Secrétaire général

Water Economics and Financing

 

Opening Remarks by Angel Gurría, OECD Secretary-General

Book Launch for the Horizontal Water Programme, 16 March 2010, Paris, France


 

Thank you for being here and contributing to the OECD Water Programme. I am deeply convinced that good water management is important for a stronger, cleaner and fairer economy. And we face some urgency. If we don’t do anything, almost half of the world’s population will live in areas of severe water stress in 2030, while climate change will only exacerbate these trends. So, clearly, business as usual is not an option.


To face this challenge, the OECD focuses its efforts on the policy and institutional responses on pricing, financing infrastructure and sustainable management of water resources.

Today, we release three major publications on water. The first one focuses on “Pricing Water Resources and Water and Sanitation Services”. It shows that households and industry in many countries increasingly pay the true cost of the water they consume. However, tariffs vary significantly across OECD countries. A bathtub of water in Denmark and Scotland can cost 10 times more than in Mexico, while Irish households pay no direct fees for water. It also shows that, in most OECD countries, it remains a challenge to balance financial, environmental and social objectives in water pricing policies. For example, low income households in Hungary and Mexico sometimes pay over 4% of their disposable income on water and wastewater services.

   


 >> Watch video: OECD Secretary-General, says water is a precious resource and must be priced accordingly.

Today we also release “Sustainable Management of Water Resources in Agriculture”, accompanied by country-specific background reports on water pricing in Australia, Japan, Korea, Mexico, Turkey, United States. It shows that, while water use by farmers decreased in some countries, especially in Eastern Europe, some OECD countries such as Turkey, New Zealand, Greece and Korea recorded large increases since the 1990s. But, to feed the growing world population, agricultural production is projected to double by 2050. Farmers will thus need to improve water efficiency. For that, they should pay not only the operation and maintenance costs, but also their fair share of the capital costs of water infrastructure. And this will not necessarily hurt agricultural production.


Meanwhile, increasing investment in water and sanitation infrastructure remains a priority in developing countries. “Innovative Financing Mechanisms for the Water Sector” examines ways to attract new financial resources to do so. For example, the Indian state of Tamil Nadu improved small water utilities’ access to capital markets by pooling their investment projects as a package, and combining different sources of capital to fund it. This reduces the risk of default, increases financial volume and cuts transaction costs. Other innovative financing mechanisms have been successfully employed, including blending grants and repayable financing, as well as micro-finance.


But there is much more to be done and the future agenda is open and challenging. Water has always been a high priority under my mandate and will continue to be. We will thus keep working on water issues and complete our menu of policy advice. We will do so by looking at multi-level governance and policy coherence issues, as well as quality aspects of agricultural water management. We will also work further on the important linkages between water and climate change adaptation, including on the role of agriculture. The role of water economics and financing in Green Growth is another important issue for the future. And our latest but ambitious proposal is to develop a “Stern-like” review of water security. I pushed forward this idea in Davos in January, and we hope are working hard to make it a reality.

 

Ladies and gentlemen,


The OECD is, and I am personally, strongly committed to provide analysis and leadership to the development of global water policy. We can bring our expertise in financing and economics of water resource management, including water supply and sanitation. We must join forces with organisations, such as UNSGAB, UN-Water, International Financial Institutions, as well as with governments, private sector and civil society organisations. Together we must face the water challenge. This is crucial for all of us, for our populations, for our economies, for our security. This is crucial for all of us, for our populations, for our economies, for our security…  I look forward to hearing your views, ideas and suggestions on key issues in the interface of water, economics and finance.

 

 

 

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