WSJ What’s News - The Summer a Global Water Crisis Arrived

Episode Date: August 30, 2026

As summer draws to a close across the northern hemisphere, water scarcity has never been a more pressing or visible issue after record heat waves and drought experienced by Americans and Europeans. With hot and unpredictable weather now a reality, and major rivers running dangerously low, WSJ climate and energy editor Ed Ballard discusses the economics of a water crisis, and what can be done to keep taps running, fields productive and industry humming. Subscribe to the WSJ Climate & Energy newsletter. Further Reading El Niño Is the Next Risk Hanging Over the Global Economy Heat Waves Are Becoming a Chronic Drag on the Economy The World Is Running Out of Clean Water. This Technology Promises to Fix It. San Diego Now Has So Much Water That It’s Selling It Why the Middle East’s Desalination Plants Are Critical Extreme Weather Is Hammering Europe’s Summer Harvest, EU Says Europe Chastised Trump’s Climate Rollback. Now It’s Delaying Its Own Green Goals. How to Put Out Wildfires Fueled by World War II Ammo? Try Driverless Tanks. Water Crisis Deepens on the Colorado River Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hey, what's news listeners. It's Sunday, August 30th. I'm Luke Vargas for the Wall Street Journal, and this is What's News Sunday, the show where we tackle the big questions about the biggest stories in the news. And this week, summer is drawing to a close across the northern hemisphere, and for a number of Americans and Europeans, water scarcity has never been a more pressing or visible issue. Much of the West is experiencing drought. The same goes for most of Europe, where major rivers are running dangerously low, and even typically, rainy, England has seen its green and pleasant land muted to yellow. So what can be done to keep the taps running, fields, productive, and industry humming if things carry on like they have been?

Let's get right to it. Well, without further ado, let me introduce reporter Ed Ballard, who covers climate change and energy for the journal, and he's also the author of our climate and energy newsletter, which comes out every Thursday. We've left a link to subscribe to that in our show notes. Ed, has this summer, in fact, been different in terms of the conditions we've seen on either side of the Atlantic, or I suppose, in how readers are responding to our coverage about what's going on? I definitely think in Europe this summer has been different, both in the sheer number of heat records that have been broken, the successive heat waves we've seen. And also, I think people are starting to see this as climate change having an impact on their own lives and perhaps a way

they weren't a few years ago. People's lives are being disrupted in new and sort of startling ways. Like, everybody is getting an air condition if they didn't already have one. We're just figuring out all the different ways in which our homes, our infrastructure are just not equipped for the kind of conditions that we're seeing now. I mean, and just in general, it feels like the future has arrived, and we were expecting it to arrive at a more convenient moment. We'll talk more about that. We'll talk about Europe. But let's shift to the U.S. West, where the Colorado River water crisis is really coming into focus. We saw federal officials this month in the U.S. announce sharp water cuts for the next two years that will cover California, Nevada, Arizona, and in the process sparked,

a lawsuit by Nevada where officials described this issue as one of a matter of survival. The Bureau of Reclamation's plan forces big cuts on the lower basin states of Nevada, Arizona, and California. It's an attempt to prop up the nation's two largest reservoirs, which both hit record low levels earlier this month. The plan does not require restrictions for the upper basin states of Colorado, Utah, Wyoming, and New Mexico. Nevada suing the federal government over its Colorado River plan. In their decision to take such action, Nevada says it's doing so to protect its citizens. Ed, this is no longer a future risk for the West. The very process meant to sort of see these states share their resources, you know, deal with the disputes.

It seems to be breaking down here. And now even the emergency measures brought in to kind of rectify things are being fought over. Yeah, that's right. This problem was sort of there right from the start on the Colorado River. Even at the beginning, there was more water accounted for in the plan than the Colorado. than the Colorado regularly supplied. And that situation has become more and more acute, basically because snowfall over the Rockies has diminished.

And of course, water consumption has gone up, especially in these fast-growing cities of the southwest. And now we're coming to the all at once part, where the two huge reservoirs that three lower basin states depend on, Lake Mead and Lake Powell, they're not so far above the level where they won't be able to generate hydropower. and below that level where they won't be able to actually discharge water on demand at all.

And that's why it's these lower basin states, which are Arizona, California, and Nevada. They're the states that can have cuts imposed on them by a federal authority in a way that doesn't apply to the upper basin state. And now we're seeing all of these sort of long-term structural challenges are reaching an acute point where it's quite possible that we'll get to a point where those dams won't be able to discharge water on demand. and this whole intricate system that's been run for decades for apportioning this sort of priceless reserve of water from the Colorado Rockies just won't exist anymore. You won't be able to have water on demand. And then the scary prospect is there'll be some sort of chaotic process for deciding who gets water. And needing to steer it away from other interests, agriculture? Exactly. So I guess the whole idea behind these negotiations is that they'll be

possible to have a deliberative process for deciding whose priorities sit where and the hierarchy, which farmers and which states, which crops are the most important. Yeah, as you said, these difficult future moments we thought would just come around at a time we could choose are now arriving on our doorstep. And meanwhile, across the Atlantic Ed, several major rivers are also running dry, as our correspondent, Tom Fairless described to us. So the Rhine is actually a real competitive edge, usually for Germany. It's a really cheap way to transport things the length of the country. but because of the lack of rainfall and the early disappearance of the snowmass in the Swiss Alps, it's hitting record low levels this year.

