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An increasingly thirsty planet

The amount of water on Earth has been more or less the same for the past 4.5 billion years. But today, a growing number of the world’s people don’t have access to enough of it. In fact, nearly half of the world's population lives in places that face water scarcity for at least one month every year. And more than 1.2 billion people lack regular access to clean water altogether.

For many of them, the situation is getting worse by the day, as climate change causes more frequent droughts or conflicts prevent people from getting to freshwater sources. The lack of access to clean water for drinking, cooking, and crops can cause illness, starvation, and death.

Small wonder, then, that water scarcity is one factor behind some of the world’s most intractable conflicts: Israel-Palestine, India-Pakistan, and now Russia-Ukraine.

The desperate search for water also has millions on the move. The UN warns that water scarcity could force some 700 million people from their homes in the coming years, in mass migrations that will test governments, humanitarian organizations, and societies alike.

But it’s not all parched earth, thirst, and conflict. Water scarcity can also give rise to spectacular practical and technological innovations, as the examples of water management in the arid landscapes of Israel, Nevada, and South Africa show.

In this special edition of Signal, we’ll look at how the world is coping with water scarcity and what’s at stake for an increasingly thirsty planet.

What We’re Watching: Water wars vs. cooperation

Water wars?

Hundreds of millions of both Indians and Pakistanis depend on water from the Indus River for drinking, farming, and hydropower. The Indus Waters Treaty, signed by India’s prime minister and Pakistan’s president in 1960, guarantees how water from the river and its tributaries will be shared. This was put at risk in February 2019, when a suicide car bomb killed more than 40 Indian soldiers in the Indian-controlled sector of Kashmir. India’s transport minister responded with plans to “stop our share of water which used to flow to Pakistan.” The Pakistani government then warned it would treat any stoppage of water as an “act of war.” A treaty loses its values if one side decides not to honor it. Though tensions cooled in this case, the risk of a water war remains, because it’s simply too dangerous for these nuclear-armed and bitter rivals to fight a war with conventional weapons, and water will only become a more precious resource in coming years. Global warming could shrink the Himalayan glaciers that feed the river by more than a third in coming decades and make rainfall patterns more erratic, even as Indian and Pakistan water demand increases with population growth.

India and Pakistan are not the only rivals to successfully share water despite bitter differences on other questions. The five former Soviet Republics in Central Asia have not fought over access to the Aral Sea. Jordan and Israel haven’t waged war over the waters of the Jordan River. Threats over access to the Nile have not yet provoked war among Ethiopia, Sudan, and Egypt. A dispute over the Mekong River between China and its Southeast Asian neighbors has generated tensions but not widespread violence. Turkey and Armenia, neighbors with no diplomatic relations who have argued for decades over charges of genocide, have continued to share water from the Arpacay River, which forms the border between them. The two countries continued to honor the Soviet-era treaty that set water-use terms even while the two have fought on opposing sides of a war in 2020.

But successfully managed disputes of the past don’t guarantee a peaceful future, so these and other potential water-based confrontations are worth watching.

Can water cooperation bring peace to the Middle East?

Water scarcity is one of the biggest crises emanating from climate change. If current trends continue, the UN warns that 5 billion people — more than two-thirds of the global population — could be living in areas grappling with extreme water scarcity by 2050. Long dealing with irregular rainfall, increasingly arid conditions, and a growing population, Israel has emerged as a global leader in clean water solutions. Israel, a tech hub, recognized early the importance of treating wastewater to meet growing domestic needs and to leverage it as a tool for international cooperation. In 2000, Israel, which straddles the Sea of Galilee and the extremely salty (and undrinkable) Dead Sea, revamped its water management system by building a slew of desalination plants. It has also revolutionized water recycling, treating wastewater effluent to make the liquid ready for human consumption and irrigation. The country currently recycles about 86% of water, using much of it for agricultural purposes in the arid Negev Desert.

This innovation has also presented opportunities for “drought diplomacy.” Last year, Israel and Jordan, who have long enjoyed a frosty peace, outlined a water-for-energy deal that will see Amman exchange solar energy capacity for much-needed desalinated water. Meanwhile, Israel has also partnered with Arab states, Egypt, and Bahrain on water-management approaches and equipment to mitigate shortages at home.

Innovative solutions to water scarcity problems can be found globally. The US state of Nevada recently inked a deal with California’s government, whereby Nevada will dole out cash to help the Golden State develop new water treatment facilities in exchange for increased access to Lake Mead. Similarly, drought-stricken South Africa, once facing Day Zero – whereby taps were slated to be turned off in major cities like Cape Town because of water shortages – has successfully found a slate of tech-based solutions, particularly for the robust agriculture sector.

