Franck: The reason why we decided to have water as our number 10 risk this year, is because we expect that the number of water related conflicts will reach a kind of like a record number this year.
Jane Goodland: Hello and welcome to the LSEG Sustainable Growth Podcast, where we talk to leading experts about the big topics spanning sustainability, business and finance. I'm your host, Jane Goodland, and this week I'm joined by Franck Gbaguidi from the Eurasia Group. Now, he is the Managing Director of Global Environment and Sustainability, and today we're going to be talking about a risk that is featuring in Eurasia's Top Risks Report for 2026, and that is water. And they claim that water is going to become the most contested resource on the planet. And Franck is very, very well positioned to talk about this because he has held roles at the UN, the World Bank, the International Finance Corporation, all before he joined Eurasia. So I am very pleased to welcome Franck back to the show. Welcome, Franck.
Franck: Yes, thank you so much for having me back, Jane. Very excited to be here. Every year we put out our flagship report. We call it Top Risks. So it's a list of the 10 biggest risks for the calendar year, in that we expect will materialise in one way or shape or form. This year we have water as risk number 10. We call it 'the water weapon'.
Jane Goodland: I love that title by the way, I think it's great.
Franck: I was sadly proud of kind of like that framing because three years ago in 2023, we had, for the first time in Euarasia Group's history, water top risk. It was water stress. And three years later, 2026, the water weapon. So it's kind of like we graduated from water stress, the competition for water access, to then the water weapon and the weaponisation of that conversation. So it really shows that it's a risk that is accelerating and getting worse. And this is why it's featured in this year's edition.
Jane Goodland: Okay, so I think that before we get into some of the detail, I think it's worth us understanding a bit more about international water governance, or I think you're probably going to tell me the lack of it, right? Because the reason why there's a potential for water to be weaponised is perhaps because of this ambiguity around governance, so tell me more about that?
Franck: I'm glad you're bringing up the governance piece because when you think of a lot of the big environmental crises that we have, climate change, biodiversity loss, desertification, they all have their own global governance system. Now, whether or not we like it or we think it's fit for purpose is a different conversation, but we have something. Every year we have the climate COP. You and I were in Brazil a few months ago. That was the 30th climate COP. Biodiversity, every other year you have a COP. Desertification, same process. On the water side, we pretty much have nothing. There was a UN water conference in the 70s, then there was a second one three years ago. But that's about it.
Jane Goodland: That's kind of a big gap between. And so that tells you that I think historically the conversation was seen as a humanitarian conversation. A conversation that is kind of limited to the scope of the Global South. But increasingly we see that the problem is becoming more and more global and we need that global governance system. Unfortunately, it is happening at a time where it is close to impossible to make something like this happen We will have a UN water conference in December in Abu Dhabi in the UAE, with a much bigger I guess ambition and scope, but still no plans on kind of setting up a formal global governance mechanism for water. And that's a big issue. Most of the water that we use, when you think about it, it's shared between different countries. It's transboundary.
Jane Goodland: So you mean no kind of no clarity around who can abstract what water and in what conditions etc?
Franck: None of that. How do you manage disputes? Nothing. Even when you look at the UN Water Courses Convention 1997, most of the big players are not even a signatory. So the US is not in there, China is not in there. So it makes the global governance conversation on the water side close to impossible. Binding treaties don't really exist. So, it's a tricky space. It's fine when there's no problem. And when the resource is not scarce or there's no competition around it. It's trickier when you operate in a geopolitically fragmented world, where the water levels are becoming lower and lower by the day.
Jane Goodland: And we will get onto this shortly but I think that it's important to remember we're not talking about just access to water to service communities. This is about economies isn't it and water is such a vital, vital resource to many sectors and we'll touch on that shortly, but before we do let's just make sure that we're clear about some of these terms. So we hear water scarcity, water stress, day zero events. Help me understand what's going on and why this issue seems to be getting worse?
