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Challenges of Water Scarcity: A Business Case Study for Financial Institutions

26 January, 2005

The United Nations Environment Programme Finance Initiative (UNEP FI) and the Stockholm International Water Institute (SIWI) have released the results of a joint project on water-related challenges for financial institutions.

In the report, "Challenges of Water Scarcity: A Business Case for Financial  Institutions", UNEP FI and SIWI highlighted the issues that arise from dealing with water scarcity and identified opportunities for the financial sector for contributing to sustainable development through active engagement in mitigating water related risks. Preparation of the report was supported with funding from the Swedish International Development Corporation Agency (SIDA) and the Swedish Water House (SWH).

The report is available for download from:
Stockholm International Water Institute www.siwi.org/
or UNEPFI  www.unepfi.org

Water scarcity currently affects many regions of the world. Without a significant reversal of economic and social trends, it will become more acute over time. Although water is considered a renewable resource, in many parts of the world, water resources have become so depleted or contaminated that they are unable to meet ever-increasing demands.

The challenges are more acutely felt in developing countries where 95% of the world’s new population is born each year. This has become a major factor impeding economic development, and also business operations. The challenges associated with water scarcity are becoming an emerging risk of strategic importance to businesses and their financial backers
around the world. This is seemly more important with rapid globalisation within the business supply chain. Therefore, a business case for strategically addressing water challenges is getting stronger.

This report, based on a review of close to 20 cases of projects and investments mainly in Africa and Latin America, and supplemented with interviews with practitioners from both development and commercial financial institutions, concludes that there is a business case for
improving risk management tools, which can specifically be related to the risks borne by water scarcity.

For any further information, please contact Johan Kuylenstierna at SIWI at johan.kuylenstierna@siwi.org or
Alberto Pacheco Capella of the UNEP Finance Initiative at alberto.pacheco@unep.ch.