Assessments of water resources and their management

7. What is the impact of water resources on economy?

Water is a vital factor of all types of production, so diminishing water supplies translates into slower growth. Some regions could see their growth rates decline by as much as 6 % of GDP by 2050 as a result of water-related losses in agriculture, health, income and prosperity.

Water supply and sanitation require a huge amount of capital investment in infrastructure such as pipe networks, pumping stations and water treatment works. It was once estimated that the Organisation for Economic Co-operation and Development (OECD) nations would need to invest at least US$ 200 billion/ year to replace aging water infrastructure to guarantee supply, reduce leakage rates and protect water quality¹².

Ensuring a sufficient and constant supply of water under increasing scarcity is thus essential to achieve global poverty alleviation goals:

• (i) Optimizing the use of water through better planning and incentives will help to improve welfare and increase economic growth. Economic instruments such as water permits and prices, if well implemented and enforced, can improve stewardship of water resources.
• (ii) Expanding water supply and availability where and if appropriate which is vital. This includes investments in water storage, water reuse and recycling and, where viable, desalinization. These interventions must be accompanied by policies to promote water efficiency and improve water allocation.
• (iii) “Water proofing” economies to limit the impact of extremes and uncertainties is also among the top priorities. Better urban planning, expanding crop insurance to protect farmers, and citizen engagement will build resilience and minimize economic impacts of adverse events.

Water is also crucial in determining whether the world will achieve the Sustainable Development Goals (SDGs) of the United Nations. The world needs thus a fundamental shift in how:

• (i) Understanding Water which means making evidence-based decisions about water using strengthened water data;
• (ii) Valuing Water which means recognizing the values that societies accord to water and its uses, taking these into account in political and business decisions including decisions about appropriately pricing water and sanitation services;
• (iii) Managing Water which means pursuing integrated approaches to water resource management across local, national, and regional levels.