As water becomes a security issue, Greenland’s freshwater reserves become ‘frozen capital’

Water is a finite resource and increasingly a national security issue, analysts told CNBC.

According to a landmark 2023 report on the economics of water, demand for water is expected to exceed supply by up to 40% by 2030. At the same time, climate change is affecting weather patterns and areas that were once rich in water are drying up. As a result, more water must be moved to ensure access.

Freshwater is used in everything from manufacturing to agriculture, and demand is expected to increase as the population grows and water-hungry AI data centers are built.

With water increasingly viewed as a strategic asset, market watchers are eyeing Greenland’s freshwater reserves as a potential resource. The Danish territory itself has recognized its strategic potential and has long focused on exploiting its assets.

“Water’s potential is wide-ranging, as clean fresh water can be used not only for drinking and food production, but also as bulk water for factories and farms, or to contribute to a bulk water supply,” according to a statement on the Greenland government’s website. “There are many possibilities.” CNBC has reached out to Greenlandic authorities for further comment.

Only about 3% of the world’s water is fresh water, the basis of adequate drinking water, and an even smaller amount is readily available.

“Historically, we’ve just kept drilling deeper and deeper into the water table, and now we’re at a point where aquifers can’t replenish automatically. It takes a long time for surface water to seep down,” says Noah Ramos, an analyst with water technology expertise and innovation at Alpine Macro. He added that simply digging deeper can no longer be “trusted.”

Resource nationalism has become a “definitive” geopolitical strategy, and that includes water, he said. “So water has essentially become a strategic asset.”

Ramos added: “Countries that don’t have it as a strategic asset at the moment are in a better position in the long run because they will be forced to innovate.” He pointed to investments in technologies in the Middle East and in countries such as desalination, which turns seawater into drinking water, and Israel, which recycles most of its water.

The United States, South America and Canada, which have historically been blessed with abundant water, are in a difficult position as they face new levels of water stress, Ramos said.

Indeed, half of the world’s population experiences water scarcity for at least one month of the year, calling public health and food security into question. What is noteworthy is that China is strengthening its water infrastructure. As part of the country’s National Water Network Strategy, investments amounted to approximately $182 billion in 2025 alone, according to a government announcement. Like the US, the eastern powers have an uneven distribution of water. The US has its own water strategy, while the European Commission is pushing ahead with a ‘water resilience’ plan.

Most of the world’s fresh water is trapped in glaciers and ice sheets, primarily in Antarctica and Greenland. According to the Greenlandic government, up to 300 billion tons of water melts from the Greenland ice sheet every year.

“It makes sense that Greenland’s freshwater reserves, which represent 10% of all global reserves, are mostly frozen capital and not a readily available supply,” Nick Kraft, senior analyst for water, agriculture and responsible investing at Eurasia Group, told CNBC.

“Greenland’s water is a strategic asset and a niche business opportunity, but it is not a realistic short-term solution to global water stress or demand,” he said.

Still, some people are looking to harness snowmelt water as climate change accelerates. Notably, a start-up company, Arctic Water Bank, planned to build a dam to store meltwater and export it internationally. It is unclear what happened to the company, but the dam was never built. Kraft noted that another company, Inland Ice, is bottling it as premium high-purity drinking water. Currently, five companies have valid 20-year licenses, including the Greenland Water Bank, which is reportedly connected to billionaire Estée Lauder heir Ronald Lauder.

“Authorities are open to proposals as ambitious as building dams to export water,” Craft said. “But the real-world track record is telling. What has actually happened so far is small, high-end boutique exports, and many larger export ideas have been announced and fallen through the cracks.”

Eric Swingedoe, a professor at the University of Manchester who specializes in the intersection of resources and governance, told CNBC that exporting water is not easy because of its weight.

“The cost is huge,” he says. “There have been attempts to transport large amounts of water (overseas), but none have been viable in any way.”

It is common to move water overland through canal systems and vast infrastructure networks. However, it has been transported in emergencies, most notably to Barcelona during severe droughts in 2008 and 2024.

“The reality is that it’s very, very difficult to make money from water. There have been attempts to privatize water for 20 years without much success,” Swingedoe said.

While some geopolitical tensions involve water disputes (for example, China’s plans for the world’s largest dams have raised concerns in India and Bangladesh), unequal distribution of water is likely to cause friction within countries, Swingedoe said.

He added: “We believe that part of the rebellion that is occurring in Iran is related to the huge drought that has been going on in Iran for some time now, which has made life in Iran very difficult.”

The country is experiencing its sixth year of drought, with access to water regularly cut off in some cities.

Asked whether it was in the government’s interest to secure water resources to prevent civil unrest, Swingedoe said: “Not all states are the same.”

“Therefore, the Iranian state has systematically ignored the development of these basic infrastructures, the consequences of which we know, and they have done so for geopolitical reasons. Iran is putting all its money into its military, which is basically their choice,” he added.

Mr Swingedoe called for the government to place greater emphasis on providing water as a public service.

Mr Craft added: “Water is increasingly being treated as a strategic asset, more like critical infrastructure than a commodity, as a changing climate and increasing demand make water security a national security issue. This will generate even more headlines about the potential for water exports, but I don’t see anything significant changing before the end of the decade.”

“Even if Greenland’s fresh water is not exported on a large scale anytime soon, it remains geopolitically important.”