Continental freshwater resources are vital to many industries, and both the quantity and quality of freshwater have significant economic implications. In the sections below, BWI explores six concrete business stakes of surface water, quantified and illustrated by examples from various continents.
Business Stakes of Surface Water
1. Agriculture
Stake: Surface Water Availability for Irrigation
- Impact on Quantity: Agriculture depends heavily on surface water from rivers, lakes, and reservoirs for irrigation, especially in regions where rainfall is insufficient. Global irrigation from surface water accounts for approximately 80% of all irrigation needs.
- Example (North America): In the Colorado River Basin, the river’s flow supports the irrigation of nearly 5.5 million acres of farmland. However, climate change and overuse have led to reduced water levels, threatening agricultural output in California, Arizona, and Nevada. The river’s flow has decreased by 20% since 2000, causing billions in agricultural losses.
- Example (Africa): The Nile River is critical for Egypt’s agriculture, where 97% of water resources come from the Nile. With increasing demands and upstream water use by other nations, such as Ethiopia’s construction of the Grand Ethiopian Renaissance Dam (GERD), Egypt faces a potential reduction in surface water, endangering crops and food security.
- Impact on Quality: Pollution from industrial and municipal waste discharged into rivers and lakes can harm crops irrigated with contaminated water, reducing agricultural yield.
- Example (Asia): The Yellow River in China is an essential surface water source for irrigation, but pollution from industrial discharge and untreated sewage has led to crop contamination. This has been a severe issue for local farmers, who report significant yield losses and harm to food safety.
2. Hydroelectric Power
Stake: Dependence on Surface Water Flow
- Impact on Quantity: Hydroelectric power plants are entirely dependent on the flow of surface water from rivers and reservoirs to generate electricity. Droughts and reduced river flows can drastically decrease electricity production.
- Example (South America): The Itaipu Dam, which is the world’s second-largest hydroelectric dam (on the Paraná River between Brazil and Paraguay), faced significant reductions in power generation during the 2021 drought. Water levels in the reservoir dropped so low that the dam’s power output fell by 15%, causing power shortages in both countries.
- Example (Africa): In East Africa, the Tana River powers Kenya’s Seven Forks Dams, which contribute about 50% of the country’s electricity. Reduced rainfall and a decrease in river flow have led to significant power shortages, affecting business productivity and raising energy costs.
- Impact on Quality: Water quality issues like siltation from upstream land degradation or industrial pollution can block turbines and reduce the efficiency of hydroelectric plants.
- Example (Asia): In India, the Tehri Dam on the Bhagirathi River has suffered from reduced efficiency due to siltation caused by upstream deforestation. This has increased maintenance costs and reduced power output, impacting energy supply for nearby industries.
3. Tourism and Recreation
Stake: Reliance on Surface Water for Attractions
- Impact on Quantity: Surface water bodies such as lakes and rivers are central to recreational activities like boating, fishing, and tourism. Reduced water levels can lower the appeal of these destinations, negatively impacting local economies.
- Example (Europe): Lake Como in Italy, a major tourist attraction, has experienced low water levels during drought periods, reducing boating and lakeside tourism. In 2022, water levels dropped by more than 50%, hurting the hospitality sector and leading to millions of euros in lost revenue.
- Example (Oceania): In Australia, the Murray-Darling Basin, a key surface water system supporting water sports and eco-tourism, has seen reduced river flows due to droughts. This has caused significant losses in the tourism sector, which depends on river cruises and fishing tourism.
- Impact on Quality: Water pollution in rivers and lakes can significantly deter tourists. Polluted or algae-filled lakes often become unusable for recreation, impacting local tourism revenues.
- Example (North America): Lake Erie in the U.S. and Canada has suffered from harmful algal blooms caused by agricultural runoff, leading to beach closures and a decline in tourism. The 2014 bloom alone led to $65 million in lost tourism revenue for surrounding communities.
4. Fisheries and Aquaculture
Stake: Dependence on Surface Water Ecosystems
- Impact on Quantity: Fisheries, both inland and coastal, rely on adequate surface water levels to maintain fish populations. Droughts and river flow reductions can devastate fish stocks, impacting livelihoods and the economy.
- Example (Africa): In Lake Chad, surface water shrinkage has led to the loss of over 90% of the lake’s area since the 1960s, drastically reducing fish catches. This has severely impacted the livelihoods of millions of people in the surrounding countries, including Chad, Niger, Nigeria, and Cameroon.
- Example (Asia): The Mekong River supports one of the world’s largest inland fisheries, but the construction of dams and reduced water flows have led to declining fish populations. This has caused severe economic losses in Cambodia, where fish provide the main source of protein for the population.
- Impact on Quality: Pollution of surface waters from industrial waste, agricultural runoff, or sewage discharges can cause fish die-offs and contaminate seafood.
- Example (South America): Lake Titicaca, shared by Peru and Bolivia, has seen declining fish populations due to pollution from untreated sewage and mining runoff. This has impacted local fishing communities and the tourism industry.
5. Bottled Water Industry
Stake: Sourcing from Surface Water
- Impact on Quantity: The bottled water industry frequently sources from surface water bodies like lakes and rivers. Reduced water availability due to droughts or overuse can limit production, especially for brands that market natural water from pristine lakes.
- Example (Europe): In France, companies like Evian rely on surface water sources from alpine lakes. Reduced glacial runoff and lower lake levels have posed threats to water availability, particularly during summer months with high consumer demand.
- Example (Oceania): In New Zealand, bottled water companies that extract from surface rivers have faced backlash and limitations due to concerns over the depletion of these rivers during drought periods. This has led to conflicts between local communities and businesses over water use.
6. Industrial Manufacturing
Stake: Use of Surface Water for Cooling and Processing
- Impact on Quantity: Many industries, including paper mills, textiles, and steel manufacturing, rely on large volumes of surface water for cooling and processing. Reduced surface water flows can limit production and raise costs.
- Example (Asia): In China, the Yangtze River, which supports much of the country’s industrial production, has faced severe water shortages due to drought and overuse. In 2022, low water levels reduced industrial activity in cities like Chongqing and Wuhan, leading to factory shutdowns and billions in economic losses.
- Example (Europe): The Rhine River, one of Europe’s most important commercial waterways, saw critically low water levels in 2018 and 2022, reducing cargo shipping and disrupting supply chains, including those for the chemical and manufacturing industries in Germany.
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Surface water is a crucial resource for industries across continents. The business stakes of surface water are high, with water quantity and quality directly affecting agriculture, hydropower, fisheries, tourism, and industrial production. Businesses dependent on surface water face significant risks from climate change, pollution, and over-extraction, making sustainable water management increasingly critical to their operations and long-term viability.