Franck: Water scarcity, is exactly what it sounds like. So there's not enough water. The water levels are quite low. This is what tends to happen in a lot of very arid spaces. So, Middle East, North Africa, parts of Southeast Asia. This is something that you have seen happen for many, many, many decades, and it's structural. Water stress is different. That's the competition for water. And so, when you look at the list of, say, the most stressed countries on the water side, you find countries that may be surprising, like Cyprus or Belgium.
Jane Goodland: Okay. So why is that, for example?
Franck: There's more competition for the resources.
Jane Goodland: Right, okay.
Franck: Right. Whereas if you look at the least stressed, you have my home country, Benin. You have Togo, you have Rwanda. And not necessarily countries that you would think of. And so when we move to like a conversation around competition for the resource, within countries between countries and between regions at a time where the world is so fragmented and continues to be even more fragmented, you then have a question as to how do we manage disputes? And the reason why we decided to have water as our number 10 risk this year, is because we expect that the number of water related conflicts will reach a kind of like record number this year. And it's not just a like 2026 isolated thing, it has been breaking records pretty much every year for the past few years. So you can see the trend materialising, getting worse, and then like on the flip side, the action to like tackle it not being put in place.
Jane Goodland: So give us some examples then of regions in the world where water is being weaponised, like you say, focusing on water stress, some examples to help this bring to life.
Franck: Yeah, I mean, I think some of the most obvious ones, so obviously what's happening in Africa, the Sahel, where you see a lot of the jihadist threats taking control of the water resources and using that as an actual weapon, or as a leverage in negotiations with governments or with communities. So that's the case around Lake Chad. So Chad, Cameroon, Niger, Nigeria, all those countries are kind of in this struggle and has been the case for quite some time. Also the case on the other side of the continent, so Ethiopia, Egypt, but that's historic. You've heard of the competition around the Nile and Ethiopia now has been starting the process of building the Grand Renaissance Dam, and that gives them leverage over what is happening in Egypt. But beyond those kind of landmark or flagship examples, you also have India and China. China basically in the process of building the largest dam ever. I think we're talking $130 billion project. And then India as a response saying, okay, we are going to also build a dam, like counter dams. So they're coming up with like their own $70 billion projects, 200 dams, between India and Pakistan. You think of the Indus Waters Treaty, it was able to like overcome and you know stand the test of time across three big conflicts between India and Pakistan. No longer the case. India suspended the treaty, using it as an actual leverage in their conversations and negotiations with Pakistan. And then I think that the less obvious maybe examples, North America, what's happening between the US and Mexico. Before Christmas, President Trump was threatening to increase tariffs by 5% if Mexico didn't send the water that they owed the US. So you can really see how it's becoming much more of a global crisis with multiple examples that are popping up here and there simultaneously. And with policymakers, heads of states being directly involved in those discussions, with often time not a great prospect for what's to come in the near future.
Jane Goodland: And so the reason why, I guess, this becomes of significant interest to governments around the world is the economic impact.
Franck: That's right.
Jane Goodland: So when I'm thinking about the relevance of water to different sectors, I immediately think about agriculture, food and beverage, that type of thing. But I think you're going to tell me that the issue is actually far more widespread than that. Help me understand how significant water is to the whole economy?
Franck: It's one of those input that we just take for granted. You don't really think about it. You mentioned agriculture, which makes sense. 70% of water is being used and consumed by the sector, but you still have 20% by industry and then 10% that is more like municipal use, household. There's like the direct use and there's the indirect use. And this is where virtually every single sector is affected. Even when I look at how we engage with clients at Eurasia Group, whether it is our large financial institution clients or large corporate clients across industries, the number of requests that I get related to water and water scarcity and water stress has been skyrocketing over the years. You know, it would be questions like, okay, think the tech industry, data centres. You know we want to build this new data centre in Arizona, but we are struggling with freedom to operate, social licence to operate because communities are worried about our water use.
Jane Goodland: And of course in that context we're talking about water being used for cooling purposes?
