It’s unclear who said it first, but it rings true: “if climate change is a shark, water is its teeth.” Climate change poses a wide set of physical risks to our systems, and water challenges are among the acute ways that these risks manifest today. We have seen this play out clearly in the US, between drastic measures taken to reduce water usage from the Colorado River to Arizona imposing limits on new construction due to limited water resources.
Galvanize exists to scale solutions for the climate transition in this decade. But investing in climate adaptation in this decade is equally important, both to minimize the impacts of climate change as well as to build resilience across sectors. Managing and adapting to our changing water reality is a key pillar of climate adaptation. Because climate change increases our water challenges it is compelling to note that there are solutions available today that address both.
Water risk is here today: The contours of our water crisis
Water is a foundational natural resource. It is an essential input into industry, energy and agriculture, and sustains our natural ecosystems and enables our own physical health. Globally, we use over 4 trillion cubic meters of freshwater per year (or over 50 times the capacity of the Colorado river)¹. Agriculture accounts for 70% of freshwater withdrawals, industry and municipal use for 20%, and energy for another 10%.²
There are multiple dimensions to our water crisis. First, we face increasing water scarcity, where demand outstrips supply. Demand for water is only projected to increase, as we continue to scale our food and energy systems to support growing global populations and irrigation demand. The buildout of industrial facilities and data centers meant to power the climate transition is adding new demand to landscapes.
Supply at the basin and sub-basin levels is finite, further strained by unsustainable withdrawals and variable drought and flood patterns. The UN projects a 40% gap between water demand and supply by 2030.³
The second dimension of the water challenge is degradation of water quality due to water pollution. Some 80% of the world’s wastewater is discharged back into the environment, threatening water resources and ecosystems.⁴ Wastewater pollution is driven at all levels – by industry, agriculture and even individual households. The supply and quality issues are intertwined because poor water quality diminishes usable water supply.
Climate change and water are inextricably linked
Climate volatility and temperature rise compound water risks. Climate change alters precipitation patterns, causing greater frequency and intensity of droughts in some regions and increased rainfall in others. This volatility makes it difficult to reliably capture and distribute water. Rising temperatures are melting glaciers and reducing snowpack. Glaciers act as freshwater reservoirs; as they shrink, their reduced capacity impacts the communities and ecosystems that rely on stored water during dry seasons. Similarly, warmer temperatures increase water evaporation from surface water bodies and soils, exacerbating water scarcity; and sea level rise leads to intrusion of salt water to freshwater reservoirs.
We can solve for climate and water – at the same time
Water and climate solutions represent wide-ranging categories, spanning measurement tools to efficiency measures to nature-based solutions. The ability to drive both increases the impact and scalability of these solutions. We see several dimensions to this climate-water nexus:
- Water challenges are costly and immediate – and drive awareness of the urgency of the climate transition. In 2021, CDP estimated that over $300 bn of business value is at risk due to water security concerns⁷ and that over 87% of companies now undertake water-related risk assessments.⁸ Water availability poses an existential risk to businesses and communities, and it motivates both near-term corporate action and in some cases a policy response.
- Managing water intelligently requires measurement and monitoring capabilities – which can piggyback on solutions used to track emissions and other sustainability factors. Advanced tools exist today to optimize decision-making, whether that be in industrial or agricultural water use. These technologies can reveal opportunities for better water management, while tracking progress toward multiple sustainability goals, including carbon. We are keen to help scale measurement processes and data infrastructure that can support both emissions and water tracking. Galvanize sees several examples of this in our own venture and growth portfolio: Arable, for example, provides crop monitoring solutions to gather ground truth data from the field, and supports not only insights into the carbon impact of given practices but also end-to-end water intelligence on growers’ water usage. Similarly, Worldly supports major brands, retailers and manufacturers in collecting data on operational and product impacts not only on carbon but also water, chemistry and labor.
