Rain fell in Dubai and parts of the UAE on Tuesday after months of dry weather. Satish Kumar / The National
Rain fell in Dubai and parts of the UAE on Tuesday after months of dry weather. Satish Kumar / The National

Concerns for UAE following lack of regional rainfall



DUBAI // Last year, the Middle East experienced the driest two months since records began, a study by a Dubai agriculture centre shows.

Research conducted by the International Centre for Biosaline Agriculture (ICBA) found that rainfall in January and February dropped from 180 millimetres in 2013 to only 20mm the following year, possibly as a result of climate change and human-induced greenhouse gas emissions – the lowest recorded since 1950.

“That winter was really exceptional,” said Karim Bergaoui, climate and water modelling scientist at ICBA. “It was the lowest yet recorded.”

The monthly data was registered by more than 200 stations scattered across Jordan, Palestine, Lebanon and Israel. “They experienced the most severe drought ever,” he said.

“The average is about 150mm. Sometimes it can go up to 400mm but that year, we registered 20mm, which is nothing. Some wells dropped by 20 metres.”

Tests were conducted around the world, in collaboration with the University of Oxford, covering all uncertainties in climate and the environment.

“We found that 45 per cent of the severity of the event was due to climate change from human-induced greenhouse gas emissions around the world,” Mr Bergaoui said. “The rest was from natural changes, but if we project it to 20 years, it will be worse. Such events will be 30 per cent more frequent than if we didn’t have greenhouse gases.

“The UAE is not an agricultural country, but food prices will be affected because food comes from that region,” he said.

And with at least 85 per cent of the UAE’s food imported, the impact could be high. “Farming in the GCC is a very expensive luxury hobby,” said Jeffrey Culpepper, chairman of Agrisecura in Dubai. “The only solution to making a dent in the food security issue of the GCC is high-tech, low-water-use greenhouses.”

He said the effects of climate change would get more extreme in distorting weather patterns.

“What’s happening in the Levant is not a one-off event, but the new normal,” he said. “No longer can farmers operate on large-scale grain production depending on seasonal rainfall.

“If farmers do not have access to reliable water sources for irrigation, farming as they know it is coming to an end.”

Nicholas Lodge, managing partner at Abu Dhabi agricultural consultancy Clarity, said the region was severely water-stressed due to extraction and excessive use of groundwater supplies.

“This year, we are experiencing a strong El Nino weather system, [when warmer than average water in the eastern equatorial Pacific affects global weather], which may explain the particularly marked decline,” he said. “With low rainfall at the best of times, high summer temperatures and depleted groundwater, the region suffers from very poor agricultural fundamentals. ”

Others blamed it on the lack of education. “It’s a pity that for money and the oil industry, we have put the environment on the back bench,” said Dr Jean-Yves Mevel, aquaculture professor at UAE University.

He said people needed to be aware of their effect on the environment.

“In the UAE, expatriates pay three times the price of water to cut consumption but Emiratis don’t,” he said.

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Name: Kumulus Water
 
Started: 2021
 
Founders: Iheb Triki and Mohamed Ali Abid
 
Based: Tunisia 
 
Sector: Water technology 
 
Number of staff: 22 
 
Investment raised: $4 million 
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Uefa Champions League final:

Who: Real Madrid v Liverpool
Where: NSC Olimpiyskiy Stadium, Kiev, Ukraine
When: Saturday, May 26, 10.45pm (UAE)
TV: Match on BeIN Sports

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Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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