The Graphic Truth

In many low- and middle-income countries, the availability of safe, drinkable water remains scarce. Though access has improved significantly in many places over the past two decades — by 152% in Afghanistan, for instance — the very low baseline means that still only 28% of that population has access to high-quality drinking water. Meanwhile, countries like the Central African Republic, Zambia, Nepal, and Pakistan saw their access reduced over the past two decades. Here’s a snapshot of the relative change in access to safe drinking water around the world from 2000 to 2020.

​Podcast: Saving the world’s water supply

In our latest “Living Beyond Borders” podcast from Citi Private Bank and GZERO Media, we examine the global risks related to the depletion of a vital ingredient needed for everything in life: water.

Severe weather events and climate change are causing an urgent water crisis. By changing our natural world, through both big and small disasters, water scarcity is disastrously on the rise worldwide.

To delve into this immediate threat, Eurasia Group’s Director of Energy, Climate & Resources Mikaela McQuade talks to Franck Gbaguidi, senior analyst of energy, climate & resources at Eurasia Group, and Harlin Singh, global head of sustainable investing at Citi Global Wealth.

Hard Numbers: India’s record drought, privatized waterways, dripping wet smartphones, big oil meets little water

669: Already sweltering amid a heatwave, the capital of India now faces water shortages with the level at Delhi's biggest reservoir dropping to 669 feet, a record low. The city’s government, run by the anti-corruption AAP party, accuses the BJP-ruled Haryana state of deliberately withholding water from the Yamuna River, which it denies.

454 billion: Private corporations control 454 billion cubic meters of water around the world, about 5% of the global supply. This water-grabbing is a major problem in Africa, where China, India, Saudi Arabia, and the UAE are investing big in water-intensive agriculture projects.

3,190: That smartphone in your hand is soaking wet – maybe (hopefully!) not literally, but it took 3,190 gallons of water to manufacture it. The production of chips and semiconductors – which are what make smartphones smart – is one of the world’s most water-intensive industries.

Getting from the Great Resignation to the Great Return

It’s a job seeker’s market.

Over 47 million Americans voluntarily left their jobs last year, almost 13% more than in 2019. That was before the pandemic, which has upended the relationship between workers and employers as much as it has disrupted all our lives.

It’s not just a US phenomenon. High turnover rates extend across comparable OECD economies. Nearly a quarter of Brits and a third of Australians plan on switching jobs in the next several months.

The picture is somewhat different in the developing world. Hundreds of millions of people who lost their jobs during the pandemic — mostly in the informal economy — still can't find work because COVID obliterated entire industries such as tourism. Chinese companies, meanwhile, are struggling to retain young employees who are fed up with low pay and long hours.

The Great Resignation is thus a global problem, in varying ways, as will be the Great Return. With the omicron scare easing in the West, many companies there have begun trying to figure out how to woo millions of now-remote (or recently resigned) employees back to the office — precisely at a time when it’s gotten harder to find and retain talent.

Here are three ways employers might have success.

The most obvious fix is to raise salaries. That’s already happening for some. US wages grew on average 4.5% last year, the highest annual rate in almost 40 years. But with US inflation currently at 7.5%, that annual bump is actually a pay cut in real terms, and higher salaries won’t entice everyone.

What’s more, upward pressure on salaries is likely to contribute to even higher inflation.

Another option is additional benefits for employees, especially those who feel more productive working from home and see little upside to returning to the office. Many companies have already adopted permanent hybrid schedules, with workers coming in twice a week.

But some CEOs want everyone in the office five days a week. They just don't get it, US organizational psychologist Adam Grant toldGZERO World. Grant argues that worker productivity “is about the purpose and the process that you bring to your job (...) not about the place you happen to be doing it in.”

Apart from going hybrid, governments are increasingly backing experiments such as four-day workweeks to deliver more work-life balance. This approach has already been tested — with varying degrees of success — in Iceland, Spain, and it will soon be trialed in England.

Finally, companies that struggle to find talent where they’re based might opt to find it elsewhere, including overseas. That means more people working remotely from other US states or even abroad, which could have big political implications.

Imagine all those American manufacturing jobs that went to Mexico thanks to NAFTA, or to China after Beijing joined the WTO. This time, though, US labor outsourcing would hit the laptop class — the one that has benefited the most from globalization and a digital-first world.

