I went to one of the best geopolitical risk firms in the world and asked a simple question: does water matter to you?
The answer was hell yeah — and increasingly more.
Think about the problems that will be waiting for you at the office on Monday.
A project that isn’t getting signed because investors are hesitating over a country they no longer feel comfortable with.
A contract manager suddenly rediscovering the force majeure clause due to war scenario and reading it out loud in every meeting.
Energy costs climbing for operators until the business model that closed the financing no longer holds.
Equipment you have to purchase now, knowing perfectly well that in a few months it may be 15% cheaper — that’s what they say — but your schedule doesn’t wait, so you commit anyway.
Logistics are their own theatre. A container that cost 3,000 last year costs 9,000 today, and it lands on a budget line you priced eighteen months ago.
Cost estimation itself is now sustained by volatility, which means the moment before signature has become the most uncomfortable moment of the whole project.
High-level business plans in large companies get disrupted by factors nobody in the room controls.
A tender being prepared in a country facing elections in the coming months might simply be cancelled — not because it was a bad project, but because the government that wanted it is no longer there.
Water scarcity in a region that can unlock economic disruption and become a national security matter.
Your neighbour is building dams upstream on the river you depend on.
Transboundary treaties written in another era are under pressure.
Geopolitics shapes our lives.
It also shapes the water business — and increasingly, the water business shapes geopolitics back.
And that’s how I met Nick Kraft, leading water coverage at Eurasia Group, a world top-class political and geopolitical risk advisory firm founded by Ian Bremmer, headquartered in New York with offices around the world.
I wanted to understand the water–geopolitics nexus from the other side of the table, from the desk where investors and multinationals go to ask whether a country is worth the risk.
What today’s conversation covers
For those of you who like to know where you’re going before you start:
Why Eurasia Group is scaling up its water coverage, and how water moved from a background stressor to an explicit strategic axis
“The water weapon” — water as risk number ten in Eurasia Group’s 2026 Top Risks report, and what that framing actually means
Real-world flashpoints: attacks on desalination infrastructure, cyberattacks on critical water systems in the US, Mexico–US tensions, India–China dam building, Egypt–Ethiopia..
Who actually buys geopolitical intelligence on water — and why
Why governance is the weakest link, in an era where multilateral coordination is at its hardest
The commitment-to-execution gap: why big announcements don’t become projects
Winners and losers from Eurasia Group’s Water Outlook — and where our sector sits
Where Nick is optimistic and where he isn’t, ahead of the UN Water Conference
Why Nick wrote to me interested in knowing more about water credit market space?
If you’re in New York over the next few days for Climate Week, reach out and meet Nick in person, either through LinkedIn or our Networking WhatsApp Group. Great guy, as you can tell from the interview!
By the way, this is a great example of how serendipity works—and how a positive domino effect can come from building good relationships and investing time and effort without knowing exactly what you’ll get back, or when.
You may remember that I attended the Rethinking Water Conference in New York exactly one year ago.
During my breakout session, one of the audience members was Jennifer Sara, former Global Director of the Water Global Practice and Climate Change at the World Bank. She later joined our community and became actively involved.
At some point, she asked me if I knew someone with expertise in AI and water, as she was helping organise a webinar for IWRA (International Water Resources Association).
I suggested Dragan Savic, and Gabriel Eickstein, the immediate former President of IWRA, mentioned also a few other potential panelists and candidates to contact. One of them was Nick.
That happened at a time when my brain was going crazy with geopolitics back in March, and I was looking for the best references and people to learn from.
So it’s fascinating to see how these stories develop. One conversation leads to another, one relationship creates another opportunity, and after months of work and conversations, I can finally bring you this today.
You never really know where a conversation, a connection, or an investment of time will take you. That’s the beauty of serendipity—and of communities like this one.
From background stressor to explicit strategic axis
Every January, Eurasia Group publishes its flagship Top Risks report: ten risks the firm considers most likely to define the year ahead.
Water appeared on that list in 2023, and it’s back in 2026 as “the water weapon.”
The 2023 entry was about stress.
The point was that water stress isn’t only a physical risk, it’s a macro-political one.
It dictates policy at national and local level, and it travels across borders.
The 2026 entry is a graduation of that idea.
Nick described the underlying logic:
🔥 If you have extreme water stress, the gas is already running. All you need is a spark.
That’s the difference between the two entries. Three years ago the argument was this matters. Today the argument is this is now combustible.
For a long time — not everywhere, but in most places where our industry sells its services — water was publicly understood as effectively infinite.
It appears in the tap. Nobody asks where from, or how fast it’s being depleted or replenished.
That mental model is now breaking. The UN has argued this year that terms like “water stress” and “water scarcity” are no longer adequate; they’re too light, they don’t carry the urgency.
Countries like Mexico are explicitly reclassifying water as a matter of national security and a human right, to be tightly controlled and tightly looked after.
Nick expects that trend to keep spreading — across Latin America and well beyond it.
For those of us who build and operate infrastructure, that reclassification changes permitting, concession terms, who signs, and how fast…
The water weapon in practice
Desalination infrastructure has been targeted directly, with obvious implications for potable supply in regions that have very little redundancy.
