Water, a Source of Risk for Geopolitical Stability and Global Economies.

The growing scarcity of water is emerging as one of the main geopolitical and economic threats of the 21st century, fueling tensions in some of the planet’s most vulnerable regions. The water crisis, exacerbated by climate change, population growth, and poor resource management practices, risks turning water into a contested commodity, with potentially devastating global consequences.

Major Geopolitical Tensions

In the Middle East, Africa, and Asia, competition for shared water resources is already generating conflicts or intensifying existing tensions. An emblematic example is the Nile Basin, where the construction of the Grand Ethiopian Renaissance Dam (GERD) has raised the risk of a confrontation between Ethiopia and Egypt. The project is located about 700 km northwest of the capital, Addis Ababa, along the Blue Nile. Once completed, the infrastructure will be 1,800 meters long and 175 meters high, with an overall volume of 10 million cubic meters. The dam will feature two power plants equipped with 13 turbines, an installed capacity of 5,150 MW, and an expected production of 15,700 GWh per year. It is a monumental project.?

Although the estimated cost is around four billion dollars, the dam could have a multiplier effect both economically and in terms of extending Ethiopian regional influence. Intervening on the western sources of the Nile—which provide about 85% of the basin’s water volume—could ensure that Addis Ababa controls the flow of the river for downstream countries. Cairo fears that the dam could compromise the influx of water into the country, threatening agriculture and food security. Despite ongoing negotiations, an agreement seems far off, and the possibility of armed conflict cannot be excluded.

Similar situations are occurring in the region between Iraq, Syria, and Turkey, where the Tigris and Euphrates rivers are sources of heated disputes. The construction of dams by Turkey has reduced water flow to downstream countries, exacerbating the already critical water conditions in Iraq and Syria, regions heavily marked by decades of political instability and internal conflict.

In Asia, major river systems like the Brahmaputra and the Ganges, which cross borders between India, Pakistan, and Nepal, are hotspots of tension. The construction of hydroelectric projects in China has raised concerns among downstream countries, foreshadowing increasing competition for water resources, particularly in the context of climate change and rising demand due to population growth and urbanization.

Impact on the Semiconductor Industry

Beyond geopolitical aspects, the economic implications of water scarcity are equally concerning. In particular, Taiwan’s semiconductor industry, crucial for the global economy as it accounts for 60% of global production, is threatened by periods of drought. Taiwan, one of the largest chip producers in the world, heavily depends on water for its complex manufacturing processes.?For instance, Taiwan Semiconductor Manufacturing Co. (TSMC), the largest contract chip manufacturer globally, uses up to 99,000 tons of water daily, not including the water consumed by other facilities across Taiwan.?

Semiconductor manufacturing companies primarily use water for cooling and cleaning residuals from silicon wafers (the wafer is a slice of silicon used as a substrate in the production of integrated circuits). In particular, cleaning semiconductors requires the use of “ultra-pure” water that is thousands of times “cleaner” than drinking water as it is devoid of any minerals and other characteristics that could damage chips.?

Although Taiwan receives sufficient rainfall to support current demand, the irregularity and morphology of the territory make it difficult to collect and store this resource. From 2015 to 2019, TSMC’s total water consumption increased by a staggering 70%. By 2036, it is expected that Taiwan’s total water consumption will exceed 7.3% compared to 2021, creating a daily supply deficit of 680,000 cubic meters. Even during typhoon season, Taiwan will struggle to supply its chip industry with its most precious natural resource. During drought periods, the scarcity will be even more intense.

To make matters even more alarming, climate change threatens to bring longer and more frequent droughts. Taiwan’s reservoirs heavily depend on summer typhoons to replenish depleted water levels. With fewer typhoons passing through and longer periods without consistent rainfall, reservoirs across the island will be under increasing pressure.

In light of these premises, water scarcity could heavily impact not only the local economy but also the entire global technology sector, creating new vulnerabilities for the global industry. In the face of this alarming scenario, several experts argue that better water resource management is necessary to avoid future crises. Some suggest adopting water-saving technologies, such as wastewater treatment and desalination, along with international cooperation policies aimed at peacefully resolving disputes over transboundary waters.

In conclusion, the water crisis is no longer just an environmental issue but a problem that is redefining global geopolitical and economic dynamics. If not managed properly, it could generate new conflicts and exacerbate inequalities, influencing the stability of entire countries and economic sectors.