As Eurasia Group CCO Alex Kazan points out on the Living Beyond Borders podcast, a post-pandemic hiring spree of remote labor from low-income countries could be politically toxic amid the surge of nationalism and protectionism we've seen in places around the world. But if done right, it could also be viewed as an expansion of a flexible gig economy that can spur greater inclusion in a global workforce.

“We're still a long way away from a global labor pool, but certainly the normalization and acceptance of technologies that enable remote work make that a more plausible future,” Kazan says.

Meanwhile, WFH is not going away. If companies in advanced economies want to lure their employees back to the office, most firms will need to reshape workplace culture to embrace remote working and hybrid models.

The Graphic Truth

The pandemic has enabled some professionals to work remotely from home — or anywhere. Digital nomads wander the world in search of the perfect place to hunker down with their laptops, prompting some countries to offer them special visas. Where should you go if you can work from anywhere?

What We're Watching: Gorillas in the gig economy & work struggles for the "sandwich generation"

Gorilla unicorn to gig goat: a cautionary tale. Last year, a new Berlin-based food delivery company called Gorillas was going bananas. With its minimal branding, pro-biker vibes, and good service, the company became the first German tech “unicorn,” meaning it raised enough capital to be valued at more than a $1 billion dollars. But then the wheels came off as its gig workers, angry about late payments and poor working conditions, tried to organize in protest, and hundreds were fired. The company continues to function, but it recently set up its holding company in the Netherlands. The tale of Gorillas is both an inspiring and cautionary one. Over the past 10 years, gig work, facilitated by new technology platforms — think Uber, Seamless, Fiver, etc — has grown rapidly. Close to 30 million Europeans secure work through digital platforms, and the EU says that could rise to 43 million by 2025. In the US, one in 10 American adults relied primarily on “on demand” work as of 2020. This has vastly expanded opportunities for employment and broadened companies’ ability to source talent and skills on demand. But that flexibility comes at a cost for employees, who lack the workplace protections and benefits normally associated with full- or part-time work. Policymakers are still trying to balance the pros of flexibility with the cons of “precarity.” The EU is leading the legislative charge on this, with a sweeping set of reforms that would force gig platforms to classify their workers as employees and give them more bargaining rights. Supporters say it will boost the gig economy to a fairer footing, while critics worry it will make them less efficient and more expensive.

Is the “sandwich generation” being frozen out? The pandemic has been difficult for people of all demographics, but the costs – and disruptions – have been particularly severe for the “sandwich generation.” Those include people in their 30s, 40s, and early 50s who are trying to balance careers along with caregiving responsibilities for young children and parents. This burden is disproportionately felt by women, who make up 60% of this demographic in the US, according to Pew. Anecdotal evidence in the US, UK, and parts of the European Union, suggests that the pandemic has forced these already-stretched individuals to give up jobs and shed work hours in order to take on the added burden of helping with home-schooling and elder-care responsibilities. There are signs that many of these women have not made their way back into the labor force. While men have mostly recouped their pandemic job losses in the US, women are lagging far behind: there were at least 1 million fewer women in the workforce in January 2022 than two years earlier, according to the Bureau of Labor Statistics. Some experts warn that things are still taxing for older members of the “sandwich generation” because young adults, whose education and work life have been disrupted for the past two years, are becoming more dependent on their parents for housing and other support. Many businesses are ramping up “return-to-work” programs to help lure women back to work after long absences. But these programs are often limited in scope, and being out of work for extended periods can make it more difficult to secure desirable roles.

Hard Numbers: India needs non-agri investment, American women lag behind, WFH forever, Iranian job woes

90: India will need to create 90 million new non-agricultural jobs by 2030 to reach its economic potential, according to McKinsey. The pandemic drove tens of millions out of cities to work in farming back in their villages, but economists now say that the government needs to boost urban production to maximize growth.

63: The US economy has shed millions of jobs since March 2020, with female workers accounting for 63% of the lost gigs, according to the National Women’s Law Center.

91: A whopping 91% of Iranians surveyed say they feel negative about their local job markets. The Iranian labor market continues to be strangled by tough economic sanctions, but if a nuclear deal is reached in the near term, employment opportunities and industry will expand significantly, experts say.

Podcast: Living Beyond Borders 

GZERO Media and Citi Private Bank teamed up to produce a special-edition podcast series called “Living Beyond Borders.” The segments focus on everything from pandemic lessons and what to expect at work in 2022 to China’s changing trade priorities and the importance of biodiversity to the global economy.

Listen to the series here.

The US and China are too busy to fight

At the dawn of the US civil rights movement, Atlanta mayors William Hartsfield and his successor Ivan Allen promoted Georgia’s capital as “the city too busy to hate.” Whatever the reality of race relations at the time, both men wanted Atlanta to avoid the confrontations plaguing other southern US cities, and to open their city as the commercial hub of the “new South.”

