Water management risks pose growing credit threats as demand soars, climate change intensifies: Moody’s

livemint.com:

New Delhi: Credit rating agency Moody’s Investors Service has warned that the credit impact of water management risks is set to escalate due to rising demand and the effects of climate change. In a report, Moody’s highlighted the increasing credit risk associated with water management as the demand for water continues to surge and climate change exacerbates challenges. Moody’s pointed out that sectors such as extractive industries, agriculture, utilities, and emerging market local governments are particularly exposed to these risks.

The report also reveals that these sectors, which collectively hold almost $2 trillion in debt, face high inherent exposure to various water-related issues, including access, availability, pollution, and pricing. In addition, it has identified 16 sectors with $6.5 trillion in rated debt that have moderate inherent exposure to water management risks. Water scarcity and the growing demand for water pose significant credit risks to both public and private-sector entities.

The report cautioned that water shortages can disrupt economic activities and even lead to social unrest. The United Nations projects that global water demand will increase by around 30% by 2050, driven by population growth, economic development, and changing consumption patterns. Areas with high water stress will face heightened challenges in managing water resources, Moody’s said, adding that insufficient measures to address water management issues, especially in regions already facing high water stress, can exacerbate water scarcity.