AVERY ISLAND, LA - AUGUST 21: Algae covers a pond in a wildlife refuge on Avery Island, home of the ... More Tabasco hot sauce factory, on August 21, 2019 in Avery Island, Louisiana. Avery Island, a dome of salt surrounded by marshes near the southern Louisiana coast, is where the iconic Tabasco sauce has been made for the past 150 years. Like much of southern Louisiana, coastal marshland around Avery Island is disappearing at a rapid pace and the island is losing about 30 feet of surrounding protective marshland per year. As land gradually retreats from the area, the island becomes more susceptible to flooding from severe storms. (Photo by Drew Angerer/Getty Images)Getty Images Climate change and water: paradox and opportunity Water is both a victim and a driver of climate change, intricately linked to our survival. Understanding this complex relationship is crucial to protecting livelihoods and infrastructure in a warming planet. Water's role in global warming Water vapor, the most abundant greenhouse gas (GHG) on earth, amplifies the greenhouse effect. GHGs like carbon trigger global warming, which warms the air and allows it to hold more water vapor. Increased evaporation from water bodies leads to higher concentrations of water vapor in the atmosphere, absorbing more heat and radiating it back to Earth’s surface, causing further warming. Water can double the warming effect of CO₂ emissions, despite being more short-lived compared to other GHGs. Adding more complexity, polluted water bodies also release methane and nitrous oxide, turning carbon sinks into emission sources. So while water itself does not have the same role in global warming as other GHG’s, it’s a key player and facilitator in the process. The paradox - scarcity and abundance Much of the planet will experience climate change in some way due to water scarcity or abundance. In some cases we will have too much water, while in other cases we will have far too little. The impacts of this seeming paradox are just beginning to play out, often with dire consequences. For instance, Jakarta, Indonesia’s capital and home to over 10 million people, is sinking. Parts of it could be entirely submerged by 2050. A mixture of climate change-related sea level rise, significant groundwater extraction and the natural consolidation of sediments in the ground all contribute to the city’s sinking. And the situation has deteriorated to the point that the government is moving the capital from Jakarta to Nusantara. A similar phenomenon will play out globally. According to the United Nations, rising sea levels could threaten the livelihoods of one in ten inhabitants on the planet, namely those residing in low lying coastal areas. Melting glaciers as well as thermal expansion of seawater, also due to global warming, are leading to disruption, damage and in some cases complete erasure of coast areas. Yet, scarcity, and in some cases the complete absence of water, is how many others will experience climate change. For example, roughly half of the world’s population currently faces severe water scarcity, which can destabilize communities and contribute to economic and social upheaval. There is a growing list of global conflicts that are in some way linked to water scarcity, with the Syrian conflict being one of the most recent. Beyond its destabilizing effects, scarcity can also damage local ecosystems and water management systems - e.g. droughts can concentrate pollutants in water, raising treatment costs and reducing water quality in the process. Innovations in water technology are critical to addressing both scarcity and abundance We have a wide range of innovations and methodologies, both human and nature-made, hard infrastructure and software, to help in addressing water challenges. There are needs across the board - the production of potable water, management of water supplies, safeguarding of water infrastructure, as well as distribution and utilization of it in important agricultural, energy and manufacturing processes, among others. Use cases for digital and data-driven tools abound. In the real estate sector, for instance, IoT can help in monitoring and managing water leaks and temperatures, minimizing waste and maintaining quality. AI can also help with energy management in wastewater treatment plants, while sensors can monitor groundwater levels and gauge infrastructure upkeep needs. To address flooding and sea-level rise Google’s Flood Hub uses machine learning to provide real-time as well as predictive flood forecasts across 1,800 sites in 80+ countries. Similarly, drones and satellite imaging can also anticipate floods, facilitating evacuations and infrastructure adjustments in the process. Hardware and infrastructure-based solutions are critical as well. For instance, cities are testing modular flood barriers that can outperform concrete walls, as well as portable water-filled barriers that serve as temporary walls during floods. There are self-elevating homes as well as sensor-equipped sea walls that adjust their height based on water levels. Similarly, there