As Hundreds Die in Asia & Africa Floods, EU Drought Worsens + Morgan Stanley Sees Rising Disasters, 5 Solutions (2)


LUCKNOW/BHUBANESHWAR, India: Floods and landslides triggered by intense monsoon rains killed at least 50 people in northern and eastern India over the last three days, officials said on Sunday (Aug 21): Channel News Asia

The rains overwhelmed hundreds of villages, sweeping away houses and leaving residents stranded as rescue crews have been racing to evacuate survivors.

800 have been killed in Pakistan since June, CNA reported on its TV news channel. See also this.

MAKAYLAB, Africa: In the Sudanese village of Makaylab, Mohamed Tigani picked through the pile of rubble that was once his mud-brick home, after torrential rains sparked heavy floods that swept it away.

“It was like doomsday,” said Tigani, 53, from Makaylab in Sudan’s River Nile state, about 400km (250 miles) north of the capital Khartoum.

China floods —China Daily:

A total of 6,245 residents of six villages in the Datong Hui and Tu autonomous county have been affected by heavy rains.

XINING — The death toll from a mountain torrent triggered by heavy rains in Northwest China’s Qinghai province has risen to 26 as of 4 p.m. Sunday, with another five people still missing, according to local authorities.

A total of 6,245 residents of six villages in the Datong Hui and Tu autonomous county have been affected by heavy rains, which began at 10:25 pm on Wednesday, according to the emergency response headquarters for the natural disaster.

The downpours lashed Datong, triggering flash floods and mudslides and causing rivers to change course, then striking the villages.


BRUSSELS: A severe drought hitting swathes of Europe is “worsening” and, while rain is helping some regions, accompanying thunderstorms are causing their own damage, EU researchers said in a report on Monday (Aug 22).

The latest monthly analysis by the European Union’s Global Drought Observatory (GDO) highlighted the risk of ongoing soil dryness caused by successive heatwaves since May and a “persistent lack” of rainfall.

Europe’s Drought Watch (unedited from GDO):

The severe drought affecting many regions of Europe since the beginning of the year has
been further expanding and worsening as of early August. Dry conditions are related to a
wide and persistent lack of precipitation combined with a sequence of heatwaves from May
 The severe precipitation deficit has affected river discharges widely across Europe.
 Reduced stored water volume has had severe impacts on the energy sector for both
hydropower generation and cooling systems of other power plants.
 Water and heat stresses have substantially reduced summer crops’ yields. The most affected crops are grain maize, soybeans, and sunflowers.
 Recent precipitation (mid-August) may have alleviated drought conditions in some regions
of Europe. However, in some areas, associated thunderstorms caused damages, losses, and
may have limited the beneficial effects of precipitation.
 Warmer and drier than usual conditions are likely to occur in the western Euro-Mediterranean region in the coming months till November 2022. In some areas of the Iberian Peninsula, warning drier than usual conditions are forecasted for the next three months.

Full report:

Morgan Stanley (unedited) — Aug. 16:

Morgan Stanley and Munich Re

For further research on Water see Changing Tides: Investing for Future Water Access (requires access)

Europe is on course for the worst drought in 500 years. The European Drought Observatory has calculated that 45% of Europe was under a drought warning by mid- July with 15% already on red alert. The River Rhine, a key waterway linking Germany and Western Europe with the North Sea, is already at critically low levels. Many reservoirs are at low capacity. For example, Spanish reservoirs are at 40% capacity and below the ten year average of around 60%, according to Reuters. Even in Norway reservoir levels are at less than 50% capacity when they are normally at ~75% at this time of year.

Industry and Agriculture are seeing the impact of water stress and represent 40% and 38% of Europe’s water withdrawal respectively. 

As our chemicals team has highlighted, the impact on industry from low levels of water is twofold: 1) the logistical challenges to ship products out of the chemical plants, and 2) how much water companies are allowed to take from the river for cooling and therefore plant operating rates (for further details see: Chemicals: Where’s the Water Gone?).

In addition, the International Grains Council has slightly reduced its global forecast for total grains to reflect drought stress in the EU. Utilities, one of the most water intensive sectors, is experiencing challenges with hydroelectricity and also nuclear facilities, which use water for cooling.

More frequent drought events ahead?

 Climate change is linked to increased frequency of extreme weather events, which will put constraints on supply. Meteorological, hydrological, climatological and geophysical records indicate that weather-related disasters have been rising since 1980. As Exhibit 1 shows, although there are fluctuations on a year-by-year basis, the overall trend of hydrological events between 1980 and 2019 was upwards.

The increased frequency of such events, coupled with climate change, means many regions are exposed to drought, represented by the darker regions in Exhibit 2.

The number of weather- related disasters has been rising since 1980

Source: Munich RE

Regions exposed to drought risk

Note: Darker red regions represent areas of higher drought risk – where droughts are likely to occur, the population and assets exposed, and the vulnerability of the population and assets to adverse effects. Source: Water Risk Atlas

Demand for water is only increasing.

 In Europe, annual industrial water demand will increase from 241 thousand cubic meters in 2010 to 325 by 2050 (Statista Global Water Industry), and supply is expected to decrease, with renewable freshwater resources per capita having fallen by 17% over the past ~50 years, according to the World Bank.

What is the solution? Industry has to play a role in improving water efficiency. 

Energy producers and utilities are the most water-intensive companies, but water is also a key resource in chemicals, mining, construction materials, food & beverages, apparel, pharmaceuticals, semiconductors and data centres. Companies are starting to implement strategies to reduce water consumption or use alternative, more sustainable, water sources. For example, utility companies are reducing the amount of freshwater withdrawn and replacing it with water recycling, and also using desalination in areas of high water stress.

Technology solutions are also essential. 

We outline five potential solutions for water stress – desalination, crop science, smart irrigation, metering & digital solutions, and vertical farming. These technologies are already commercial on a small scale, but we expect to see greater adoption over the next decade.

  • Desalination. With ~97% of global water sources concentrated in the oceans and seas, desalination is one of the feasible solutions to freshwater shortage.
  • Crop Science. Seed innovation to adjust specific traits and characteristics has driven material yield enhancements in the last 30 years in conventional and genetically modified (GM) seeds.
  • Smart Irrigation. Many different irrigation methods are used worldwide, but we expect micro-irrigation to grow at a faster pace given its environmental and economic benefits (reduced water loss, improved crop efficiency, reduced labour intensity and lower methane emissions).
  • Metering & Digital Solutions. These can improve resource use transparency, infrastructure efficiency and limit non-revenue water losses for municipalities and utilities.
  • Vertical farming. Vertical Farming is a resource-efficient approach to growing certain types of food produce. It requires a controlled, indoor environment with crops typically grown on a series of stacked layers.

For each of these, we list ‘solution stocks’ – companies with revenue exposure to these technologies.

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