Severe water scarcity is emerging as the biggest climate threat facing the global food industry, yet most companies remain unable to measure whether their resilience investments are actually reducing the risk.
According to the Climate-Smart Resilience Report 2026 from Lumina Intelligence, 42.8% of food industry decision-makers identify water scarcity as the single greatest climate threat to food production over the next five years, while nearly 70% say water resilience is either very important or extremely important to business survival.
Water risk rises as measurement lags
However, just 9.6% currently measure water savings when assessing climate resilience investments.
“We are looking at a significant blind spot at the heart of the global food system,” said Katie Gallagher, insight lead at Lumina Intelligence.
“When a third of Europe’s agricultural land is hit by drought, it isn’t just an environmental issue; it directly hits supermarket shelves and consumer wallets, as we’ve seen with soaring olive oil prices.”
The findings suggest a growing disconnect between awareness and action. While companies increasingly recognise water scarcity as a business risk, many still lack the data needed to understand their exposure to crop failures, supply disruptions and price volatility.
Opportunity for agtech
For the agtech sector, that gap could represent a significant commercial opportunity.
If food manufacturers are expected to track water preservation and resilience more rigorously, they will need technologies capable of quantifying, verifying and reducing water use across agricultural supply chains, creating potential demand for a broad range of solutions, from precision irrigation systems and soil sensors to farm-management platforms, satellite monitoring tools and supply-chain sustainability software.
Speaking to AgNavigator at the recent World Agri-Tech Innovation Summit London, Michael Lee, managing director of Syngenta Group Ventures, said water scarcity is becoming one of agriculture’s defining challenges.
“We’ve seen this summer pretty much across Europe, in the US, water’s going to be a massive problem,” he said. “I like to look at Lake Mead [a reservoir formed by the Hoover Dam on the Colorado River in the Southwestern United States] every so often. That’s about 30% full. That only feeds 40 million people, seven states and two countries. And it’s still going down.”
As of mid-October 2026, data now show Lake Mead at approximately 26.1% of capacity, down from around 30-33% earlier in the year.
Lee argued that climate change ultimately manifests itself through practical farming challenges such as water shortages and rising temperatures.
“Climate change is almost too big a thing. What does climate change mean? It means there’s no water. It means the crops are not tolerant to the heat they’re now being subjected to.”
The Lumina report suggests spending is beginning to shift in that direction. The proportion of companies prioritising water stewardship investments is expected to rise from 15% today to 22% over the next three years, making it one of the fastest-growing categories of sustainability spending.
With nearly 60% of executives citing a lack of clear return-on-investment data as the biggest barrier to action, providers that can demonstrate measurable improvements in water efficiency could be particularly well positioned.
Lee pointed to Phytech, a precision agriculture analytics company backed by Syngenta Group Ventures, as an example of the types of technologies likely to benefit. Often described as a “FitBit for crops”, the company’s platform combines plant sensors, soil-moisture monitoring and environmental data to help growers manage water stress and irrigation more efficiently.
“Phytech is an irrigation decision-support company,” Lee said. “That’s across hundreds of thousands of acres in perennial crops. They’re having a go at row crops. That’s a water-saving device that’s fitted to trees, typically.”
China turns resilience into a growth strategy
While the report identifies widespread shortcomings across the food industry, it also points to a growing divide between China and Western markets.
According to Lumina’s survey of 250 senior executives across food, beverage, ingredient and FMCG manufacturers, Chinese companies are increasingly treating climate resilience as a source of competitive advantage rather than a compliance obligation.
More than half (53%) of Chinese respondents said they are investing more in climate-smart initiatives than they were three years ago, the highest proportion of any region surveyed. These initiatives include regenerative agriculture, water stewardship, biological crop inputs and carbon reporting.
Notably, no Chinese respondent described their approach to climate resilience as compliance-driven. Instead, 47% viewed it primarily as risk management and 20% saw it as a direct driver of innovation and growth.
By contrast, Lumina argues that many Western businesses remain constrained by shorter investment horizons, ROI concerns and regulatory obligations. Internal drivers such as corporate commitments (50%) and investor expectations (37%) are playing a larger role in China, where 10% of companies have fully embedded climate resilience into core corporate strategy, compared with a global average of 6%.
Warning for Western food companies
For Katie Gallagher, the findings point to a broader geopolitical shift.
“What we are seeing in the data is part of a much broader geopolitical shift,” she said. “Just as China moved decisively to capture leadership in electric vehicles and green energy, its food sector is now positioning climate resilience not as a regulatory burden, but as an essential competitive strategy.
“While western businesses are more hesitant over immediate payback periods, Chinese leaders are building supply-chain strength that looks better placed to build climate-smart resilience over the next decade.”
