The inherent costs and uncertainties of water scarcity in a changing world

Climate and development-driven water scarcity pose a major risk to global economic growth and stability, as regional drought impacts propagate through the Food-Energy-Water nexus and thus the global economic system. Past work in this area has largely focused on physical water scarcity rather than its economic impacts. Additionally, previous studies have analyzed local scarcity while ignoring the global context and assumed no or limited adaptive capacity. This work uses the Global Change Assessment Model (GCAM) to capture the effects of market adaptation to physical water constraints across a wide range of potential futures sampled from various earth system models, the Shared Socioeconomic Pathways, varying levels of climate mitigation, and water infrastructure development. Though water scarcity has negative impacts at a global level across all futures, clear regional winners and losers emerge as water-rich basins become virtual water exporters. Scenario discovery reveals that different uncertain factors define meaningful scenarios in different basins, illustrating the need to tailor regional planning scenarios to the basin level while also considering the global context. It is shown that the economic system amplifies water supply uncertainty depending on future conditions. The economic uncertainty due to uncertain water supply exceeds 30% of GDP in some basins, representing an economic tipping point where negative impacts persist till the end of the century. This analysis provides insight into what worlds and basins are most prone to these tipping points due to global change.