Franck: Water being used for cooling purposes, exactly, which is huge. Especially when you look at the forecast for how big those new products are going to be.
Jane Goodland: And AI coming into the frame of course, really sort of ramping up that energy consumption and therefore the associated cooling.
Franck: Indirectly, right? So that goes back to that point of like, it's that indirect link, but that is becoming so important, particularly when those data centres are being built in places that are water scarce or like deserts. And so that project in Texas and Arizona got cancelled and we're talking $3.6 billion, right. And you see more and more of that. That was the case also a few years ago for a big brewery plant in Mexico. The project was about to get started in terms of like building it. Then the president at the time called for a referendum, asking the communities, do you want this project to happen? They said, no. End of it. California, I remember a few years ago, I was covering this for Eurasia Group, a big desalination project, 10 years of negotiations. They were really about to get there, backing from the president of the United States at the time, backing from the governor of California. Then the regulators said no. So then, just like that, over one billion dollars, project didn't go through. So you see more and more of those across industries, whether it is specifically water industry, tech, mining, more and, a lot of permitting, I see that a lot in Australia, for instance. No longer granted or no longer automatically renewed. So you have to enter these negotiations with governments or local governments. It creates a series of industry related problems that I don't think people think about. Real estate is another one. In many, many places, many countries, you have to basically say, okay, I'm going to build this new complex, and I know that I'm going to be able to access water for the next, you know, 100 years. A lot of real estate developers are no longer able to say that.
Jane Goodland: You can't say that if there's no kind of governance or frameworks in place that actually legitimise the access to that water.
Franck: It's almost like every day I have a new water related challenge from a new industry. And our investors, our investor clients feel the same way. You know, they're like, you know, now we have to ask questions about water contingency plans. And, you know, when our investors tell us that they want to expand their activities, we ask them, do you have a water plan? Have you looked for physical risk or policy risk related to this? So it's way beyond the agricultural conversation and it cuts across for sure.
Jane Goodland: I guess it's an obvious question when we're thinking about kind of access to water is, is, well we live on a planet full of water, we have oceans. Why can't we think about desalination as a realistic solution to some of this kind of stress around potable water?
Franck: I mean, I get that question all the time. And I think it's a very fair and valid question. Look, the way I look at it is we cover many topics in the sustainability space at Eurasia Group. We do climate, we do biodiversity, we do water, we do plastics. Out of all of those crises, when I look at water, I remain hopeful, because I know that there's a solution. Or how should I say, there are solutions, plural. Desalination is one of them. I think the issue with leading with desalination is that sometimes it shouldn't be the first solution. Take the Middle East. It absolutely makes sense, given physical water scarcity there to have desalination plants, to ramp that up, to ensure that the technology is kind of like top-notch. But when you think of Western European countries, France, Italy, a lot of the issues there have to do with the existing water infrastructure. A big chunk of the water that is being lost has to do with the failing infrastructure. So a lot of it is just upgrading the infrastructure. You don't even have to be that fancy in your technologies. You upgrade the infrastructure and you save a lot water. In Mexico, 40% of the of the water is being lost because of the failing infrastructure.
Jane Goodland: Are we talking pipes here?
Franck: We're talking pipes here specifically. So you fix that, you know, the linking pipes, and then you already have this massive influx of water that goes back into your system. I think, but it goes back to this point of we took it for granted, so we had no problem letting the infrastructure crumble. And also because when you fix the pipes, then you also increase the water bills and so that's not necessarily the most appealing proposal.
Jane Goodland: Well, that leads us on very, very kind of smoothly to pricing. And I think that's something I'd love to talk about more, because you mentioned about investors thinking about exposure of their investments to this and portfolios. Fundamentally, this comes around to kind of a pricing mechanism, right? So I guess the question is, do we pay enough for the water coming out of our tap and if not, why not?