In recent decades, US and Chinese leaders have relied on a similar approach to relations between the two countries. The risk of conflict was obvious, given differences in their interests and political ideologies, but there was much money to be made and stability to be gained as long as they protected their mutually profitable business opportunities.

But over the past five years, US and Chinese words and deeds have taken on a harder edge. As US post-Cold War dominance of the international system has eroded, and as Xi Jinping has more explicitly offered China’s leadership as an alternative to the West’s global rule-setting, Washington and Beijing have seemed headed toward a digital-age Cold War. Former US President Donald Trump pushed for a more open confrontation between the two powers, and current President Joe Biden has done little to change course.

There is good news, however, for those who believe that a US-China Cold War would be catastrophic for both countries and the world. In reality, both countries are far too busy to transform rivalry into hate. But it isn’t just business opportunities that now preoccupy them. It’s also major domestic challenges and distractions, particularly for China, that demand something close to their full attention.

Troubles at home

One year into the job, Biden knows the success of his presidency will depend on helping to end the pandemic, revive the US economy, and deliver on more of his legislative promises. With midterm elections in November, his need to focus on these priorities is increasingly obvious. Fights with China won’t help, because they undermine investor confidence in the country’s immediate and longer-term future and distract from the issues his voters care more about.

Xi faces an even longer list of domestic problems. In a year in which he wants a smooth path toward a third term as China’s leader, and the indefinite extension of his power, he’s coping with both urgent and longer-term challenges for China.

First, China is days away from hosting the Beijing Winter Olympic Games in the middle of a public health emergency — and Xi is well aware that the credibility of his government’s COVID response is very much on the line. From the beginning of the pandemic, China has enforced a zero-COVID policy, imposing large-scale lockdowns in response to small numbers of infected people.

Now, with the Games about to begin, the much more transmissible omicron variant has appeared inside multiple Chinese cities, and more than 20 million people have been locked down in response. An added complication: it will be months before China can roll out an mRNA vaccine that’s more effective than currently available Chinese vaccines.

This problem arrives at a moment when China’s economy was already cooling off — and this slowdown creates a more urgent worry in China than a temporarily stalled economy in the US or Europe. China is still a middle-income country. To reach Western levels of prosperity, it needs growth above 6 percent for another generation, according to Eurasia Group estimates.

But in a world where factories’ production depends less heavily on cheap labor and more on robots, that’s a serious concern for China’s future. The country’s changing demographics — fewer workers and more retirees as birth rates remain low — compounds that problem.

Then there’s China’s debt problem. For decades, the state has boosted growth by encouraging Chinese lenders, some of them state-owned, to finance real estate and other speculative projects with little worry over the financial wisdom of each investment. When big companies have struggled to repay, the state has subsidized repayment to avoid a systemic financial crisis.

But when borrowers believe that government will prevent default, they take on even more risk, including by borrowing more from foreign lenders, creating a debt bubble. In recent years, China has tried to allow some companies to default and fail. But reform comes with risks that demand careful attention.

The Graphic Truth

For decades, the Chinese Communist Party was worried about overpopulation. In 1978 it told Chinese families they could only have one kid to contain the ballooning population size. But after years of restricting the number of births, China's population is now shrinking — fast. This demographic trend is a massive problem for China, currently vying to overtake the US as the world's largest economy. Meanwhile, the US population has also started to decline over the past decade. We compare their population growth rates from 1961-2020.

What We’re Watching: COVID Olympics, US-China business dilemma, China and the US midterms

COVID at the Games. The Beijing Winter Olympics, which begin on Friday, will be the most serious test to date of China's zero-COVID policy. President Xi Jinping wants to make a big international splash with the Games, as his predecessor did with the Beijing Summer Olympics in 2008. That'll be tough with stadiums only half-full with domestic spectators pre-screened by the Communist Party, and no foreign fans allowed to attend at all. To avoid an outbreak at the Olympic Village, China initially imposed strict testing and quarantine policies for everyone attending the Games. But it’s possible that the CCP is having at least some doubts about this policy's ability to contain the omicron variant: Only days out from the inauguration ceremony, authorities have relaxed testing and isolation guidelines, signaling a slight pivot in China's pandemic management strategy. Does this mean the Olympics will be the beginning of the end of zero COVID? China's economy — and the world's — would surely benefit from a transition to living with the virus. Beijing says it is developing its own mRNA vaccines to achieve this, but that could still be many months away.