are also innovative urban planning techniques. Cities in China and the Netherlands are experimenting with “sponge cities”: urban designs with permeable pavements, green roofs, and rain gardens that absorb stormwater and reduce runoff. Nature itself has a large range of tools in its toolkit as well. For example, restoring wetlands, forests, and river basins can enhance water retention and filtration. To that end, some coastal areas are restoring their wetlands by using mangroves and dunes as nature-made barriers. Flood mapping with LiDAR and GIS can identify high-risk areas, guiding development away from vulnerable zones while rolling easements allow wetlands to migrate inland as seas rise. From stilt homes to pump stations, dry and wet floodproofing, governments and policymakers are exploring a range of ways to build more flood resilient structures. Last but not least, to address scarcity issues, numerous technologies and approaches including atmospheric water generation, membrane filtration and reverse osmosis, advanced oxidation processes and fog and dew harvesting with advanced materials, among others, have come to the fore. This mixture of deep-tech hardware, big data and software, urban design, social policy and regulatory solutions are just a sampling of where and how groups are innovating around water. Low investment in water to date And while the suite of solutions is significant, investment into the sector is minimal. For starters, public sector investment dominates. The vast majority of funding for water comes from the government and less than 2% comes from private investors. According to the Climate Policy Initiative’s 2023 report, less than 15% of public climate finance was directed to agriculture, forestry, other land use, water, and wastewater combined. Water has an even smaller representation in climate tech venture capital. In 2023, water tech accounted for less than 3% of the $48 billion raised for climate tech globally. While the population of funds and accelerators specializing in water is small relative to those focusing on other verticals within climate technology, there are notable examples: investors like PureTerra Ventures, Water Equity, Aqualateral, Cimbria Capital, Burnt Island Ventures and The Future of Water Fund, to name several. There are also corporate investors like Xylem Innovation Labs, and specialized accelerators like Imagine H2O. These entities can provide unique insight into how investors, entrepreneurs and policymakers alike can navigate the barriers in this critical sector. A range of policy, infrastructure and business models challenges, often playing out at the local level, have held back investment. For example, water infrastructure in many geographies needs updating. The bill for these repairs and replacements is enormous, needing trillions globally by 2030. This aging infrastructure could limit or obscure the use cases of some emerging water technologies. Beyond physical infrastructure risk, the legal environment surrounding water can vary highly across geographies. For example, regulations and operations of water utilities companies themselves, can differ between cities, states and regions. Without knowing how to navigate local policymaking and procurement processes, new technologies could struggle to find piloting opportunities and longterm footholds in the market. Moreover, utilities companies could have low risk tolerance given how essential clean and efficient water systems are. In other words, a lack of sanitary and dependable water systems can jeopardize lives which may deter utilities from partnering with water technology startups, no matter how innovative and cost-effective their solution may be. Lower risk tolerance can lead to slow or no solution adoption, which can create risk in investors’ eyes.These challenges can lead to long sales cycles and procurement barriers, regulatory risks and in some cases even the undervaluation of water as a resource. Charting a Resilient Water Future The global water crisis requires a holistic, ecosystem-wide strategy. While increased capital investment is crucial, it must be coupled with infrastructure modernization, forward-thinking policy frameworks, and specialized talent capable of navigating the complex regulatory landscape. Overcoming these systemic hurdles – aging infrastructure, regulatory fragmentation, and risk aversion – is paramount to unlocking greater investment and fostering technological innovation in the water sector. Building resilience goes beyond technology alone, requiring integrated safeguards against rising sea levels, alongside proactive adaptation measures for floods and droughts, and robust mitigation strategies encompassing carbon sequestration and emissions reduction within water systems. Success hinges on deep, localized expertise. Understanding regional industry nuances and navigating unpredictable sales cycles are as critical as technological advancement. By embracing this comprehensive approach, we can forge a resilient water future that safeguards communities, economies, and ecosystems alike.