The drought gripping Brazil's Sao Paulo state – the worst in nearly a century -- will cause short-term water restrictions, but may also lead to investment in inadequate water infrastructure.
The state of Sao Paulo, Brazil's financial core, remains in a drought of historic proportions, and we expect to continue seeing reports of water shortages in the greater municipal area of the city of Sao Paulo. Further water restrictions and rationing will be necessary if the region does not receive substantial amounts of rain in the next several months. While we may see a small drop in industrial activity, wealthier consumers — residential and industrial — will be able to find and use more expensive alternative sources of water. The shortage may contribute to the slowing of Brazil's economy, but it will not cause a collapse. Rather, the drought will be a relatively short-term water stressor and has the potential to be a catalyst to solve Sao Paulo's larger structural problem of inadequate and inefficient water infrastructure.
