager.

Melanie holds a Masters HSG in Banking and Finance from the University of St. Gallen and was awarded the CFA UK Certificate in Climate and Investing. In addition, she has successfully completed the “Sustainable Finance” program at the University of Cambridge and the “Business Sustainability Strategy” program at MIT Sloan School of Management.

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