We need to talk about water – but not in the way we’re used to

Water has, historically, been framed in the UK as an issue of excess. Flooding dominates headlines, shapes planning policy and drives risk assessments. But there is a quieter, less visible risk emerging alongside it: too little water, in the wrong places, at the wrong time.

Following successive summers of hosepipe bans and warnings of drought conditions, including the drought officially declared across parts of England in 2022, the UK’s relationship with water is beginning to shift. What was once considered a reliably water-abundant country is now confronting the realities of water stress.

For the property sector, that shift raises an important question: are we thinking about water risk broadly enough?

A growing imbalance

At first glance, the idea of water scarcity in the UK seems counterintuitive. Annual rainfall remains relatively high; however, increasingly there are issues in distribution of rainfall and demand for water.

Population growth, ageing infrastructure and climate change are combining to create pressure on water resources. The Environment Agency has warned that by 2050, England could face a daily shortfall of billions of litres of water if action is not taken. At the same time, per capita water consumption in England remains high at around 140 litres per person per day – compared to closer to 120 litres in France and approximately 125 litres in Germany, illustrating that demand-side pressures are not inevitable and can be influenced by policy and behaviour.

Crucially, much of the demand is concentrated in the south and east of England (areas that are already among the driest).

The result is a growing mismatch: more demand where there is less water available.

From environmental issue to commercial risk

Unlike flooding, drought does not typically cause immediate, visible damage to property assets. But its impacts can be just as disruptive, albeit in more indirect ways.

For example:

• Water supply restrictions can affect construction timelines, delaying projects due to a lack of consistent availability of water.
• Commercial occupiers may face operational constraints. This applies particularly in manufacturing, life sciences and data centres which rely on constant supplies of water to run machinery and apparatus.
• Local planning authorities are increasingly required to consider the impact of a new building, development or activity on the water demand in the local area, limiting development unless water use can be offset elsewhere in the community.

In some areas, developers are already being required to demonstrate that new schemes will not increase overall water demand. This effectively introduces a new layer of constraint alongside nutrient neutrality and other environmental considerations.

This shifts water from a background utility to a front-of-mind development issue, and one that isn’t necessarily easy to control or predict in a changing climate.

Rethinking due diligence and design

As with flooding, the implications for due diligence are significant, but rather than asking “is there too much water?”, the question becomes: “Is there enough – and how reliable is that supply?”

Typically, drought risk is not something that currently gets disclosed by the usual property searches. Investors themselves, particularly those looking to develop, might instead need to consider:

• Assessing local water resource availability and future supply projections.
• Understanding whether abstraction limits or restrictions are likely to tighten.
• Checking for and complying with planning constraints linked to water neutrality or sustainability requirements.
• Evaluating the resilience of supply for water-intensive occupiers.

Design considerations are also likely to evolve. Increasingly, developers and investors are needing to explore incorporating monitoring and conserving features, such as:

• Water efficiency measures, such as low-flow systems and smart metering.
• On-site water recycling and rainwater harvesting.
• Sustainable drainage systems that can serve a dual purpose – managing flood risk while capturing usable water.

In doing so, water becomes not just a constraint, but a design and value consideration.

Valuation, investment and ESG pressures

Investors are coming under increasing scrutiny to demonstrate in their ESF frameworks how assets will perform under future climate scenarios, including constraints on resources. Properties that rely heavily on water, but lack resilience measures, may be more vulnerable to interruptions of business operations at a site, reduced attractiveness to tenants and, ultimately, downward pressures on value.

Conversely, assets that can demonstrate water efficiency and resilience may benefit from enhanced ESG credentials and less interruption to operations, leading to stronger tenant demand and greater long-term stability in values.

In this sense, the risk of drought is as much another dimension of climate resilience strategy as the risk of flooding is.

A more nuanced water conversation

Perhaps the most important shift is conceptual.

Flooding and drought are often treated as separate issues. But in reality, they are two sides of the same coin: a more volatile, less predictable water cycle.

Periods of intense rainfall followed by extended dry spells place strain on land and infrastructure that was not designed for such extremes. Managing that volatility requires a more integrated approach, one that considers both excess and scarcity of water across a cycle (both in the short and long-term), and how water moves through systems over time.

For the property sector, that means broadening the conversation. Water is no longer just about drainage or flood zones. It is about availability, reliability and long-term sustainability.

So yes, we do need to talk about water. But not just when there is too much of it. Increasingly, the bigger question may be whether there will be enough at all – and what that means for how, where and even whether we develop a property.

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