February 25, 2025
‘Scene’ on ACTUAL: Tackling Water Scarcity for Economic Growth
Recent research by the World Resources Institute found that half of the world’s population experiences “high water stress” for at least one month each year. A key contributor to the growing water crisis is the increased demand for agricultural irrigation, further intensified by more frequent droughts and floods driven by climate change.
In Mexico, where 76% of the water supply is used for agriculture, a severe drought last year raised fears of taps running dry in Mexico City. While last-minute rainfall prevented a “Day Zero” scenario, the crisis highlighted the country’s vulnerable water supply and its impact on residents.
Addressing water stress in agriculture is not only an environmental necessity, it’s an economic imperative. A potential 25% tariff on goods from Canada and Mexico — currently on a 30-day pause — could destabilize trade relationships and affect total output. With nearly a quarter of agriculture consumed in the U.S. imported from Mexico, any disruptions in supply chains will be magnified, making cost efficiency and resource management more critical than ever.
Without investment in water infrastructure and irrigation systems, water stress will continue to intensify in Mexico and across the globe. This edition of ‘Scene’ on ACTUAL highlights how decisionmakers can build concrete and resilient plans to de-risk future water stress, while creating clear pathways for funding and maximizing returns.
FEATURES AND MODULES ON ACTUAL
Data_Layers #Features. Visualizing water stress levels (where demand far exceeds available supply) at the state level allows project developers to collaborate with government planners to identify high-priority areas. Other considerations including economic factors, such as total agricultural output, and infrastructure data, such as water leaks, can provide additional insights, enabling decisionmakers to quickly pinpoint areas of concern based on their strategic rankings.
In addition, integrating these objectives with scientific data, such as seasonal precipitation patterns, helps refine areas of focus and drive our capital planning model. This ensures project developers have the confidence to assess urgency and risks of no action, not through assumptions, but with reliable, science-based data.
How does this apply to you? ACTUAL integrates multiple data layers into a single platform, giving project developers a holistic view — essential for navigating priorities across public and private sectors. Our platform bridges these gaps by aligning objectives and scientific data to drive an actionable plan. For example, government stakeholders may prioritize regions with high winter crop demand for exports impacted by insufficient seasonal rainfall. Project developers can overlay these economic priorities with scientific data, such as precipitation patterns and high-yield areas, to strategically invest in irrigation systems of high-risk regions and mitigate potential financial losses.
Investment_Planning #Features. At the site level, physical factors such as farm size, land topography, and location-specific conditions determine the feasibility of irrigation solutions like drip or microsprinklers. Additionally, precipitation data from the science data layer highlights the additional water required for purchase, which varies by region.
Our capital planning model evaluates both capital and operational costs to project the IRR of multiple upgraded irrigation solutions while quantifying water savings, ensuring optimal efficiency and sustainability. Additionally, government subsidies and tax incentives can be added as inputs in the financial model to evaluate the total budget for each project case-by-case.
How does this apply to you? In our scenario, farmers contribute a portion of their monthly savings from upgraded investments to repay project investors. For example, project developers that subsidize the cost of irrigation methods for their farms can achieve a full payback as early as 4 years to cover CAPEX costs with high returns. Our platform enables project developers to assess the cost implications of risks, establishing clear funding pathways for investors by ensuring real returns and delivering measurable impact across infrastructure projects.
Water #Module. Water availability influences both a country’s economy and the direct allocation of water among businesses, agriculture, and residents, as supply is divided across sectors in urban systems. Various industries, including food & beverage, manufacturing, and pharmaceuticals, are highly water-intensive and water-dependent. Moreover, water stress can impact even supply chain logistics, as seen in the Panama Canal. How does this affect you?
Policymakers need to partner with private stakeholders and prioritize investment in water infrastructure to tackle the crisis proactively, reducing economic and climate-related vulnerabilities.
Farmers need to adopt alternative practices, such as replacing water-intensive crops with native, drought-resistant varieties, to maximize yields and reduce irrigation costs.
Food & Beverage companies need to prioritize water efficiency across their entire supply chain, from agriculture to retail, to mitigate the impacts of rising demand and water supply constraints due to regulations and drought-related events.
Apparel companies need to invest directly in farms to secure raw materials, ensuring long-term competitiveness and resilience. Improved water irrigation and infrastructure will reduce water consumption in traditional practices and lower risks during high water stress seasons.
In the face of economic challenges and unpredictable climate events, resilience planning is the government's strongest defense for long-term success. While large-scale infrastructure investments may seem daunting, funding long-term projects requires reliable and verifiable solutions. Addressing drought-related water stress reactively will be far more costly than proactive infrastructure investments. Day Zero is a risk not worth taking.
Until next time,
Actual
* Review of water scarcity assessments: Highlights of Mexico's water situation, WIREs Water, 2024
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