Though often considered a national or local issue, water management presents a number of challenges for OECD governments. Environmentally, water bodies are important in regulating atmospheric processes and ensuring ecosystem health. Economically, water provides key inputs to industrial production and municipal consumption activities across political regions and borders.

Rising demand for water is generating concern that the water needs of the environment are not being adequately met. Water supplies continue to be mismanaged and wasted, leading to depleted river flows and contaminated supplies. Effective water management and access to clean water is not only fundamental to environmental health, but also to poverty alleviation efforts in developing countries.

For many countries, the availability of water may become a major determinant of economic growth. Even in nations with adequate water resources, economic activity can be severely limited in areas affected by drought and restricted supplies. Achieving sustainable water consumption objectives will fundamentally depend on changes in the pricing and management of water demand and supply.

The OECD has recently reviewed water-pricing practices in member countries. It has completed a three-year project on sustainable development in which more efficient use of water infrastructure was recommended. The OECD is currently examining of the social aspects of water pricing, public/private partnerships in the water sector, and other related projects.