Half of the world’s population might not have enough water by 2050. That’s not over-dramatic – that’s according to the UN.

“It sounds serious and it should do. Water scarcity is one of the biggest environmental challenges of our time,” says Lucy Acton, HSBC Global Research’s Environmental, Social and Governance Analyst.

“Water provides the basis of natural, social and even financial capital around the world and when it becomes scarce, ecosystems, societies and economies start to break down.”

Why is the water crisis becoming so serious? Here are five things you might not know:

1. Water is hidden in everyday items

Some countries that already suffer from water stress are literally exporting water – because they produce goods and services containing high levels of ‘virtual water’ (see box).

2. Most water is wasted

UN data shows that 80% of global wastewater goes untreated. It can contain everything from human effluent to chemicals, posing significant pollution risks as well.

3. Water scarcity causes conflict

According to the World Water Organisation, water has been the cause, trigger or weapon in conflicts going back to the start of human history – 3,000BC.

4. Climate change will lead to mass migration

Desertification, rising sea levels and extreme weather events are making land uninhabitable. The UN estimates that by 2050, changes to the water cycle could displace 200 million people,

5. Water trading could help

Treating water like a commodity, and trading it within a well regulated market, could help ensure it’s allocated and distributed in a more sustainable way in the future.

“It’s more important than ever for investors, companies and governments to recognise the risks we face as the quality and quantity of water supply increasingly comes under threat,” says Lucy.

Go deeper into the cause, effects and possible solutions for the water crisis in HSBC Global Research’s report (opens in new window) .