Rescuers from Mexico along the Guadalupe River outside of Camp Mystic while aiding in recovery efforts in Hunt, Texas, US, on Thursday, July 10, 2025. Crews in central Texas are digging through massive piles of debris, overturned vehicles and shattered homes as the search continues for victims of flash floods that killed more than 100 people over the Fourth of July weekend. Photographer: Eli Hartman/Bloomberg
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Water has quietly become one of the most important variables in the global economy. As climate pressures intensify and artificial intelligence accelerates energy and water demand, the world’s most basic resource is proving to be its most undervalued. From data centers and factories to farms and cities, the ability to secure, manage, and price water now shapes everything from credit ratings to national stability.
Measuring The Invisible
For decades, companies treated water as an environmental disclosure issue, noted in sustainability reports but rarely quantified beyond direct withdrawals, often representing less than 10% of their total footprint. That is changing quickly as new tools make water dependence visible across supply chains.
One of the most advanced is the Water Footprint Assessment tool, built on decades of research at the University of Twente. It calculates both direct and indirect water use with basin-level granularity, producing blue and grey water footprints that show where consumption and pollution actually occur. It follows the methodology used in emerging frameworks such as the EU’s Corporate Sustainability Reporting Directive and the Science Based Targets for Nature.
For many companies, this level of detail is new. If direct withdrawals are a small part of reported water use, the tool exposes the rest: the agricultural inputs, chemical precursors and manufactured components embedded in global supply chains. Because it uses externally verified, geographically specific datasets, results can be reproduced and audited, an essential need as water moves into mainstream financial reporting.
By illuminating where and how water is used, the platform gives firms a clearer view of procurement exposure, local scarcity, pollution risks and reputational pressure. For companies that have never quantified more than their utility bill, these insights can be transformative, shifting water from a compliance topic to a strategic variable in procurement, investment, and long-term risk management.
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Valuing What We Measure
Measurement solves one half of the problem. Valuation solves the other. Grundfos, the Danish water-technology company, worked with The Economist Impact to build the Water Access Tool, which approaches the question from a different direction. Instead of measuring corporate footprints, it quantifies how improvements in local water access translate into health, education and productivity gains and then expresses those outcomes in economic terms.
This tool models links between water reliability and reductions in disease burden, improved school attendance, higher workforce participation and local income growth. It maps these relationships across 189 countries, giving governments and companies a way to express the economic value of safe water in practical, comparative terms.
“The idea was to show that water is an asset that underpins growth and development,” said Anise Sacranie, head of water access and sustainability at Grundfos told me. Hamed Heyhat, chief executive officer of the water utilities division at Grundfos, explained they wanted to make water valuation as practical and evidence-based as carbon accounting. “When countries and companies start to understand the value of water, they begin to manage it differently,” he told me. “It moves from being an environmental line item to being part of the core infrastructure conversation.”
The results of their work reveal how large the stakes are. In regions with the biggest access gaps, the economic value of closing them can reach several percentage points of national GDP. In higher-income economies, the model helps utilities and policymakers target investment in reuse, efficiency and resilience, ensuring that scarce water resources support long-term economic stability.
Together, these tools reflect a broader shift toward treating water as core economic infrastructure. When scarcity, flooding or pollution disrupt supply chains, the impacts flow through prices, productivity and public finances. Measuring and valuing water makes those risks visible and investable. By treating water as an asset, planned, managed and financed alongside energy, transport, and housing, economies can become more resilient.
When Markets Catch Up
Financial markets are beginning to reflect this shift. Moody’s Ratings now describes water as “a key transmission channel for physical climate risk,” pointing to its influence on manufacturing, agriculture, energy systems and inflation.
“Countries and companies that plan and finance water as core infrastructure tend to absorb shocks more effectively,” Ram Sri, a senior analyst at Moody’s Ratings told me. “Where governance is weaker, similar hazards spill into price pressures and fiscal strain.”
Moody’s recent report Strong Water Management Increases Economic Resilience to Physical Climate Risk highlights how differences in governance translate directly into credit outcomes. Regions that invest in desalination, reuse and interconnection can moderate drought and flood impacts. Others face longer-lived budget pressure and social instability.
Transparency on water use, storage and allocation is improving as more data becomes public, and markets are beginning to reflect that information. “Finance is increasingly translating water risk into cost and terms, through negotiated allocation, quality standards with cost recovery, and bonds tied to measurable outcomes,” Sri explained.
Water-linked adaptation bonds, once the domain of utilities, are now appearing across governments and companies investing in flood defences, drought-response infrastructure, and wastewater upgrades. “This shift to greater outcome specificity and verification,” Sri said, “shows that the debt market is treating water adaptation as a strategic resilience investment.”
The Moody’s report highlights issuers such as Aguas Andinas in Chile, China Water Affairs and Mexico’s SDG sovereign bond, all of which tie financing to measurable efficiency, leakage or treatment improvements. Investors are treating these metrics as evidence of resilience.
Moody’s also warns that with about 60% of the world’s freshwater crossing borders, weak cooperation frameworks can turn scarcity into geopolitical risk. “Competition over shared rivers such as the Nile and Mekong is becoming an increasingly visible credit factor,” added Sri said. Climate-driven scarcity raises the likelihood of political friction, trade disruption and fiscal costs.
From Accounting To Action
For corporate leaders, this convergence of measurement, valuation, and finance changes the logic of water management. Tools like Water Footprint Implementation reveal where exposure actually sits, while valuation models like the Water Access Tool show what improved access enables. Meanwhile credit markets are beginning to price these differences.
This changes how companies make decisions. Water risk moves from the sustainability report into procurement strategies, capital allocation and insurance terms. Once firms can quantify their full water dependence, they can prioritize reductions, reuse and verified restoration projects. Many are beginning to assess location-specific scarcity and quality baselines when siting facilities, sourcing materials or evaluating suppliers.
Governments face similar decisions. Moody’s research highlights how gaps in water governance can transform local environmental shocks into systemic economic events. Conversely, where planning and coordination are strong, droughts and floods tend to have shorter-lived effects on growth and budgets. Water, in other words, is no longer a side issue in climate policy, it is the medium through which physical risk becomes financial.
The deeper issue is that water’s economic value has long been obscured by design. As a public service, usually regulated, subsidized or politically capped, its price rarely reflects scarcity, quality or long-term risk. That buffer has protected households and businesses from volatility, but it has also discouraged investment in efficiency and resilience. Many utilities charge less than the cost of sustainable supply, and water rights systems in many regions were set decades before climate stress made them unpredictable assets.
Markets are now beginning to bridge the gap between physical reality and financial signal. As Singh noted, transparency on water use and allocation is improving, and financing structures increasingly reward resilience. Adaptation bonds, negotiated allocation agreements and cost-recovery standards tie water outcomes to credit terms. “Market participants are beginning to treat water resilience as an asset rather than a cost,” he said.
The New Currency Of Resilience
A decade ago, few would have imagined that carbon accounting would influence credit ratings or asset valuations. Water is following a similar trajectory, but faster. As climate pressures intensify, economies digitalize and capital markets search for stability, the ability to measure and value water accurately may become one of the defining advantages of the next decade.
The true value of water is not what it costs to pump or purify but rather in what it prevents in losses and what it enables in growth. The world is only beginning to account for that difference.