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Changing drought, flood and storm conditions have the potential to cost the UAE up to $27 billion in lost GDP in the Middle East between 2022 and 2050, with an average annual GDP loss of 0.1%.
Future economic impacts of water risk across climates: UAE, Australia, Canada, China, Philippines, UK and America.
While the economic impact of water risk will accelerate throughout the century, it is a particularly pressing issue this decade – it could cost these major economies some $1.3 trillion between now and 2030, increasing by 2050 to $5.6 trillion.
Insurance data with econometric models
The study is the first to calculate the impact of water risk on GDP at the economy-wide and sectoral levels. The study combines insurance data with econometric models to demonstrate the broader economic impact of future increases in water risk.
The study also highlights that increasingly frequent and severe water-related events pose a threat not only to the global economy, but also to communities and natural ecosystems that depend on a balanced water cycle.
The study found that the UAE will face a significant level of water risk – albeit low compared to other countries in the study. The main sector-level threat facing the UAE is expected to fall to the UAE’s growing agricultural sector, with potential output down 0.5% year-on-year due to widespread water risks.
The UAE is known to have a unique water risk profile in both desert and developed urban landscapes, which could be threatened by rising temperatures and the frequency and greed of dust storms.
uneven distribution
Aquanomics also revealed that water risks are not evenly distributed across countries, and outlined the unique opportunities the UAE has in preparing its communities, infrastructure and investment portfolio to mitigate such risks. In terms of total water-related GDP losses from 2022 to 2050, the U.S. is estimated to be the hardest hit, with a projected loss of $3.7 trillion, while the UAE, a particularly arid country, is expected to be far less affected and is expected to be hit hardest. Loss of $27 billion.
The study also presents potential future impacts on five key economic sectors: agriculture; banking and insurance; energy and utilities; fast-moving consumer goods (FMCG) and retail; and manufacturing and distribution.
The Aquanomics model predicts that the agricultural sector will be most affected by increased water risks – by 2050, the agricultural sector will face an average annual output loss of 0.5% and a total output loss of $3 billion. Despite the link between the water and energy systems, the energy and utilities sector is estimated to be the least affected, with an estimated total output loss of $2 billion.
desalination
Regarding the research, Andrew Saunders, Head of Water Markets, UAE, GHD, said: “As one of the world’s leading water-stressed countries, the UAE has been heavily adopting desalination methods to provide adequate supplies and reduce risks, with 42% of its drinking water coming from Desalination supply.”
However, the economic price of these methods is high and the environmental impact is clear, so as the technology develops, the UAE will need to employ fewer and more efficient methods of desalination, he said.
Taking a long-term view and increasing the use of innovative technologies, such as water recycling and the use of renewable energy for desalination, will be key to building resilience and enabling targeted demand management in the country. The strategic use of valuable groundwater resources will also be critical, especially for the agricultural sector.
global benchmark
The study highlights the opportunity for the UAE to innovate and set global benchmarks around modern water management that will be able to appropriately address the significant impacts that climate change is having and create sustainable, vibrant and resilient communities in the UAE, he said. add. – arab trade news agency
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