Opening remarks by Angel Gurría
Monday 13 April 2015
(As prepared for delivery)
Dear Panellists, Ladies and Gentlemen,
It is my pleasure to welcome you to this OECD side event on water and cities. This topic has shaped our work since the 6th World Water Forum in Marseille, and has led to four OECD reports that I am launching today.
The water challenge is one the most pressing issues of our era. OECD projections estimate that by 2050, the world’s population will rise to over 9 billion, 4 billion of whom will live in severely water-stressed basins, with around 1.4 billion expected to remain without access to basic sanitation.
The water crisis is also an environmental crisis. The deterioration in water quality is estimated to have already reduced biodiversity in the world’s rivers, lakes and wetlands by about one-third.
The rate of global groundwater depletion more than doubled in the second half of the 20th century. And global water demand is projected to increase by 55% to 2050.
Rapid urbanisation means that many water-related challenges are playing out in our cities.
By 2050, 86% of people in the OECD will be living in urban areas. Ensuring a sustainable future will mean getting water policy right in cities. This is what we are trying to do with this report, Water and Cities: Ensuring Sustainable Futures.
OECD city dwellers enjoy high levels of water security. However, cities in several OECD regions already experience severe or recurrent scarcity. The number of areas and people affected by droughts in Europe rose by almost 20% between 1976 and 2006, at a cost of 100 billion Euros. In Mexico, increasingly severe droughts are projected to occur in cities located in the Central, Jalisco and Chiapas regions. Cities in Australia and the United States are also facing the persistent threat of drought.
But even cities not on the front line of droughts may not be fit for emerging challenges, particularly as climate change is generating uncertainty about future water availability and demand. The report sets out three main challenges that cities face in providing safe, reliable and sustainable water.
Firstly, the economic, social and environmental costs of water security are rising. Cities are increasingly competing for water with farmers, energy suppliers, and the environment. In contested basins, competition will intensify as cities expand and fetch water from ever-distant surroundings.
A second major challenge is ageing infrastructure. Traditional financing has supported the operation of existing infrastructure and kept tariffs low. But has been less successful at financing the upgrade or replacement of assets. Ageing undermines efficiency. For example, leaking pipes generate environmental and financial costs as water is wasted.
A third challenge lies in water governance. In all countries urban water management suffers from governance gaps, notably fragmented institutions, weak capacity at the local level and tensions between water, energy and land policies. To address this, governance structures need to be able to adequately regulate water services, manage water resources across multiple scales, at sub-basin, local, national and transboundary levels, and engage a wide variety of stakeholders.
The report shares innovative responses to these challenges from cities in the OECD. I would like to share with you some of our main findings:
In terms of financing, it’s time to refine the 3Ts (Tariffs, Taxes and Transfers). Tariff structures and business models need adjusting in order to secure stable revenues in the face of declining consumption. This is the case in several cities in California, where pilot programmes have decoupled revenues from the volume of water sold. Governments could also consider taxes on those who benefit from increased water security or who generate higher costs and externalities. For instance, in France, cities can levy a tax on owners of sealed surfaces, which generate polluted stormwater run-off and prevent groundwater recharge.
In addition to financing, the report sets out how cities and rural communities can cooperate to tackle water scarcity, floods and pollution. For instance, Munich and Paris compensate farmers who protect catchments from agricultural pollution. In the Netherlands, cities can compensate farmers for the use of farmland to buffer against floods. National governments should provide incentives and institutional mechanisms to foster win-win-win solutions benefiting cities, local communities, and ecosystems.
As competition between cities and other water users intensifies, water allocation regimes become increasingly important in improving efficiency, reducing conflicts and providing incentives for innovation and investment in greater efficiency. Another new report, Water Resources Allocation: Sharing Risks and Opportunities provides policy solutions for sustainability in the face of heightened competition.
For water governance to be effective, cities need to manage water at various scales – from basin to catchment to individual buildings. A mechanism consistently used in OECD cities is metropolitan governance: it offers the ability to combine different scales and pool resources across municipalities in a metropolitan area. For example, “Consortia” in Italy and Spain are inter-municipal vertical organisations with a board and staff to manage the drinking water supply cycle, from production to distribution.
To support better water governance in cities, the report also focuses on dedicated regulatory bodies for water utilities and stakeholder engagement. Where they have been established, water regulators can significantly contribute to improved urban water management through greater transparency and improved credibility of decision-making.
Better stakeholder engagement can help build trust and ownership, secure willingness to pay for water services, raise awareness of water challenges, ensure accountability, and foster innovation and inclusive decision-making. The report highlights a number of ‘Principles for effective stakeholder engagement in water-related decision-making’, for example how to help cities prevent consultation fatigue and capture by over-represented groups.
At the OECD we are committed to supporting more effective water policies and governance. Here in Korea I am also launching two studies on regulation and better stakeholder engagement: The Governance of Water Regulators and Stakeholder Engagement for Inclusive Water Governance. Alongside our report on water and cities, and water resources allocation, together these four reports constitute an up-to-date and evidence-based library of case studies, analysis and recommendations on water.
Ladies and Gentlemen:
Water policies around the world are in urgent need of reform. With almost 70% of the world’s population projected to live in cities by 2050, there is no sustainable, water-secure future without good urban water management. So I urge you to be bold, creative and ambitious as we make the most of this unique opportunity to find better urban water policies for better, more sustainable lives.