Franck: That's a tricky one. I mean water, access to water is your human right. And literally, officially a human right in the UN system since 2010. And so there is this idea of, if you're supposed to have access to something, it's hard to have people pay for it, particularly a high price. I would say historically, we've been underpaying. That's across the world. How do you overcome that? We find that in most countries, whenever governments are launching programmes that are saying, 'please use less water' because, you know, like your, your country needs it. We need it for agriculture. We needed for industry. You actually see a great decrease in water. So you know that there's a lot of waste and it's just happening because people are not thinking about it. Another reason that makes me hopeful about this whole water crisis is that I know that once we reach a breaking point, people will be able to adjust their consumption. And I think you, you might see a world where, yes for households, we're saying, OK, the price remains what it is. But for industry, particularly water-intensive industries that are not seen as essential, you could see targeted increased water bills for them.
Jane Goodland: Is that happening anywhere around the world?
Franck: Not yet. I know that a few governments are actually actively considering this as part of the, you know, water related solutions, a lot of the companies that I get to talk to on a regular basis, whenever they are, particularly the water intensive ones, whenever they are moving forward with their activities, they are trying to think of water offsetting schemes. So I have clients who are saying, okay, we're building this big plant here, but we're going to partner with the municipality to build a wastewater plant. So you see a lot of indirect ways in which companies are already paying more or figuring out ways to show some sort of water stewardship. And I think that that will continue.
Jane Goodland: And Australia is kind of starting to activate around water more and more. Tell me what's happening there?
Franck: Yeah, Australia has always been doing a lot in that space, particularly when it comes to innovative mechanism, like water sharing processes. So it's like, I'm a farmer, I am using this much, but I'm not using that part. I can sell that part, you can trade water in such a fashion, it has its pros and its cons. But I do think that they are at the forefront of kind of what a new thinking around sharing the resource, pricing the resource and figuring out a way to basically force people to, or industries, to decrease consumption can look like. And I can see that becoming more standardised, streamlined and mainstreamed over time. They are tackling two key sectors; agriculture and mining. And they are being bolstered by civil society organisations and communities on the ground that are seeing that as a bigger issue every day. Many other countries are looking at the Australian model and trying to use it as potential inspiration for what they will do themselves. That's the case for Italy, but that's also the case for South Africa. That's case for parts of Brazil as well. So they're definitely at the forefront of that conversation, the same way the Netherlands were a few years ago.
Jane Goodland: Interesting. Now fundamental to a lot of what we've talked about today is about the ability to measure. Measure water. Now, you know, if you think about kind of a comparison around climate change, we've now got to a position where we have a singular unit of measure tonnes of CO2 equivalent and governments around the world as well as corporates and other big organisations are able to quantify their impact through this this kind of unit of measure and we can be increasingly transparent about emissions related to certain activities. When we flip that into the water context, tell me more about kind of measuring water and transparency around water and what we really should be thinking about as a helpful foundation to a lot of this kind of potential solution to the problem we're talking about?
Franck: That's why it gets tricky. And the reason for that is, so you mentioned climate and carbon and it's such an easy metric. Its global CO2 emissions in Paris have the exact same impact as CO2 emission in Cotonou and so you are able to move like this, have very clear comparisons. And therefore, fast-track your process when you have a global climate governance system that is put in place. Water is so local.
Jane Goodland: But surely a litre of water is a litre of water, right? Tell me why that's not the case?
Franck: Well, it is. But the actual, again, going back to that point on the competition, right, if it's within an area where you don't have an industrial hub, or you don't have intense agricultural efforts, then it's not a problem. It's not relevant, if you will.
Jane Goodland: Is this water stress point, right?
