In many countries, freshwater sources are being depleted faster than their rate of replenishment. Industry and agricultural outflows often go untreated, leading to the discharge of pollutants into rivers and further damage to ecosystems and livelihoods that depend on these resources. This environmental damage is extremely expensive to clean up. In China, where agricultural and industrial production has led to large-scale water pollution, the government spends billions of dollars each year on water clean-up projects.
In places where foreign investment and jobs are a priority, governments may lack incentives to properly regulate or price water, or even to impose penalties for water pollution. Production and trade of key commodities – agricultural products, textiles and minerals – are the main drivers of unsustainable water use. While increased exports boost economic growth and poverty alleviation, for example through job creation, their production can hinder progress on some Sustainable Development Goals (SDGs), such as access to water. Over time, unsustainable use of water will also impinge on the export sectors themselves. As climate change influences hydrological cycles, increasing water scarcity and management challenges in some regions will constrain production capacity or reduce profitability.
Agricultural products
Agricultural goods are a crucial part of agri-food systems and the global economy, with trade of such goods worth $1.75 trillion in 2021. Agriculture is highly water-intensive and has the largest water footprint, in terms of detrimental impact on water sources (see Box 1), among the sectors considered here. Meat production, especially beef, accounts for the biggest proportion of this footprint, and growing global meat consumption is expected to increase future demand for water. Six crops – wheat, rice, cotton, sugar cane, fodder and maize – dominate water-intensive and unsustainable food production. According to recent assessments, international crop trade accounts for around 15 per cent of unsustainable global water consumption, and that figure is increasing each year.
The same analysis shows that the production of food exports contributes to more than 30 per cent of unsustainable irrigation practices in many countries including Mexico, Spain, Turkmenistan, South Africa, Morocco and Australia. In Peru, researchers have found that the international markets for ‘high-value and water-hungry crops’, such as asparagus and avocados, exacerbated water scarcity following the introduction of the Andean Trade Preference Act, which reduced tariff barriers. In Spain, excessive abstraction of groundwater for strawberry cultivation has caused severe environmental damage to biodiversity, breaking EU law (under directives on both water and natural habitats), and requiring the government to take restorative measures.
The new European Environmental Crimes Directive, expected to be incorporated into member state law in 2026, will make such illegal water depletion as well as pollution punishable at the company level with prison sentences and fines. There is not yet a mechanism to address such offenses at the international level. Trade in energy-related crops such as fuelwood and biodiesel has rapidly increased in the past decade, and represents up to 9 per cent of the world’s total trade in virtual water.
Textiles
World trade in textiles has grown rapidly over the past few decades, and the market is now worth $882 billion a year. Raw materials, such as cotton, used to create textiles are water-intensive to grow. WWF estimates that these pre-processed raw materials account for 65 per cent of the water consumed in the textiles value chain. Beyond water consumption, processing materials into fabrics causes significant pollution that affects local environments and populations. For example, in Bangladesh, people living along the rivers where textile industry wastes are present have high degrees of illness as a result of industrial wastes and effluents in their water and food. In some contexts, local stakeholders note that pollution is ‘blatant and well known, and the laws are strong but never enforced… It is as if the industry has a free pass to pollute because it creates jobs’. Different industry initiatives focused on improving water stewardship in textiles have emerged, such as the Open Apparel Registry, Sustainable Apparel Coalition, Zero Discharge of Hazardous Chemicals, and the CEO Water Mandate. The UK has Textiles 2030, to which over 30 major retailers have signed up, pledging to reduce their overall water footprint for new textiles by 30 per cent by 2030.
Mining
The mining and processing of mineral raw materials also has a high impact on water sources, particularly groundwater – water beneath the surface that can also feed into freshwater supplies. Mining companies have responded with self-governance initiatives like the International Council on Mining and Metals’ guidance on water stewardship and reporting, and the Extractive Industries Transparency Initiative (EITI) guidance on environmental impact disclosures. However, the metals and mining industry is expanding rapidly in response to demand for electronics and low-carbon energy technologies. Authors of a 2021 study found that the industry has increased pressure on vulnerable ecosystems: extraction sites are often located near protected areas, and 90 per cent of such sites are in areas with below-average relative water availability. Figure 1 shows that many global mining sites are located in areas exhibiting medium (orange) to extreme (dark red) water risk, where operations are likely to intensify stress levels. Even without accounting for the effect of improper water management on biodiversity, the impacts of mining on water can cost billions of dollars to resolve. The highly lucrative nature of the mineral products industry (with a total trade value of $2.89 trillion in 2021) offers the potential to address these issues going forward.