In the US, there’s been heavy reporting on cybersecurity attacks against critical water infrastructure.
I told Nick about my own version of this. When I was building desalination plants in the Middle East, friends would ask whether the situation was affecting us.
Yes — bombs falling four hundred metres away, because our plant sat inside a power complex under a public-private partnership structure.
The target may well have been the power plant. But when the desal is inside the complex, the distinction stops mattering very quickly.
Beyond open conflict, the pattern shows up in quieter forms:
Sub-Saharan Africa, where controlling water at local level is used as a tactic to control groups of people, layered onto agricultural and livestock needs
Mexico and the US, where water sharing has escalated to the presidential level, with both leaders exchanging blows publicly over allocation
India and China, where dam building on the border is a permanent source of friction
Egypt and Ethiopia, the textbook case of upstream construction reshaping downstream leverage
The structural framing here is upper versus lower riparian states — the countries sitting at the top of the river flow versus those living with whatever the upstream neighbour decides to release.
As water becomes scarcer and more strategically valuable, the desire to control it only grows. Expect that tension to keep playing out.
Who pays for this, and why it should interest you
I wanted to understand the demand side. Who actually buys geopolitical intelligence on water?
Nick simplified it into two buckets.
Financial institutions — asset owners, asset managers, funds allocating capital globally…
Risk mitigation is part of every capital allocation decision, and water has moved firmly into the set of risks that must be understood before money moves.
Multinational corporations — companies with operations spanning countries and regions, trying to understand the politics of water in a given market: what’s permitted, what isn’t, what counts as good or bad practice, and what a local population will actually accept. That last variable changes drastically depending on where you are.
The questions they’re now asking their geopolitical advisors are the same questions that will land on your desk six months later as a change in tender conditions, a delayed financial close, or a country suddenly moving off the target list.
Governance: the weakest link
Water is a flowing, transboundary resource. Which means governance is, unavoidably, a question of multilateral coordination.
And as Nick put it, we are not in an era where coordination and collaboration are at the top of the agenda. Rather the opposite.
A majority of transboundary water agreements are relatively weak and not necessarily enforceable.
Some countries refuse to share transboundary water data at all, which makes it close to impossible to plan around river flows changing in real time.
Meanwhile the underlying stress isn’t going anywhere — if anything it’s getting worse.
So governance systems need to get better precisely at the moment when the machinery for building them is at its least functional.
This is where I connect it back to my own work on the Knowledge Hub. One of the things that becomes obvious the moment you start mapping water governance country by country is that there is no global standard.
Each country, each region, each basin operates on its own logic. That fragmentation is itself a geopolitical fact, not just an administrative one.
The gap between announcements and projects
Here is the frustration I hear constantly from members across the globe: the announcements are enormous, and the implementation is slow.
Nick’s diagnosis has three parts.
Capacity. Permitting, planning, implementation capacity. The money can be committed long before anyone can actually deliver.
Price. There’s a historical, baked-in mentality that water is cheap — that it’s simply there. The economics of water suggest the price is chronically too low relative to the cost of getting water to homes. Nobody is campaigning for higher bills, but that mentality quietly justifies not spending billions on infrastructure.
Urgency. Frankly, it hasn’t been there. The silver lining — and Nick was explicit that this is his optimist hat — is that as the problem worsens, urgency will arrive, and urgency sparks action. The obvious risk is that it arrives too late.
And this isn’t a regional issue. Across continents, the same question keeps coming back: where did the money actually go, how fast is it moving, and when do these projects become real?
Winners and losers
Eurasia Group publishes an annual Water Outlook, and I’d picked up its expected winners and losers list.
Winners
desalination developers,
reuse
irrigation efficiency providers
It tells you the direction of travel: toward alternative sources that haven’t been drawn on before, and toward maximising efficiency in agriculture, the single largest water-using industry there is.
There's a fourth winner that is expected on 2027 outlook report: the professionals who keep learning.
Nick agreed when I raised it, and I don't think it's a throwaway. Every item on that winners-and-losers list is a decision someone has to make under uncertainty — which technology, which market, which counterparty.
Nobody makes those decisions well from a standing start.
The people who spent the previous two years building context are the ones who will move quickly when the urgency finally arrives.
Losers:
leaky utilities and
hydro-reliant grids.
On leaky utilities, the examples write themselves — the fight over Thames Water in the UK, and Tehran as the extreme case, where poor planning and leaking infrastructure produced a genuine crisis.
Cities in South Africa and Mexico have come close to day-zero events. We know how bad it can get.
On hydro-reliant grids, add drought and La Niña and you get something bigger than the way we traditionally think about water.
It stops being only about consumption and business operations and becomes an energy security question.
Layer AI and data centre demand on top — a topic rising fast in political salience — and water is no longer a sector. It’s an input to everything else.
Optimist or pessimist?
Nick describes himself as an optimist by nature, and as someone deliberately careful not to let that optimism take up more space than the analysis can support.
His optimism comes from the conversations.