And that means that the ability to transport these bulk goods is severely constricted, which reduces industrial output. That's one issue. And another is the energy grid. And in Hungary, this nuclear plant was forced to shut down because it's usually cooled by the Danube River and they didn't have enough water, it didn't have enough cooling water. keep it online. Ed, with just those two rivers there, we are taking off a lot of boxes, effects on industry, on trade, on energy. And if you look around Europe, even further, or beyond

Europe, we can take off even more boxes, making this whole situation, honestly, quite hard to process. Yeah, there's certainly a lot to keep track of. We haven't even talked about the Poe River in Italy, another of Europe's great rivers that's got perilously low water levels and threatening a major agricultural producing region. And this is a, you know, a risk we're going to be hearing a lot more about. You may have heard that El Nino is back, this global weather phenomenon that's associated with both droughts and floods around the world. India's monsoon, for example, is 13% below usual levels, and that's bad news for agricultural production. A recent report from Bloomberg said that droughts due to El Nino can cause up to two percentage points of food price inflation in some countries,

especially in Asia. So we're just going to see more and more in the coming months how the temperatures and the weather conditions that are becoming normal how they play out and ripple through the economy. It does seem like this is a year in which we are starting to see some responses, whether or not they're concrete enough from politicians or businesses for the moment, maybe is the open question, but action is starting to occur. Of course, and it's maybe taking the form of emergency responses. Like in France, they promised to buy more water bombing planes of the kind they didn't have enough of when forests around Bordeaux are on fire. Or in the UK, we've also had some wildfires. There's been a temporary ban on disposable barbecues, but perhaps not the kind of deep, far-reaching infrastructure change that would allow countries to get ahead of these risks.

Yeah, some political leaders sort of starting to come around on this. Particularly, I would note as it seems like businesses are talking about how weather conditions are starting to hit their bottom lines. The U.S. government has warned that drought, which we should note is currently being experienced across 95% of the Intermountain West, could lead to significant. negative, direct and indirect economic impacts for agriculture. There was a report earlier this month by Trioidos Bank over here in Europe, concluding that this year's extreme summer heat sapped the EU of around 1% of GDP. And Sam Jackson with the UK Climate Action Group Ecology said that 1,600 businesses in the UK that they pulled before this hot and dry summer were already basically awakening to the challenges that they were facing. 84% of the businesses that we surveyed told us that they could identify climate-related or nature-related impacts on their business in the past two years.

And when we drilled down on that, what we found was that 70% of those told us that these impacts had cost them more than 1% of their revenue in the past year, and 40% so that it cost more than 6% of their revenue in the past year. And is it going to be businesses that end up driving action here a few years ago, especially here in the UK? It felt like there was a very active climate movement and maybe public pressure might be what pushes things. Now, not so much. It's an interesting point. I mean, certainly the politics of climate change has changed quite a lot here in the UK and elsewhere in Europe, especially when the target we were shooting for, the stopping, warming at 1.5 degrees is basically here. It's on us.

As for whether it's going to be business, certainly what is she showing up more on earnings calls in Europe, nobody has a more direct incentive than the private sector. that doesn't necessarily mean they'll have the funds or the know-how to make interventions that really do improve their resilience. Ed, and in the U.S., could we not say that elements of the anti-AI push, the data center blowback that we're seeing, has elements of climate protests within it? Yeah, certainly. And it's an intriguing theme because obviously climate politics itself is totally in abeyance in the U.S. It's not a priority. In fact, the Trump administration is obviously just opposed to this agenda altogether. But perhaps we see in the data center, protest something that has a family resemblance with climate politics. Right now is primarily

motivated by people's here and now concerns because people are worried about their electricity bills going up. They're worried about not having enough water in their communities or their water being harmed in some way. And those are really sort of powerful motivators for people. We've got to put a pin in that though, Ed. We've been talking about the challenges posed by water scarcity after the break. We'll look at technology, whether it can help close the gap between water supply and demand. Stick around. Ed, let's turn now to looking at some of the most promising ways that we can adapt to water scarcity. And if we triage demand-side interventions, I think we have to start with what uses up the most water, and that's agriculture.