Franck: It's the water stress point. It's about the water hotspots and therefore it's hyperlocalised. And that also means that who is in charge of that conversation, oftentimes it's not even at the central government level, it's often at the local government level. So you can definitely measure how much water is being consumed. By the way, we don't do that enough. Even in the UK, for instance, most people don't even know how much water they are using or consuming. They just get their bills and they pay for it. So the measuring part, we could do a lot more and it's easy to do. And that would at least help us have some sort of baselines. We don't have them at the moment. So that's the first part. Then to kind of like get to the next step would be where is the competition? Where are the hotspots? And this is where you should kind of like, have more efforts, focus more on. And once you have those, for those hotspots, what are the quick wins that we could implement? Any industries could move to another region, for instance, or could we have any sort of water reductions targets that could be within a specific sector or across that city or that town? There's a lot that can be done, but that means that the conversation needs to be differentiated, and it is harder to just have a global one. On the data point though, this is where AI could play a key role in the water conversation. I find that global governance, yes, it is about, you know, multilateralism, big global conferences, binding treaties, but it is also about real time data sharing. And on the water side, we still don't have that. So you can think of a world where we would have like say a global platform, where you're able to see in real time the level of the reservoirs across the world and when you reach a tipping point and what would be some of the key actions that could be implemented. This is not impossible to do. This is definitely in the realm of what we can do. We would just need to find the right leadership to make something like this happen because it would require governments being willing to share data, do it openly, being very transparent as you mentioned and understand that this is a bigger conversation than one that is for one country.
Jane Goodland: Yep. So notwithstanding that kind of global co-operation, which is obviously not easy, let's bring it back down to kind of and focus on the, if you are a company, regardless of the sector, or you're an investor for example, what are the sort of few things that those organisations perhaps should be doing if they're not already doing that, from a water perspective?
Franck: I would say, number one, whatever it is that you're doing on the energy side, you can take those questions and then apply them to the water piece and then figure out what is your water strategy. Do you have any water contingency plans? Do you a baseline for water use? Do you have any sort of water related targets? Are they on par with what the rest of your industry is doing? I think just even having that conversation and making sure that water is part of the discussion when it comes to your resource management efforts, I think is already a big step.
Jane Goodland: And then presumably as well, not thinking at the stopping at your direct operations because much of this is in our supply chains, right?
Franck: It's always in the supply chain. It would be the equivalent of your Scope 2 and Scope 3, but for water.
Jane Goodland: Maybe we need a new way to describe kind of direct and indirect water use, right?
Franck: Exactly, exactly. That's what I'm saying. We have the blueprint with energy and so it's a matter of replicating that to the water space with the specificities that you and I have discussed, how local it is and the different hotspots. I would say where most investors and companies need to really, really work on is on the policy overlay. Tracking political decisions related to water access. I find that they do that very well on the energy side. Terrible job on the water side. Like figuring out what are some of the emergency water related policy measures that are being adopted. Who is in charge of setting up your water access and could stop it tomorrow? What are the best in class water policies that you could be advocating for or asking another jurisdictions to replicate? Those conversations I find it's always, there's a lot that can be done there.
Jane Goodland: So investors and companies like to be really questioning, you know, what's the resilience of the business model in a context where water is becoming ever, ever so more stressed and kind of potentially weaponised.
Franck: And the next step, right, which is the whole conversation around weaponisation, but also forecasting predictions. Yes, the issue may not be terrible today or reach a breaking point today, but it might be the case in five years or it might be the cases in ten years. Are you doing the right scenario work that can tell you that? And is that informing some of your business decision efforts?
Jane Goodland: It's so like energy, right?
Franck: It's just like energy. So we have the blueprint. We can go faster because we've done it before. And then there's the conversations around water credits of the offset mechanism, all of the stuff that we've known on the carbon side. You can see it on the water side as well.
Jane Goodland: Brilliant. Thank you so much, Franck. I think we're going to leave it there because I found that fascinating. I'm sure our listeners and watchers will too. So thank you once again for coming and sharing your amazing expertise.
Franck: Thanks for having me, Jane.
Jane Goodland: Well, thank you very much for joining that conversation with Franck. And I found that fascinating. And if you did, too, then please do follow us and rate us on Apple podcasts, Spotify or YouTube. And if you want to get in touch with the show, you can do so by email at
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