Toute l'actualitéWater is no longer merely a resource under stress. The Global Water Bankruptcy report published by the United Nations University – Institute for Water, Environment and Health (UNU-INWEH) shows that, in a growing number of watersheds worldwide, hydrological systems are entering a phase of structural degradation. This “water bankruptcy” is redefining the conditions of ecological, territorial and economic stability. Reforest’Action analyses its underlying drivers and implications for businesses, and explores the levers for action that can help strengthen the water resilience of territories.
Water as a Condition of Life and a Driver of Systemic Stability
The availability of freshwater underpins all living systems. It determines ecosystem productivity, biodiversity maintenance, soil fertility, and the functioning of biogeochemical cycles, as well as food security, industrial production, energy generation, and the stability of human societies. When water becomes scarce or its quality deteriorates, it is not isolated uses that are affected, but the very organisation of territories — from the location of economic activities and the arbitration between competing uses to the ecological balances that sustain them.
For several decades, these tensions have been described under the generic label of a “water crisis.” Yet this expression suggests a temporary disruption, one that can be resolved through technical adjustments, infrastructure investments, or improved resource allocation. The Global Water Bankruptcy report introduces a major analytical shift: in many watersheds, the issue is no longer a cyclical or conjunctural crisis, but a structural degradation of hydrological systems.
The concept of water bankruptcy captures this shift. It refers to a situation in which water uses and pressures durably exceed the natural capacity of ecosystems to produce, store, filter and regulate the resource. In other words, the natural capital embodied in water systems is being depleted. This perspective calls for a reassessment of analytical and decision-making frameworks, particularly for companies whose operations depend on increasingly fragile territorial equilibria.
From Crisis to Water Bankruptcy: A Shift in Analytical Framework
Water governance has historically been structured around a flow-based rationale. Public policies and industrial strategies have sought to secure available volumes, smooth seasonal variability, and offset temporary deficits through hydraulic infrastructure such as dams, reservoirs, transfer canals and diversion structures. While this framework remains relevant as long as natural systems retain their regulatory capacity, it becomes inadequate once withdrawals durably exceed renewable inputs.
As diagnosed by UNU-INWEH, water bankruptcy describes the moment when societies begin drawing down stocks accumulated over decades or even centuries: deep groundwater aquifers, soil moisture reserves, wetlands and glaciers. At the same time, the mechanisms that enable water to infiltrate, be stored and purified are degraded through soil sealing, deforestation, erosion and diffuse pollution. Water bankruptcy thus characterises a post-crisis condition in which water use exceeds long-term renewal capacity, causing irreversible or near-irreversible damage to the ecosystems that generate, store and regulate the resource.
In this regard, the economic analogy used in the UN report is particularly illuminating. A hydrological system functions much like a balance sheet. Precipitation and natural recharge constitute income; aquifers, soils and ecosystems form the assets; human withdrawals represent expenditures. Bankruptcy occurs when maintaining current uses requires degrading the assets themselves. At that point, the issue is no longer a quantitative imbalance, but a structural alteration of hydrological systems.
Irreversibility as a Breaking Point
Water bankruptcy therefore marks a regime shift in which certain alterations of hydrological systems become partially irreversible. In many aquifers, prolonged pumping reduces pressure to such an extent that geological formations compact. This subsidence decreases the porosity of underground layers and, with it, their capacity to store water. Even if precipitation increases later, aquifers do not necessarily recover their initial storage capacity.
Comparable mechanisms operate in soils. The loss of organic matter, compaction resulting from intensive land use, or salinisation reduce infiltration and retention capacity. Water runs off more rapidly, intensifying erosion and flooding while diminishing groundwater recharge. The disappearance of wetlands eliminates key spaces of regulation and filtration that are essential to water quality and habitat preservation.
In such contexts, a return to previous conditions becomes uncertain, if not impossible, within economic and investment timeframes. Water management consequently shifts from a logic of optimisation to one of loss limitation and targeted restoration of ecological functions.
A Dynamic Already Observable at the Global Scale
The Global Water Bankruptcy report documents the rapid expansion of such situations. Nearly 75% of the world’s population now lives in countries exposed to high water vulnerability. Approximately four billion people experience severe water scarcity at least one month per year. More than half of the world’s major lakes have seen declining levels since the 1990s, and around 70% of major aquifers show long-term depletion trends.