And to learn more about that, I spoke to Ram Lisa E, the director of global agronomy at Orbia, Netafim. This is a company that makes precision irrigation products. And he told me 70% of all water globally goes into agriculture and that the majority of farmers are still flooding their fields around the world compared to just 15% of whom are using either sprinklers or drip lines to get water exactly where it needs to be. And this is a number that low 1 15%. He forecast basically has to and will change. If you are not paying for this resource that call water and if you have abandoned of it, why change the way that you behave? But now the reality is changing. need to find way to actually make this change. When you switch from any other kind of irrigation, in precision irrigation, the numbers are not fraction of a percent. We are talking about sometimes

savings of between 60 percent to 40 percent of the amount of the water. Ed, Rahm also added the ROI, the return on investment for precision irrigation is pretty quick. So people will see benefits if they're willing to pony up the money to make those changes. That seems like something we should start to see getting rolled out pretty quickly, no? Yeah, it's hard to think of someone with a bigger incentive to save water than a farmer in a water stressed region. And it's going to get more and more important to do this as the climate changes because it's not like there's less water now. It's just sort of behaving in a less convenient way. You know, we're getting more intense downpours, which can run off the soil and go to waste

combined with these more protracted droughts, which obviously a massive headache for farmers. there's going to be more and more need to carefully make the use of the rainfall when it comes. At the same time, again, a lot of farmers will struggle just to come up with the capital to pay for expensive interventions like precision agriculture, especially in poorer parts of the world. So I guess a challenge will be financing it. There's a host of other technologies we could spend in a whole episode talking about what we have to just give brief mention to leak detection by some estimates. More than a third of drinking water is lost before it even reaches people.

taps, so sensors, proactive repairs over in industry, things like data centers, chip makers. We're hearing about them moving to closed loop water systems that aren't hogging water from municipal sources. And then there's capturing rainwater, making sure, as you mentioned just a moment ago, that when it does rain, that's not all going straight back down into the ocean. But this is, again, requires a big retrofit of the built environment around us. And some of these interventions may not be hugely expensive. I don't think there's necessarily a huge price tag attached to fixing some sensors to pipes to tell you when water's getting lost. But that doesn't mean it'll be an easy thing to roll out necessarily.

And Ed, I think this brings us to desalination as we shift sort of from demand side fixes to supply side ones, maybe a way to kind of bring new water into the supply, a technology that has traditionally been a fixture in the Persian Gulf, now getting interest worldwide. This could turn into a really fascinating growth area for Middle Eastern economies. You've already talked to Netafim and Israeli water technology company, and desalination is a huge deal in the Middle East. These areas just couldn't support the populations that they do without this technology. There are 5,000 operational plants in the Middle East.

And it's starting to be deployed further afield on the US West Coast. And there's some really cool desalination technologies. The journal had a story last year about doing it underwater in the ocean itself to make the process more efficient, and that sort of gets at the problem with desalination, which is pretty expensive. If saving water is like at the easier end of this hierarchy of interventions, de salinations at the higher end, it kind of raises interesting questions about the value of water because maybe it makes sense for that data center that we keep talking about to pay a higher

price for water because you're running a desalination plant. But again, if you're out in the stick somewhere, you're working on a farm, there are fewer people around to collectively fund something like a desalination plant than there is in a town. So again, you get into these interesting questions about how much is water worth and to whom and who is going to pay for things like those desal plants. Well, it's a question actually that we put to Martin Conroy, a senior portfolio manager at KBI Global Investors, which, going back to 2012, has maintained a water fund that's investing in companies addressing water challenges. Yeah, what I'd say is that water as a sector has been underinvested in for at least 25 to 30 years.

Because water infrastructure tends to be out of sight, out of mind, it has always been lower priority than other more visible infrastructure investments such as transportation. But we've reached a crisis point now in many geographies whereby we can't continue to underinvest in water infrastructure. And that's going to require broad-based funding. So it will be from equity investors. It will be from debt investors. And there will also be an element that needs to come from government funds, whether that be through PPPs or some other type of mechanism. Ed, do you see evidence of all of that coming together?

Well, I think it's inevitable that we will see more investment in ensuring that water comes out of the taps and we have enough water to grow food. But I think it's going to involve a lot of tough choices. There are reasons why this has been historically underfunded sector. just because it's quite difficult to generate a return from even some of the water projects that would be most useful. You know, what are the useful interventions you can do to boost water security as something called sponge cities you might have heard of, which basically means having more vegetation in a town or on a street to soak up more water? And this can be a really effective way of preventing floods,

but it's hard to see how spending money on that actually generates a return for the private sector. sector. And this just shows up in the numbers, especially in the developing world where some of these problems are going to be most acute. Only 2% of funding for water-related projects in the developing world comes from the private sector. And that's just the private sector. But when we look at the public sector, which is inevitably where a lot of this money is going to come from, all of these sort of essential sounding projects are going to have to compete for money with other essential sounding projects. So, you know, maybe you have to decide whether to spend money on a new desalination plant or a new battleship. And these are,

are not going to be easy decisions, and we're going to have to face up to a lot of them. Ed Ballard covers climate change and energy for us at the journal, Ed. Thanks so much for dropping by. Thanks so much, Luke. And that's it. For What's News Sunday for August 30th, today's show was produced by Daniel Bach, with supervising producer Sandra Kilhoff and Melanie Roy, and Deputy Editor Chris Sinsley.

I'm Luke Fargus, and we'll be back tomorrow morning with a brand-new show. Until then, thanks for listening.