UK Long-term flood risk

Our Aquanomics model projects that, in total, the UK could face a loss of $153 billion to GDP due to water risk between the years 2022 to 2050. It also estimates that it will lose over $100 billion over that period as a direct result of water risk, with flooding making up approximately 45% of that total. That said, all things being equal, the model also projects that the global threat of droughts, floods and storms could lead to the UK’s agricultural sector increasing its output slightly by 2050 to make up for other countries’ reduction in output.

UK data dashboard

$153 Billion
0.1 Percent
Manufacturing & distribution
Energy & utilities
Banking & insurance
FMCG & retail

What events will cause the biggest economic impact?

Flood44% Storm37% Drought19%

Data showing direct losses by weather event type between 2022 - 2050

Water risk in the UK

With a temperate climate, the UK faces relatively low levels of water risk. Resilience is fairly high, and most people are protected from loss of their existing homes, assets and livelihoods through insurance. But, while the majority of the population has low rates of exposure and vulnerability to hazards such as droughts, floods and storms, there are pockets of the country that are disproportionately affected.

Climate change, population growth and the protection of delicate environments are leading to water shortages in parts of the Southeast. More than half the region’s water comes from underground aquifers that rely on sufficient winter rainfall to meet rising water demands in spring and summer. Climate change will have a big impact on the variability and volume of rainfall, making long term planning with any certainty harder. The Southeast region typically experiences more droughts than any other region in the UK and the predicted hotter, drier summers will put even more pressure on homes, business, and the natural environment.

In contrast, heavy rainfall across large swathes of the UK leads to flooding, and homes and businesses built on floodplains and vulnerable parts of the coastline face increasing risks due to flooding and land erosion, with increasing social and economic pressures to relocate. Effective early warning systems and emergency services help to ensure the risk of mortality and illness due to storms and floods remains low for the vast majority of the population.

The Water Services Regulation Authority, or Ofwat – the economic regulator of the water sector in England and Wales – has pledged a spending package of £51 billion for 2020-2025. A quarter of this, £13 billion, is for new and improved services to help tackle challenges outside of day-to-day operations. This includes £1 billion to reduce the impact of future flooding and almost £500 million to help solve long-term drought resilience challenges.

A road weaves around a cliff-side and the shoreline

Building future water resilience

The UK population is forecast to reach 75 million by 2050, with most of the rise expected to occur in areas already experiencing water stress. On a warming planet, extreme and irregular weather events such as floods and drought are expected to become more frequent, and the ecological health of our rivers is declining.

Building resilience and adaptability into our systems that collect, treat, store, and distribute water must be addressed now. Strategic water planning that ensures affordability, resilience and sustainability for the public, industry and the natural environment is urgently needed, but the scale and complexity present a real challenge for government, regulators, and water companies.

Effective infrastructure is critical for sustained economic growth and adequate well-being, but current investment levels are insufficient to repair our ageing water systems, expand systems to accommodate urban growth, meet stricter environmental regulations or adequately adapt to climate change.

A father and daughter wash their teeth together in a bathroom with a large window
A watering can watering some plants. The watering can is being help by someone in a striped top.

The UK Government’s proposed legislation (in the Environment Bill) provisions on nature – including biodiversity net gain, local nature recovery strategies and protected site strategies – are complimenting the drive to use natural systems to slow storm flows, store water and cleanse run off. Green bonds or debt raised specifically for environmental purposes are being used to finance related investment.

Water intensive sectors such as energy, agriculture and manufacturing tend to pursue individual plans, however collaboration across these parties would enable more efficient water use. Bringing together water stakeholders is critical to meet increasing demand for water while maintaining a sustainable, vibrant and resilient environment that can respond to the major impacts that climate change is having on this vital resource. Circular economy approaches are now in the spotlight to help, but it is abundantly clear that the urgency to adapt and transform in the face of immediate and future challenges has intensified to a new level.

John Hensman, UK Water Market Leader, GHD

John Hensman

UK Water Market Leader, GHD

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