|
Getting your Trinity Audio player ready...
|
In 2026, water is emerging as one of the world’s most contested shared resources. Water is becoming the protagonist in a story of global disruption and leverage. Droughts can escalate into diplomatic crises. Local shortages can metastasize into national-security problems. It is why water has appeared among Eurasia Group’s Top Global Risks in two of the past three years. In 2023, the warning centered on accelerating water stress. In 2026, the risk sharpened: water as a strategic weapon is becoming a threat to economic, political, social, and environmental stability.
This recognition is no longer confined to environmental or social impact. At the World Economic Forum’s annual meeting in Davos, water moved from the margins to the core agenda. The rise of a more prominent #BlueDavos, alongside preparations for the UN Water Conference later this year, reflects a broader moment: converging shocks — from climate volatility and geopolitical fragmentation to energy transition and AI-driven demand — are turning 2026 into a defining year for fresh water.
The physical drivers are well known. Demand rises as populations grow and cities expand. Supply grows less reliable as heat intensifies, rainfall becomes erratic, and droughts linger. What has changed is resilience. Many water systems no longer rebound after stress. Aquifers are pumped faster than they recharge. Rivers are allocated to more users than they can sustain. Pollution further diminishes usable supply.
“Water Bankruptcy”
A recent UN report describes this dynamic as “water bankruptcy”: regions spending water they do not have, drawing down reserves built over centuries or even millenia.
For governments, this could mean a new politically fraught calculus: households versus farms, industry versus ecosystems, price controls versus cost recovery, emergency relief versus long-term reform. For businesses, the implications are equally high. Water risk no longer sits neatly in sustainability. It now cuts across operations, supply chains, insurance costs, capital access, and license to operate.
This is a missed opportunity of epic proportions.
Magnified risk
This risk is magnified by governance gaps. Nearly two-thirds of the world’s freshwater crosses national borders, yet more than half of the planet’s 310 international river basins still lack cooperative management agreements. Key powers, including the United States and China, have never ratified the 1997 UN Watercourses Convention. Unlike climate, water has no standing global negotiation process with binding targets or enforcement. There have been only two UN water conferences over the past half century, with a third scheduled for December 2026. It’s an extraordinary mismatch between risk and response.
In that vacuum, leverage matters. Upstream countries — those that control headwaters, dams, data, and timing — can increasingly shape downstream dynamics through infrastructure and information. When conditions are stable, cooperation limps along. When conditions tighten, uncertainty can turn to suspicion, and routine water management can become a national security issue.
Happening in real time
We are seeing this play out in real time. Along the U.S.–Mexico border, disputes over deliveries under the 1944 water treaty escalated into broader political confrontation and tariff threats before minimum flows were stabilized. In South Asia, India responded to the April 2025 Pahalgam terrorist attack by suspending the Indus Waters Treaty, placing at risk the water supply that supports roughly 80 percent of Pakistani agriculture. China’s upstream dams along the Mekong give it meaningful influence over seasonal flows that downstream economies and farms depend on.
A hungrier planet is also a thirstier planet, where agriculture typically uses more than 70 percent of water withdrawals. And cooling thermoelectric power plants – coal, natural gas or nuclear – remains the largest industrial water use.
Water risk is also becoming more disruptive. In Ukraine, attacks on energy infrastructure have repeatedly cascaded into failures of water, sanitation, and heating. Outside conventional warfare, cyber threats are rising. Denmark has publicly attributed cyberattacks on a water utility near Copenhagen to pro-Russian actors. A Norwegian dam suffered a similar breach, resulting in uncontrolled water releases. U.S. regulators now issue public guidance on defending water utilities against cyber intrusion.
A hungrier, thirstier planet
For companies, these disruptions can halt manufacturing, upend logistics, strand assets, trigger community backlash, and expose firms to regulatory and reputational shock. The rush to build data centers, often in water-stressed regions, has added a new and largely unpriced layer of risk, tapping surface and groundwater supplies faster than municipal systems and governance can respond. Communities are pushing back, demanding transparency from technology firms whose AI-driven growth depends on vast quantities of water for cooling and power generation.
The “water weapon” also exposes state fragility. In parts of the Sahel, armed groups exploit competition over water and grazing, positioning themselves as de facto authorities where governments are absent. Around Lake Chad, declining water levels and collapsing livelihoods have opened space for violent actors to expand influence. Water scarcity rarely causes violence on its own, but it heightens grievances, accelerates displacement, and becomes a tool for control.
Conflict data underscores the trend. The Pacific Institute recorded 420 water-related conflict events in 2024, an 18 percent increase over 2023 across Sub-Saharan Africa, South Asia, and Eastern Europe. Most are not headline “water wars.” They are local clashes, infrastructure sabotage, political violence, or coercion where water is the trigger, or the leverage.
The more likely 2026 story is cumulative: increasing scarcity, lagging governance, and more state and non-state actors learning that control over water, data, infrastructure, or timing can be converted into influence.
The moment to change the script
This is where the opportunity lies to change the story.
Despite its universal relevance, water remains siloed and undervalued. It is persistently disconnected from climate strategy, energy transition planning, food systems, finance, and technology investment.
This is a missed opportunity of epic proportions. Water is a powerful lever for climate adaptation, environmental justice, migration management, urban resilience and transboundary cooperation. It is also among the clearest signals of operational and systemic risk facing companies.
Still, though most solutions exist, breakthroughs in technology and policy continue to stumble. Decisions are made in isolation. Capital moves too slowly. Promising innovations die before scaling. The result is a world where water stress now directly threatens food and energy systems, supply-chain resilience, public health, and global economic and environmental stability. The water-food-energy nexus is a fault line that is testing modern society.
What this moment demands is a new operating system for water: one that integrates risk intelligence, aligns policy and finance, accelerates innovation, and mobilizes awareness at scale. It demands systems thinking and ambition equal to the systems now under strain.
What this moment demands is a new operating system for water: one that integrates risk intelligence, aligns policy and finance, accelerates innovation, and mobilizes awareness at scale. It demands systems thinking and ambition equal to the systems now under strain.
Over generations, water has determined whether civilizations thrive or fail, whether they fight or make peace. Understanding that water can be used as a weapon should remind leaders in geopolitics, security, and business that in an interconnected world, power may lie not only in who controls the water, but in who governs, shares, and safeguards it wisely.
Eurasia Group President Ian Bremmer explains why water made the top 10 of the world’s greatest geopolitical risks for 2026.
Nick Kraft is Senior Analyst for Water, Agriculture and Responsible Investing at Eurasia Group.
J. Carl Ganter is Managing Director of Circle of Blue and a member of the World Economic Forum Global Future Council on the Energy Nexus and Water Futures Community.
Lead Image: Without the Nile River, Cairo and much of Egypt would face the dry sands of time. Many of the world’s storied civilizations’ success – or failure – have been defined by water and who controls it. ©J. Carl Ganter/Circle of Blue