Xinjiang business culture wars. The Beijing Winter Olympics will also pose a big test for multinational corporations that will try to attract business in China despite the CCP’s ongoing human rights violations. US firms will worry about American consumer boycotts if they source products from Xinjiang, where some Chinese manufacturers rely on Uyghur forced labor. (Elon Musk recently came under fire for opening a Tesla showroom in the region.) But if US corporations take a firm stand on Xinjiang and other politically-sensitive issues in China, they risk a similar backlash from Chinese consumers. Last year, a vocal online movement in China called for the boycott of Nike after the multinational corporation criticized abuses in Xinjiang. Indeed, the CCP is more game to stoke nationalist fervor at the expense of business opportunities than the US government, which is reluctant to support consumer-led boycotts that hurt US businesses. Now, American corporations will face a very tough choice between drawing the potential ire of the US public or nationalist Chinese consumers.

China enters US midterms campaign. Republicans and Democrats in the US Congress don’t agree on much these days, but they do find much common ground on China — specifically, the need to counter Beijing’s growing economic and diplomatic clout. This “tough-on-China'' competition will surely intensify in the lead-up to the November midterm elections. Last summer, the Senate passed a bill to augment the US’ tech capabilities and “global competitiveness” – for instance by producing more US-made semiconductors instead of relying on Chinese chips. Tellingly, the legislation explicitly refers to China as the "greatest geopolitical and geoeconomic threat" to US foreign policy. The House of Representatives, meanwhile, passed two separate research and development bills, with some Democrats saying the Senate bill was too focused on countering China. In the months ahead, expect Republicans to jump at the opportunity to cast the Democratic party — and President Biden — as weak on China. Senator Marco Rubio from Florida, who is up for re-election, has previously sent out campaign emails with the subject line "Dems <3 China.” This could prove to be a decisive electoral strategy considering that most Americans have a negative view of China, and support a more assertive stance towards its government.

Podcast: The US and China

This two-part instalment of Living Beyond Borders, a special podcast series from GZERO and Citi Private Bank, focuses on the relationship between the US and China. Moderated by Caitlin Dean, head of the Geostrategy Practice at Eurasia Group, the two episodes feature David Bailin; Chief Investment Officer and head of Investments for Citi Global Wealth; Steven Lo, co-head Citi Global Wealth for Asia-Pacific; and Ian Bremmer, President at Eurasia Group and GZERO Media. Watch part I (Tariffs, tutors, and tension) here and part II (Common prosperity, coal, and competitiveness) here.

Quiz: Nixon goes to China

February 21 is the 50th anniversary of Richard Nixon's historic visit to China, which began the normalization of US relations with the world's most populous Communist state — instantly shifting the Cold War balance of power. This bold move by a US president who had made his political reputation as an anti-Communist crusader shocked many at the time, but it helped set the stage for deeper ties between what are now the world's two most powerful nations and largest economies.

How well do you know the details of Nixon's week-long trip? Take our quiz to find out.

1. How did Nixon refer to National Security Adviser Henry Kissinger during his meeting with Mao?

A. A foreign policy genius

B. A ladies' man

C. A doctor of brains

2. The leader of which Asian country brokered Kissinger's secret 1971 visit to China that paved the way for Nixon's trip?

A. Yahya Khan, Pakistan

B. Indira Gandhi, India

C. Suharto, Indonesia

3. What did Nixon say while touring the Great Wall?

A. How long is it?

B. This is a great wall.

C. Who built it?

Hard Numbers: GDP wars, WTO rules in Beijing’s favor, Africans support Chinese engagement, China winning 5G battle

5.9: China’s GDP could grow on average 5.9 percent per year until 2025, according to the Center for Economics and Business Research, which predicts that China will overtake the US as the world’s largest economy by the end of the decade. The Chinese economy was worth $18 trillion in 2021, compared to America’s $23 trillion.

645 million: Amid an ongoing trade war between the world’s top two economies, the World Trade Organization ruled last week that Beijing can slap $645 million worth of tariffs on US goods. A decade ago, the US placed tariffs on some Chinese products, including steel pipes and solar panels, saying that Beijing was giving unfair subsidies to state-owned companies.

59: The US has been trying to discredit China’s growing influence in Africa, but it’s not working: 59 percent of Africans view China’s economic and political clout favorably. Almost exactly the same number — 58 percent — feel the same about the US.

90: More than 90 countries have signed up to use 5G networks made by the Chinese telecom giant Huawei. Meanwhile, only eight nations have so far agreed to join the US ban on Huawei. Why? Many analysts say it’s because China offers way superior 5G infrastructure.