The Financial Times published a recent article on water scarcity in Europe (paywall) which I think gives a good idea of how climate change is impacting society as well as how changes in real world demand exacerbates the problem.
Climate change seems to be one of those slow-moving fundamental changes to society that goes under the radar for investors because of how they view "green" and "ESG" investing. The impact to society may be profound and under-appreciated, at least at the moment. The impact may be felt in their day-to-day lives, if they take a moment to take a look.
Here are my notes on the article.
- Water scarcity is driving users to develop alternative sources of water. In the article, a Spanish olive farmer is forced to pipe water as a drought and harsh weather is reducing groundwater reserves.
- Droughts are an increasing problem in the EU. This is a new experience for Europe as they are used to cool winters and high, steady levels of rains. The problem here is that their infrastructure (both political and actual) are built during times of plenty so they struggle to deal with the changes happening recently.
- The problem is not just limited to farmers, but hits households and industry. Examples are nuclear power plants (require water to cool) and hydropower.
- Traditional sources of water like Alpine meltwater are falling and because of warming weather and droughts, groundwater reserves are not replenished.
- On the infrastructure side, leaky pipe systems allegedly lose about 25 percent of water on average. Rome supposedly leaks 42 percent, due to its old pipe system.
- On the political side, the water supply infrastructure is maintained by a patchwork of local companies and municipal authorities so it is hard for national/EU level policymakers to take action.
- For households, the water tariffs they pay (e.g. water bills) are not incentivizing users to conserve water. They usually pay a flat rate and in some countries, domestic users do not pay tariffs. This leads to less money for investment in infrastructure.
- Water costs are not reflecting the true cost of extraction, transport, use and pollution.
- Clean energies like nuclear, and clean tech like electric vehicles and wind tech require water and will push demand up.
- Data centres and chip production require water for cooling and humidification.
- governments are taking action like targeting reuse of wastewater, putting water efficiency labels on toilets/washing machines.
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