Private sector, public sector, academia, nonprofit — everyone is talking, and increasingly talking across silos rather than within them. The interest in translating discussion into real projects, real policy advocacy, real efficiency work, is genuinely there.
His pessimism comes from the same place the whole conversation started: geopolitics. Moving the needle on water requires a very healthy dose of coordination and collaboration.
Without it, the hill gets steeper — and the hill was steep enough already.
The UN Water Conference in December, hosted by the UAE with Senegal, is the obvious test. Nick will be there, along with Climate Week in New York and the various COPs.
If you’re attending any of them, he’s open to connecting as described at the beginning of this publication.
The credit markets nobody has figured out yet?
A few weeks before we recorded, Nick sent me a message mentioning that he’d been looking closely at water and biodiversity credit markets, trying to understand how these relatively new mechanisms actually work.
I personally recommended him to my colleagues at Aqua Positive, as I know part of the team behind it, and I firmly believe they have great knowledge and valuable insights into what’s happening in this space and, more importantly, how they can genuinely help address these challenges.
It caught my attention because it’s one of those corners of the sector where I can see a lot of movement.
So I asked him why he was spending time there.
He’s studying them because he’s scanning far and wide for the kinds of mechanisms and solutions that different stakeholders are inventing when a physical resource starts becoming scarce. Credits are one specimen in that collection.
The finding, in a nutshell: they are very, very nascent. Nothing is perfect at this stage. It’s all very new.
Carbon credits were nascent once too. And the degree to which carbon credits have become polarizing is a telling sign for how future credit markets may or may not unfold, and for the kind of pushback and criticism they can expect.
The carbon analogy cuts both ways. It proves the path exists. It also shows you exactly where the path leads if the integrity questions aren’t answered early.
What Nick found interesting was the growing body of stakeholders now asking the questions underneath them: what can we invest in, what can we hedge our operations with, how should we be thinking about this resource.
That’s the real signal.
The alarm bells about water not being an infinite resource have been ringing for a long time.
What’s changed is that people with capital are finally treating it as something that has to be meticulously planned and gamed out across scenarios, rather than drawn on indefinitely.
What I took away
Geopolitical intelligence isn’t a luxury layer for people who read foreign policy for fun.
It’s becoming a standard input into cost estimation, into tender go/no-go decisions, into where you deploy your business development effort, into how you write a force majeure clause. If water is moving from background stressor to explicit strategic axis, then the people building, financing and operating water infrastructure need to be reading the political map with the same seriousness they read a hydraulic one.
We can’t control the geopolitical shifts. We can be as prepared as possible for them. That, more or less, is the job.
(And for the record: Nick has been invited to the first Water MBA event in Seville, Spain in 2030. World Cup year, to witness our local irrigation techniques by day, and — with any luck — a second consecutive trophy by night.)
Key quotes
On the risk framing
“If you have extreme water stress or extreme water scarcity, it’s almost like the gas has already been lit or is already running, and all you need is just a spark for something to explode into a wider conflict.”
On how water is classified
“In the past, water was kind of publicly understood to be almost this infinite resource. It kind of magically appears in your sink, in your shower. There’s not a ton of thought around where is it coming from and how quickly, if at all, is it being depleted or replenished. That is starting to change.”
“Phrases like water stress, water scarcity are actually no longer adequate. They’re too light, they don’t capture the urgency enough.”
On the direction of travel
“As water continues to be seen as a very, very important, very critical, and increasingly scarce resource, the desire to control it will only grow.”
On governance
“We’re not really in an era where coordination and collaboration is at the top of the agenda. It’s kind of the opposite.”
“A majority of transboundary water agreements are not necessarily enforceable, they’re relatively weak. There are countries that will refuse to share transboundary water data, which makes it very challenging to plan out and understand how river flows are changing in real time.”
“That underlying water stress is not going anywhere. If anything, it’s getting worse — which means our governance systems need to get better to catch up to that.”
On the price of water
“There’s a historical, baked-in mentality about water that it’s cheap. The cost to get water to homes is chronically low, and it’s developed a mentality of, water’s cheap and we shouldn’t be spending billions of dollars improving infrastructure.”
On commitments versus execution
“The lack of execution has a lot to do with things like permitting, things like planning, things like implementation capacity.”
“Questions remain on: okay, well, where did that money go? How quickly is that money moving? And when are these projects actually going to become ready?”
On urgency
“One of the silver linings of a growing risk and a growing major problem in water stress and water scarcity is that the sense of urgency will come. I would obviously rather it not come too late.”
On credit markets
“They’re very, very nascent. But then again, so were carbon credits at one point.”
On optimism
“The amount of interest and the amount of interesting conversations that I’m having right now is vastly optimistic. It’s extremely rewarding.”
On pessimism
“You need a very, very healthy dose of coordination and collaboration to actually move the needle on all things water. Without that, it’s a steeper hill to climb — and the hill is steep enough already as it is.”
Nick Kraft is Senior Analyst leading water coverage at Eurasia Group. For a general introduction to geopolitics, he recommends the podcasts of Eurasia Group founder and president Ian Bremmer.