- Solutions for climate are often also solutions for water – and those deploying these solutions can stack the commercial benefits of both aspects. There are myriad solutions that address both arenas: for example, deploying renewable energy substantially reduces reliance on water-intensive fossil fuels, explored here by the IEA. Regions like California and Finland which have studied the potential effects of a 100% renewable-powered grid estimate that this will reduce over 95% of water consumption from their regional energy sectors.⁹ Additional improvements to water management can result from sustainable agricultural practices. Regenerative agriculture, precision irrigation, and other soil conservation measures can reduce water consumption, enhance soil moisture retention and sequester carbon; Galvanize venture and growth portfolio company Regrow helps its customers stack these benefits in every deployment. These benefits apply more generally to scaling nature-based solutions – the same projects around wetlands and riparian restoration designed for carbon goals also enhance water quality, regulate water flow and reduce erosion. In all of these projects, the corporation or entity deploying a given solution can net the benefits across savings on water and energy use, potential carbon revenue and increased resilience.
Case Study: Arable in Action
Galvanize Innovation + Expansion portfolio company Arable recently announced a landscape-level project with Google in western Nebraska that simultaneously promotes water conservation and production efficiency across more than 25,000 acres of crops.
Arable’s innovative crop intelligence solution empowers farmers to optimize water use by leveraging integrated weather, crop, soil, and irrigation data to support and inform farm and water management decisions.
The project will support the conservation of millions of gallons of water annually to support progress on Google’s 2030 Water Positive commitment. Read more about the partnership here.
- Corporate leadership on climate issues sets useful precedents for how to scale corporate action on water issues. Although the work is far from done, corporates have made substantial strides in establishing frameworks and processes for measuring GHG emissions, setting credible targets and developing climate action plans. This movement has acquired scale: Over 2,900 companies have set science-based targets, and nearly 40% of the Fortune 500 have set net-zero targets.¹⁰ These voluntary measures now inform regulatory requirements on measurement and disclosure (from SBs 253 and 261 in California to the CSRD directive in the EU). Corporate action on water is more nascent, but already leverages a similar pathway. Groups like the CEO Water Mandate, Alliance for Water Stewardship and Carbon Disclosure Project continue to refine how companies set water positive targets and track their progress. Ultimately, we hope to see standardized integration of metrics for adaptation and water risk management into corporate reporting frameworks – and we see a role for investors in pushing for robust disclosure and accountability.
- Finally, collective action efforts can combine water and climate priorities. There are many examples of NGOs, corporates and communities coming together to support critical restoration activities around over-stressed basins and watersheds that they jointly rely on. The regional nature of water risk makes it more apparent which parties should collaborate on a given opportunity. As data collection and measurement improve our ability to see emissions and water trends across supply chains, we wonder: how can we facilitate similar collective efforts around other types of “hotspots”?
Case Study: Public-Private Opportunities in the Great Plains
Dan Northrup, a Principal on Galvanize’s Science & Technology team, recently detailed the potential for irrigation management in regions of the Ogallala aquifer, located beneath the Great Plains of the United States, to extend economic productivity and while making meaningful emission reductions.
Kansas stakeholders across corporate sustainability professionals, investors, policy makers, and climate advocates have an aligned interest in collaborating with the agricultural community to incentivize water conservation and extend aquifer lifetimes. This model of irrigation stewardship will apply to other geographies and can be used to improve water quality and to minimize competition for limited resources in basins with growing water demand.
Similar to the energy transition, financial incentives using pooled private and public funding can be mobilized to address climate issues across the board and benefit all stakeholders. The tools to promote sustainable and productive water use are available today and a combination of technology, funding, and education can lead to rapid improvements in water efficiency to the benefit of businesses and the environment.
Hear more about the business case for acting on water conservation and why the Ogallala aquifer has reached peak actionability on the AgTech, So What? Podcast or read more of Dan’s thoughts in the UpstreamAg Newsletter.
Sources
1. Water: A human and business priority (McKinsey)
2. CEO Water Mandate
3. Global freshwater demand will exceed supply by 2030, experts warn (WEF)
4. CEO Water Mandate
5. Climate Change will affect global water availability through compounding changes in seasonal precipitation and evaporation
6. Explainer: How climate change is accelerating sea level rise (Carbon Brief)
7. Water risks to business five times higher than cost of inaction (CDP)
8. How North American companies are assessing environmental risk (CDP)
9. FSW Water Use in Renewables (Food and Water Watch)
10. Fortune Global 500 Climate Commitments, SBTs: Companies Taking Action