When Growth Gets Thirsty: Why Water Pricing Belongs in The Boardroom

Water. Critical to life. Especially as we all stormed up and down Manhattan a few weeks ago at the biggest Climate Week NYC ever – we were all sipping water. We are thirsty. We know it is important for our health.

What about businesses? Do they also recognize water is important to their corporate health? By 2030 freshwater demand is expected to exceed supply by 40%. That will affect the health of corporations worldwide.

In this next installment of our Earth-positive economics series (part one available here), I’m diving into the vital role of water – exploring how it underpins growth across industries, why it belongs at the heart of boardroom strategy, and how it must be treated as a key input in the economic model of the future.

The hidden lifeline of growth 

The risks of water scarcity are often assumed to affect only water-intensive sectors – agriculture, textiles, cement, manufacturing. But what if we started to talk about the universal drive for growth that most businesses share?

Barely a day passes without AI being cited as the engine of future efficiency and innovation across every sector. This growth story has a lesser-known subplot: AI is not only power-hungry, it’s water-hungry too.

The surge in AI adoption is driving exponential demand for data centers – and these facilities rely on huge volumes of water for cooling. By 2030, data centers could consume 1,200 billion liters of water each year, almost equal to New York City’s annual use. Strikingly, two-thirds of new data centers built since 2022 are in water-stressed regions.

AI is hungry. And thirsty.

For policymakers trying to balance scarce water resources among households, agriculture, industry and tech, these pressures are rapidly becoming an economic flashpoint.

Global water risk locations. Source: Aqueduct Water Risk Atlas

The rising price of scarcity

We can all very easily figure out that decreasing supply and increasing demand means that water is going to become more expensive.

If your business is interested in how AI can drive growth and efficiency, then it needs to care about water. This transcends industry and sector.

Supply chains under pressure

This isn’t just about the direct usage of water in the course of doing business. Water risk extends well beyond a company’s own operations.

Companies disclosed US$339 billion in potential financial impacts from water-related risks through CDP in 2024. These risks could be mitigated for US$58.7 billion – a potential six-fold return on investment.

A recent report from the European Central Bank states that surface water scarcity alone puts almost 15% of the EU’s economic output at risk. The graphic below shows the stark reality of water scarcity effects right across the supply chain.

CDP’s Supply Chain program works with over 270 of the world’s largest buyers, representing US$6.5 trillion in purchasing power. Today only 21% of companies engage their suppliers on water issues – although the proportion is climbing each year.

The leaders in this 21% are embedding KPIs, capacity-building, financial incentives, and innovation partnerships to drive real change. The top performers don’t just map their supply chain risk; they actively work to reduce it.

Source: Oxford Systemic Risk Score, EXIOBASE, ENCORE

Measuring to manage: The business case for water pricing

This poses the important question: What can we do about water-related financial risks and opportunities?

A key CDP mantra remains: “What you can measure, you can manage.” It’s proven effective for carbon – and the same applies to water.

Investor demand for transparency is rising fast: US requests for water data doubled this year – a clear sign boards and investors want visibility.

However, from the 8,500 companies disclosing on water in 2024, only 426 (5%) reported an internal water price, and just 290 (3%) went beyond simply applying external tariffs. In contrast, over 1,200 companies already use internal carbon pricing.

Water pricing is an interesting step. Consider this: Have you ever seen a giant cargo ship transporting fresh water across oceans?

Almost never – because water has historically been too cheap to make that trip economically viable. But freshwater is geographically constrained, and scarcity is shifting the equation. We may reach a point where moving water across borders becomes economically viable – with profound implications for supply chain planning and business continuity.

Minimum and maximum internal water prices by industry, based on CDP water disclosure data (2024). Source: Watermarq and CDP’s ‘Valuing water: Corporate engagement with internal water pricing, September 2025.’

This is why CDP put water center-stage at Climate Week NYC. We teamed up with Ecolab, NTT Data, BBVA and the City of Los Angeles to understand the pressures corporates and cities are facing and how technology and the banking sector – with data at the core – can help companies, investors and governments to assess water in a more holistic and informative way.

We released a new paper with Watermarq based on CDP water disclosure data, looking deeper into corporate engagement with water pricing. The report clearly shows that water is gaining prominence as a strategic risk and opportunity for businesses across the globe.

Water sits at the heart of Earth-positive economics - recognizing that natural resources like water, carbon and land are fundamental inputs to business value, and that their changing availability carries real financial consequences.

Boards, CEOs, investors and buyers should all be considering the financial impacts on their business due to changing and uncertain availability of these economic inputs.

Data as a common language to support Earth-positive growth

The good news: many are considering this issue.

Disclosure of sustainability data underpins Earth-positive economics by enabling growth rather than constraining it.

Our economies deserve our attention in securing water as an economic input well into the future.

I’ll drink to that.