Polski
Business and economics, Issue 17/2025
Continental drying up is a growing threat to the global economy
Dec
Every year the world loses 324 billioncubic meters of fresh water – enough to meet the annual needs of 280 million people. Analysis of satellite data from the past two decades shows that the drying up of the continents is worsening every year, and that disruption of the hydrological cycle results in job losses, reduced incomes and ecosystem degradation.
Trends and causes of loss of water resources
The World Bank’s Continental Drying: A Threat to Our Common Future report, published in November, defines continental drying as a long-term decline in freshwater resources over large areas of land. This is the first attempt to estimate the economic and planetary impacts of the water crisis, and the authors have already announced future editions as part of the Global Water Monitoring Report.
Satellite data collected by World Bank experts indicate that dry regions of the world are drying up, while wet regions are increasingly flooded. However, the drying up is faster and more widespread, resulting in worsening water deficits on the continents. Regional analysis shows that the median loss of freshwater in river basins corresponds to about 3 percent of the annual renewable water resource. In dry and arid river basins, the rate reaches up to 10 percent, exacerbating the water deficit in the most vulnerable areas.
So-called. mega-dry regions of the world include Alaska, western and northern Canada, western and southern North America, Central America, the northern part of Russia, and vast areas in Central Asia, Europe, the Middle East, North Africa and Southeast Asia.
In non-glaciated regions, the most important cause of water loss is groundwater depletion (68 percent), followed by surface water loss (18 percent), soil moisture reduction (9 percent) and snow cover reduction (5 percent).
How drying up the continents affects the economy
Water is crucial to the labor market. On the one hand, it regulates the supply of labor, taking care of the health and condition of human capital – thirst breeds disease and inefficiency, and droughts lead to malnutrition and weakened workers. On the other hand, water scarcity reduces the number of jobs due to productivity losses in agriculture, energy, industry, tourism and transportation.
The World Bank estimates that 78 percent of all full-time jobs on Earth are dependent on water to some degree. As a stark example, the report points to sub-Saharan Africa, where between 600,000 and 900,000 people are unemployed annually due to drought. The groups most affected are women, the elderly and low-skilled workers.
A local water shock, defined as a drop in soil moisture levels below multi-year norms, also has global economic effects. The report’s authors point to so-called virtual water trade, the movement of water between countries in the form of commodities such as food, clothing or industrial products. Thanks to the removal of tariff and non-tariff barriers to international trade, global virtual water trade increased by 26 percent between 2000 and 2019. As a result, a quarter of global water consumption today involves exports.
The cascade of consequences of local water shortages can be startling. Experts at the World Bank, for example, have calculated that a 100 mm reduction in India’s annual rainfall reduces global GDP by $68 billion. Indeed, the impact is felt not only by agriculture, but also by industries and services that depend on agricultural products, such as the production of packaged food and catering.
Environmental effects of water scarcity
The World Bank report also analyzes the impact that continental drying out has on ecosystems and biodiversity. It pays particular attention to fires, which are more frequent and larger in a drier world. Experts have calculated that a 1 standard deviation (SD) increase in the rate of freshwater depletion increases the likelihood of fires by 27 percent. Unfortunately, in areas with high biodiversity, the risk increases by as much as 50 percent.
Areas with high susceptibility to drying out
Global water consumption increased by 25 percent between 2000 and 2019. – One-third of this result is related to dry regions, including Central America, northern China and Eastern Europe. The pressure on water resources is exacerbated by the inefficient use of water in agriculture, which is seen especially in Algeria, Cambodia, Mexico, Pakistan, Thailand, Tunisia and Romania.
An additional problem, World Bank experts point out, is the change in crop patterns. Over the past two decades, as many as 37 countries experiencing desiccation have shifted to more water-intensive agriculture. To make matters worse, two-thirds of inefficient irrigation in drying areas is related to the cultivation of water-intensive crops such as rice, wheat, cotton, corn and sugarcane.
Water conservation – a huge potential to be tapped
Losses of freshwater resources from glaciers and snowpack are primarily due to a warming climate. However, other factors in the drying up of continents are under human control, and more efficient water management and better land use can generally reduce them. Healthy forests and wetlands help retain water, while urbanization and intensive irrigation in agriculture generate huge losses.
According to the report’s authors, Integrated Water Resources Management (IWRM) can fundamentally reduce the drying up of continents. In countries where the model is underdeveloped, water losses are up to 2-3 times higher than in countries with mature IWRM. Meanwhile, if all producers with low irrigation efficiency improved it to at least the global median level, annual water use for this purpose could be reduced by 137 billioncubic meters – equal to the water needs of 118 million people at this time. The greatest potential for generating savings is observed in South Asia.
The report’s authors point out that efficiency improvements alone do not guarantee water savings. Without adequate regulation, efficiency gains may encourage agricultural expansion or the introduction of more water-intensive crops, which will ultimately increase water use and exacerbate water scarcity – a phenomenon known as Jevons’ paradox. Achieving real savings requires a combination of technological advances with price incentives and limits on consumption by sector.
World Bank experts also call for improving spatial resource efficiency. In deficit areas, it makes sense to reallocate water use from less efficient producers to more efficient ones. More broadly, meanwhile, it makes sense to use virtual water trading to shift water use from scarce areas to water-abundant regions. The report estimates that virtual water trading has already yielded annual global savings of 475 billioncubic meters, equivalent to 9.4 percent of total consumption for 35 key crops between 2000 and 2019.
In the article, I used:
Zhang, Fan, Christian Borja-Vega, Hrishikesh Arvind Chandanpurkar, James Famiglietti, Rick Hogeboom, Regassa Namara, Zarif Rasul, Pavel Luengas-Sierra, and Deyu Rao. 2025. Continental Drying: A Threat to Our Common Future. Global Water Monitoring. Washington, DC: World Bank. doi:10.1596/978-1-4648-2269-8
