Resilinc Special Report
How Water Scarcity Is Creating Manufacturing Supply Chain Disruptions Worldwide
In 2025, water scarcity has become a defining challenge for global manufacturing supply chains, disrupting production and reshaping risk planning. Once seen as a localized issue, droughts, aquifer depletion, and declining water quality are now causing widespread manufacturing supply chain disruptions, from semiconductor fabs in Taiwan to copper mines in Chile, food processors in Europe, and SMEs in India. These disruptions expose the broader environmental impact of supply chains, as companies struggle with higher water procurement costs, regulatory crackdowns, and reputational pressure from communities competing for the same scarce resource. Water access is rapidly evolving into a “license to operate” issue that will shape where and how manufacturers expand capacity. For supply chain leaders, resilience will depend on mapping water risk exposure, investing in water reuse and recycling, and rethinking sourcing strategies in stressed regions.
- By 2035, nearly one-third of global semiconductor production may be disrupted due to copper supply risks, many of which stem from water shortage pressures
- The Organization for Economic Co-operation and Development (OECD) warns that the economic cost of droughts has already more than doubled since the year 2000 and could climb a further 35% to 110% by 2035
- Under severe drought projections, EU industrial and economic output could decline by up to 15%, with manufacturing among the worst impacted sectors