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This year’s drought in Brazil has left the state of Sao Paolo with its lowest-ever water level.

The Cantareira water system, the largest of six in the area, has reservoirs at less than 15 percent of their normal level.

Wagner Ribiero, a professor at the University of Sao Paolo, warns that if the drought continues, the Cantareira system may not able to meet the demands of the 2014 FIFA World Cup period.

“Currently, the extraction and processing of drinking water has consumed about 20 percent of the water, and this can be improved. On the other hand, we should enhance industrial water usage and recycling,” Ribero explained.

Source

I'm wondering what the words "consume" and "improve" really mean in this context.

My perception:
Currently, the extraction and processing of drinking water has destroyed about 20 percent of the water and this can be fixed.

Another possible interpretation:
Currently, the extraction and processing of drinking water has provided / supplied about 20 percent of the water and this can reach to a higher percentage 30 or 40 percent.

In other words, what can be improved? The amount supplied (which can improve by going up), or the amount lost (which can improve by going down)?

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Consumed: In this context, it means 'used up'. It's similar in meaning to how you would normally use the word. It can also mean 'wasted'.

Improved: The first part of the sentence describes the current situation. It is this situation that needs to be 'improved'. The situation is improved when a better solution is found: in this case, when less than 20% of the water has been used up.

Note: When consumed is used in this context, it tends to describe something negative, as 'consuming' something is similar to wasting the resource by using to much of it. Your perception is perfectly correct.

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