The United Nations distinguishes between climatic drought and anthropogenic drought. In the latter case, scarcity results primarily from land-use, production and consumption choices. Precipitation levels may remain close to historical averages, yet recovery fails to occur because storage and regulatory capacities have been degraded. Scarcity thus becomes chronic.
From Water Vulnerability to Economic Risk
For businesses, water bankruptcy fundamentally alters the nature of risk. Water ceases to be a peripheral environmental parameter and becomes a structural constraint on operations. This constraint first manifests operationally. Withdrawal restrictions, increased flow variability, or deteriorating water quality directly affect production capacity, variable costs and supply chain reliability.
Beyond these direct effects, territorial dimensions come into play. In water-stressed basins, competition between agricultural, industrial and domestic uses becomes increasingly contentious. Decisions regarding the siting, expansion or continuation of industrial activities are progressively shaped by local water availability and by the social legitimacy of water use, in light of community needs and ecosystem requirements.
Water thus joins climate and biodiversity as a determinant of long-term value creation. According to CDP’s Global Water Report 2024, one in five companies already reports water-related risks within its supply chain that could have a significant financial impact.
Reference Frameworks Structuring Corporate Action
In response to these challenges, a growing body of methodological and regulatory frameworks has emerged. Corporate Water Stewardship, promoted notably by the World Resources Institute (WRI), encourages companies to move beyond purely internal water management and adopt a basin-level, collaborative approach involving other water users and public authorities.
The Science Based Targets for Nature (SBTN) apply science-based target-setting to freshwater. They propose a sequenced methodology that includes assessing dependencies and impacts, geographically prioritising at-risk basins, and defining actions consistent with local ecological limits, integrating both quantity and quality dimensions.
CDP Water structures the disclosure of information relating to corporate water risks, opportunities, governance and performance. It has become a central assessment tool for investors by making previously fragmented data comparable.
The Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS) further strengthen transparency requirements by imposing a “double materiality” analysis. Companies must assess both their impacts on water resources and ecosystems, and the financial risks arising from their degradation. Water is thus recognised as a cross-cutting issue at the intersection of ecological impacts and economic dependencies. Taken together, these frameworks converge toward a common requirement: aligning corporate water strategy with the biophysical realities of the territories on which business activities depend.
Water Resilience: Restoring the Hydrological Functions of Landscapes
Reforest’Action’s Water Resilience programme is designed for companies whose operations or value chains are exposed to significant water risks. It aims to strengthen watershed resilience through nature-based projects.
The Watershed as the Appropriate Scale
A watershed is the territory within which rainfall and runoff converge toward a common outlet. It constitutes the physical unit within which hydrological flows, uses and impacts are structured. Any action on water — whether withdrawals, discharges or ecosystem restoration — necessarily takes place within this geography.
Acting at basin scale makes it possible to connect industrial uses with upstream and downstream dynamics, identify the most effective levers, and coordinate actors sharing the same resource. By contrast, a strictly volumetric approach disconnected from ecosystem functioning tends to displace pressures rather than resolve them.
An Approach Grounded in Hydrological Processes
Our approach is based on a comprehensive hydrological diagnosis integrating soil characteristics, land cover and land use data, topography, precipitation regimes and water uses. Forestry and agroforestry projects are then designed to act on key water cycle mechanisms — notably infiltration, groundwater recharge, pollutant filtration and flow regulation — and implemented by our teams in close collaboration with local stakeholders.
Impacts are assessed and monitored using recognised methodologies such as the Volumetric Water Benefit Accounting (VWBA) framework developed by WRI, alongside monitoring systems combining field data and remote sensing. Results are consolidated within a Monitoring, Reporting and Verification (MRV) platform compatible with leading reporting standards. Through this programme, Reforest’Action seeks to restore the hydrological functions of landscapes — improving natural water filtration, regulating flows, reducing flood risks and enhancing groundwater recharge — as a necessary condition for long-term water stability.
Water bankruptcy signals a regime shift. It reveals the limits of volume-centred management and calls for a systemic approach grounded in the restoration of ecological functions and territorial governance. For businesses, the challenge is no longer merely to secure immediate access to water, but to contribute to the resilience of watersheds upon which their activities depend. In a context of growing constraints, the ability to integrate water as a strategic, ecological and territorial factor becomes a major determinant of long-term performance, while contributing to the preservation of hydrological equilibria essential to all life.