Water: The Currency of the Future?


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by Trisha Parikh

When people think of a limited and valuable natural resource, one thing immediately comes to mind: oil.  As a non-renewable resource, the possibility of consuming the entire existing supply of crude oil is possible.  The media echo this perception of oil, with conversation constantly focusing on the amount of oil reserves left and whether these reserves will eventually run out. These questions have plagued our minds since the 1970s and the emergence of “Peak Oil.” Every country, city, and individual in the world today depends on oil—and the pervasive oil trade amongst countries has established oil as an unofficial currency across the globe. Oil’s reputation as liquid gold has been at the root of many violent and political conflicts.

However, another more essential resource has come to the forefront as a global shortage, threatening the wellbeing of populations with the potential to cause political destabilization and violent conflict: fresh water. Fresh water is a renewable resource; it will eventually be replenished by natural forces—but at a very slow rate.  Satellite data recently published by NASA in a report on the water supplies in the Middle East, Africa, and Asia have led scientists to conclude that the Tigris-Euphrates-Western Iran region is facing the second fastest rate of groundwater losses on Earth, followed by India. Why is this concerning? Matt Rodell, the co-author of the study, sums up the fundamental issue: “Groundwater is like your savings account, it’s okay to drain it down when you need it, but if it’s not replenished, eventually, it will be gone.”

Water Supply

Freshwater makes up 3% of the world’s water supply—1% is stored as groundwater and other surface sources and the remaining 2% as ice. Today, water scarcity affects 1.2 billion people with an additional 500 million expected to reach a level of water scarcity in the coming years. It is estimated that by 2025, 1.8 billion people will experience absolute water scarcity and two thirds of the world population will live in water stressed conditions. This scarcity will not be limited to the more arid regions of the world, particularly in the Middle East and African desert regions, but will affect other densely populated regions in Asia and the Americas as well. The U.S. Director of National Intelligence estimates that by 2030, 40% of the world’s fresh water will be consumed.

When natural resources are in short supply and cannot keep up with the ever-growing demand, prices rise. Thus, an actual water shortage will be followed by an economic water shortage due to unaffordable water prices, particularly in areas with relatively low infrastructure to support fresh water. Alternative options such as desalination and importing water supplies are very expensive and although they may increase the supply of water in certain regions, they will not make water more affordable.  Desalinated water is 15% more expensive than regular water and it requires an extensive use of fossil fuels.

The diminishing supply of water and rising prices, coupled with the rapid population growth that we expect in the next 30 years, paints a complicated picture of the consequences. The World Bank estimates that the world population is expected to grow from its current level of 7 billion to 9.2 billion by 2050, with the majority of the increase occurring in less developed regions of the world. As the population grows by billions and the water supply diminishes to less than half of its current level, political conflicts over rights to fresh water sources will arise.

Water Conflicts

Historically, wars fought directly over water rights have been rare, but have arisen in regions with pre-existing political conflict. Yet, access to commodities such as oil has been directly at stake in many of the major wars of the recent past. One possible explanation is that the resource curse has a role in these conflicts: many of the oil rich countries are also those with the poorest economic growth, which in turn fuels poverty and strife. In the Middle East, access to crude oil played a part in the Gulf Wars particularly when Iraq invaded Kuwait due to its overproduction of oil and when the U.S. tried to secure its oil pipelines running through the region.

As we begin to face more pressing shortages of water, conflicts over access to freshwater will not be limited to states and will resemble the conflicts over oil: regional and global. India and Pakistan pose a prime example of the role water shortages can play in conflicts. Pakistan was concerned about its access to water via the major rivers during periods of unrest with India since the water basins for the rivers are located in India. In order to settle the conflict, the World Bank brokered the 1960 Indus Waters Treaty, which set up guidelines for water management in the region. Further complicating the settlement is the heightened tension at the Kashmiri border and terrorist activity; if the conflict escalates, it would be easy to use access to water as a weapon to inflict damage on the opposing side. But, the treaty has thus far prevented both sides from doing so.

Future of the Water Supply

The necessity for a third-party to mediate these conflicts will increase as water shortages expand from region to region. Currently, the areas with the most severe water shortages (Africa and the Middle East) are also those with the most political instability, terrorist activity, and economic strife. Many of the countries in this region are unable to come to any political or ceasefire agreements and the spillover effects of this instability affect their water supply and population. International organizations will also have to step up their involvement to regulate the commodity market for water rights. Private corporations and individuals are increasingly investing in water and privatizing the supply of water. While there are benefits to this practice, as many of these corporations are transporting the water to drought-plagued regions of the world, unregulated investment in water could lead to exorbitantly high water prices.

Oil shortages and prices have always overshadowed concerns about water. But, whenever and wherever the next war will be, it will likely involve water rights. It is the human population’s fuel for survival and it could become the currency of the future as countries fight to sustain their water supplies and as technology tries to compete with water shortages.  It will not be a surprise to see water surpass crude oil as the most traded commodity on the international market. The oil-to-U.S. dollar unofficial currency will could be replaced by a water-to-U.S. dollar exchange rate.

Rapid population growth, accelerating climate change, and increase in terrorist activity will only make conditions worse. We will see drastic water shortages within our lifetime and the next fifteen years. Water is the new liquid gold, the most prized natural resource. The sustainability of our water supply will not only depend on international cooperation, but it will also rely on individual conservation. Many people dismiss the idea of water conservation, assuming that it will not affect them in their lifetime, but the fact that the world will face deep water scarcity issues within our lifetime is certain. If every individual takes one small step to conserve freshwater, the collective effect will be enormous and while it may not completely mitigate the water crises, it is the only way to ensure sustainability in the present until technology progresses and becomes more affordable.

 Facts and figures from Al Jazeera, BBC, NASA, Reuters, and the United Nations.


Trisha Parikh is a fourth year Economics and Political Science double major. She is a co-editor at the Generation.




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  • I read with great interest your piece about impending water shortages and the resulting conflicts which seem increasingly imminent.

    Part vanity, part genuine concern I wanted to share my near future fiction, “The Plunge of Icarus.” A surreal tale about a future conflict related to water.

    Just thought I’d put it out there.

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