The Socially Inspired Investor ESG in Focus

Understanding water scarcity

Food and Agriculture Organization of the United Nations

Originally published 1.7.2009

Physical water scarcity occurs when there is not enough water to meet all demands. Arid regions are most often associated with physical water scarcity, but an alarming new trend is an artificially created physical water scarcity due to over allocation and overdevelopment of water resources. Symptoms of physical water scarcity include, among other factors, severe environmental degradation and increasing occurrence of conflicts.

Economic water scarcity is caused by a lack of investment in water or a lack of human capacity to satisfy the demand for water, even in places where water is abundant. Symptoms of economic water scarcity include inadequate infrastructure development: people have trouble getting enough water for domestic and other purposes; high vulnerability to seasonal fluctuations: floods and drought; and inequitable distribution of water, even when infrastructure exists.

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