Global conflict risks to intensify if – or when – the water dries up

Expert believes that water problems could soon lead to catastrophic global disruptions

Global conflict risks to intensify if – or when – the water dries up

Catastrophe & Flood

By Sam Boyer

Water scarcity could lead to increased global crises in the not-too-distant future.

When it comes to geopolitical risks and crisis management – and the insurance that goes with that – water problems in the Middle East and Africa could cause catastrophic global disruptions.

Christof Bentele, head of global crisis management at Allianz Global Corporate & Security, said geopolitical risks are big business.

“Even though we hear so much about terrorism, when we look at global conflict, we as the global community spend about $1,000 billion [$1 trillion] every year to manage conflict,” he said. “Only $100 billion of this is spent for terrorism. In other words, yes, terrorism is a terrible peril but it is only 10% of the conflict [spend].”

The pressing risk trend for insurers is unrest in Africa and the Middle East.

“Terrorism, from an insurance perspective is less and less important, if you compare it to political violence – strikes, riots, civil commotion, a coup d’etat, a civil war, or even war,” he explained. “Africa is a real risk right now.”

In the Middle East, Bentele cited, in particular, the high penetration of internet-connectivity of the citizens of Kuwait and Bahrain as a risk issue in the volatile region. Widespread access to internet allowed the citizenry to see how they were treated politically, and to see how others lived, which could engender jealousy and extremism, Bentele said.

And both these regions could become more volatile if stresses and diffuclties were to arise there – as elsewhere – as a result of global warming creating water scarcity, said Dave Anderson, head of credit and political risk at Zurich.

Zurich and Atlantic Council recently released a study on “geopolitical shocks and risks”, in which, Anderson said, the three greatest identified global risks were protectionism, natural energy, and water scarcity.

“I think the water scarcity [global crisis risk] is the most dramatic, because it’s the hardest one to do anything about,” he said. “Water scarcity is such a massive problem in so many countries and it could really lead to mass migration and economic refugees who are going to tend to head towards Europe, in my view. The whole area from northern Africa, up through the Middle East, and up to Afghanistan, millions of people are going to fall under the water scarcity problem.”

As well as migration, Anderson said a scarcity of water would also lead to conflict – as vying groups would look to take control of what water is available.

“It’s potentially water as a weapon,” he explained. “We’re seeing it in Yemen; we’re seeing it India and Pakistan; Syria, Iraq; ISIS has used it as a weapon. It’s a disturbing development.

“The global community has got to find a way to end the cycle, otherwise we’re going to be dealing with a real problem. We already are. And climate change is just going to make it worse.”

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