Aquanomics: New Research from GHD Reveals $3.7 Trillion Impact of Water Risk to the U.S. by 2050
First-of-its-kind research shows droughts, floods and storms could cause GDP loss of $5.6 trillion across seven countries by 2050
New research, launched today by global professional services company GHD, titled Aquanomics: The economics of water risk and future resilience reveals droughts, floods and storms could result in a total loss of $3.7 trillion to U.S. gross domestic product (GDP) between 2022 and 2050. This is the largest dollar impact faced by any of the countries included in the study, making up the majority of the $5.6 trillion total GDP losses projected across all seven focus countries. This equates to an average annual GDP loss of 0.5%.
This study represents the first time the economic impact of water risk has been calculated at a GDP and sector level. The research combines insurance data with econometric modelling to demonstrate the wider economic impact of increased future water risk. It focuses on seven key countries across GHD’s footprint – Australia, Canada, China, the Philippines, the UAE, the UK and the U.S. – and three U.S. regions – Northeastern U.S., Southeastern U.S. and Southwestern U.S.
Estimated GDP loss by country between 2022 and 2050
|Country||Total GDP loss||Average annual GDP loss|
When it comes to direct losses, storms are predicted to account for over half of the overall damage ($1.4tn) followed by floods ($645 billion) and droughts ($432 billion).
Estimated total direct losses by event type
|Total direct losses between 2022 to 2050||Attributed to flood||Attributed to storm||Attributed to drought|
The study projects, in less than 30 years (2022 to 2050), the Southwestern region of the U.S. could face a total loss of over $1.4 trillion to GDP. In the Northeastern region, water risk is predicted to account for total GDP losses of over $700 billion between these years, and this figure is over $400 billion for the Southeastern region.
Estimated GDP loss by US region between 2022 and 2050
|Region||Total GDP loss||Average annual GDP loss|
The study also presents the potential impact on five critical economic sectors: agriculture; fast-moving consumer goods (FMCG) and retail; manufacturing and distribution; energy and utilities; and banking and insurance. It reveals the U.S.’s manufacturing and distribution sector could suffer total losses of $2.2 trillion by 2050 – equating to average annual output losses of 0.7%. The agriculture sector, on the other hand – the most water-intensive industry – faces projected losses of $143 billion by 2050, but this equates to average output losses of 1.2% each year.
Estimated total loss by sector across the US between 2022 and 2050
|Region||Total output losses||Average annual output losses|
|FMCG & Retail||$696B||0.8%|
|Manufacturing & Distribution||$2.154T||0.7%|
|Energy & Utilities||$165T||0.5%|
|Banking & Insurance||$288T||0.3%|
Don Holland, water market leader at GHD, says: “The Infrastructure Investment and Jobs Act (IIJA) provides a much-needed injection of funding for the water sector, which has long been starved of the capital needed to maintain vital infrastructure.
Building future water resilience across the U.S. will require solutions as diverse as the types of water risk the country faces. Managing water scarcity caused by drought in California will require an entirely different approach to mitigating the worst impact of storm surges in the Gulf of Mexico. In the Northeast, flooding is the biggest problem, although replacing lead pipes in the drinking water system is also a key priority. In the Southeast, flooding and coastal protection top the agenda. For these regions, a focus on flood mitigation should be at the center of any water resilience strategy.
What unites all these regions is the need to adopt innovative new solutions and technology – which the U.S. has in abundance – and to pursue an approach of radical collaboration across all jurisdictions and stakeholders. In others word a One-Water approach.”
US Water Alliance CEO, Mami Hara says, “This study comes at a critical time in the world’s understanding of the relationship between water and climate. GHD’s thought provoking Aquanomics report not only details the potential economic risks to inaction, but it also offers solutions that the water sector and private industry can enact to build resilience and mitigate the effects of flooding, storms, and drought. The US Water Alliance commends GHD for bringing these issues to the forefront and we support expedited and equitable solutions to protect our most precious resource.”
A global professional services company that leads through engineering and architectural skills and experience, GHD is committed to solving the world’s biggest challenges in the areas of water, energy, and urbanization. Our forward-looking, innovative approaches deliver extraordinary social and economic outcomes for communities around the world.
Effective water use is part of all business, industry, and community life. GHD has a powerful global network of water competencies and experience that we can apply to local scenarios. We offer a broad range of services covering feasibility studies, planning, design, project management, construction and asset management services as well as operational optimization.
To find out more about GHD, please visit www.ghd.com.
GHD in the Americas
GHD has long-standing client relationships, a significant project and geographic footprint in the Americas and employs 40 percent of GHD’s global workforce with nearly 4,000 professionals in over 100 offices in the U.S. Canada and Chile. GHD ranks #9 in international design firms operating in the U.S. and #8 in Canada according to Engineering News-Record’s 2020 annual survey of key market segments. These rankings reflect the size and significance of our growing Americas business. Find a local office here.
Aquanomics: The economics of water risk and future resilience utilized a three-phased methodology to estimate the direct losses, sector losses and GDP losses that will be attributed to water risk (droughts, floods and storms) between 2022 and 2050. The study focuses on seven key countries across GHD’s footprint – Australia, Canada, China, the Philippines, the UAE, the U.K. and the U.S. – and three U.S. regions – Northeastern U.S., Southeastern U.S. and Southwestern U.S. For further details, please refer to the full report LINK and methodology.
The modelling was constructed by Cambridge Econometrics – an independent organization of economists that specialize in data and provide credible and robust evidence across a broad spectrum of complex 21st century challenges facing our economies, societies and the natural environment.