Drivers of Future Physical Water Scarcity and Its Economic Impacts in Latin America and the Caribbean

Abstract Future water scarcity is a global concern with impacts across the energy, water, and land (EWL) sectors. Countries in Latin America and the Caribbean (LAC) are significant producers of agricultural goods, so disruptions resulting from water scarcity in LAC have global importance. Understanding where water scarcity in LAC could occur and what could exacerbate it is critical for strategic resource management and planning, both regionally and globally. Assessing future water scarcity in LAC is challenging given the complex interactions among the EWL sectors and the multiple uncertainties acting across spatial scales. To illuminate these dynamics, we use scenario discovery on a large ensemble representing diverse futures simulated using an integrated human‐environmental systems model. We quantify future water scarcity and its economic impacts across several physical and economic metrics. We find that future levels of reservoir storage expansion could be a significant driver of physical and economic water scarcity, highlighting the importance of strategic water infrastructure development in maintaining future water availability. Changes in crop profit are driven by both water supply and demand, emphasizing the complexity of EWL multisector dynamics. While most of LAC is poised to have abundant land and water resources available for future development, basins in Mexico and along the Pacific coast of South America experience high exposure to severe outcomes and uncertainty across outcomes for at least one metric. We find that drivers of severe scarcity vary spatially and across metrics, highlighting the region's heterogeneity and the importance of considering multiple metrics to assess water scarcity.