Building a water smart economy in the Euro-Mediterranean Area : the role of business

This research analyzes the private sector’s role in sustainable water management and the development of more resilient production systems, linking water security, climate change, production systems, and competitiveness.

In the current climate—marked by climate change and regional droughts—water is a crucial economic factor for the development and sustainability of economic systems. Estimates for 2050 predict a 10% reduction in global GDP due to water scarcity, with impacts reaching up to 19% in lower-middle-income countries.¹

The Mediterranean region currently stands as one of the global hotspots of the water crisis, with water scarcity levels twelve times higher than the global average. Approximately 220 million people—42% of the region’s population—live in conditions of water scarcity, with the Mediterranean basin accounting for about 60% of the global population classified as “water-poor.”

The region’s exposure to water stress is set to increase over time, becoming increasingly structural due to the combined effects of climate change and demographic dynamics; indeed, the Mediterranean is warming about 20% faster than the global average.

Competition among different water uses is particularly intense in the Mediterranean, largely due to the weight of agriculture: the sector accounts for 87% of water withdrawals in Turkey, 80% in Greece, 79% in Egypt, and approximately 50% in Italy. At the EU level, agriculture accounts for 51% of net water consumption.

In the coming years, demands linked to the energy and digital transitions will further increase pressure and competition regarding water resources. Strategic sectors such as semiconductors, data centers, renewable hydrogen, and batteries have significant and growing water requirements. Their combined economic value could rise from approximately €192 billion to nearly €1,000 billion by 2030, with associated water demand potentially reaching levels up to 2.6 times higher than current figures.

Finally, competition for water resources is a key driver of the rise in water-related conflicts. Since 2000, water-related conflicts have increased seventeen fold, rising from 24 to 420 recorded cases in 2024.

The study indeed examines the role of businesses in risk assessment, governance, and investment, while also gathering insights from corporate experiences and practices. The findings highlight two key messages:

• water is becoming increasingly important to businesses, yet it is not yet fully integrated into economic decision-making: among the more than 8,500 companies reporting to CDP Water, only 5% assign a monetary value to water in their decision-making processes, compared to nearly one in four for carbon;
• water security is closely linked to competitiveness and the transformation of production systems. The growth of sectors strategic to the energy and digital transitions—including semiconductors, data centers, hydrogen, renewables, and batteries—will drive up water demand, making it essential to integrate water-related risks into investment planning and corporate strategies.

Water Resource Governance in the Euro-Mediterranean Area

As part of the research, data drawn from UN Global Compact “Communication on Progress” (CoP) reports for Egypt, France, Greece, Italy, Portugal and Turkey covered a total sample of 2,180 businesses, 52.9% of which were SMEs. The analysis reveals that the importance companies in the region attribute to water varies significantly from country to country. The highest share is recorded in Turkey (61%), followed by Greece (49%) and Egypt (48%). Italy stands at 41%, reflecting the importance a significant number of companies place on the issue, despite a generally low perception of water-related risk.

Across the Euro-Mediterranean area, the majority of companies report no negative water-related impacts in the countries surveyed. Greece ranks first (87%), followed by Italy (86%), Portugal (84%), Turkey (82%), France (75%), and Egypt (71%). Companies reporting negative impacts but failing to implement remedial measures account for 12% in Egypt, compared to a mere 4% in Greece, Portugal, and Turkey, and 2% in Italy.

Meanwhile, 17% of Egyptian companies report having identified negative impacts and implemented remedial measures, followed by France (13%), Portugal and Greece (12% each), Turkey (11%), and Italy (8%). In the Euro-Mediterranean region, water withdrawals and consumption in areas characterized by high or extremely high water stress vary significantly from country to country, resulting in differing levels of exposure to water risk. Portugal and Turkey show the highest figures, with approximately half or more of their withdrawals and consumption occurring in water-stressed areas—specifically 59% and 63% for Portugal, and 50% and 47% for Turkey—whereas the other countries analyzed show considerably lower values.

Across the Euro-Mediterranean region, more than half of companies have already adopted a water policy; indeed, 51% of companies in the area manage water resources through specific policies or as part of broader environmental policies. Greece ranks first in this regard, with 76% of companies having already adopted a water resource management policy, followed by Turkey (74%) and Portugal (62%). In Egypt, while a more modest 40% of companies currently have a water policy in place, 43% have committed to implementing water resource management measures within the next two years.

Télécharger le document