According to the OECD Environmental Outlook to 2050: The Consequences of Inaction, global water demand is projected to increase by 55% between 2000 and 2050, and tensions could increase as domestic users, manufacturing, electricity generation and other economic sectors compete with agriculture and ecosystems for access to resources. By 2050, over 40% of the global population are likely to be living in river basins under severe water stress.
Despite progress in increasing access to improved water sources and sanitation, more than 240 million people are expected to remain without access to “improved” –but not necessarily safe – water sources by 2050. Almost 1.4 billion people are projected to still be without access to basic sanitation in 2050, mostly in developing countries. According to the World Health Organization, investments to meet the water and sanitation MDGs could have a benefit-to-cost ratio of 7 to 1.
Global water demand: Baseline scenario,
2000 and 2050
Note: BRIICS: Brazil, Russia, India, Indonesia, China, South Africa. RoW: Rest of the world.
Source: OECD Environmental Outlook to 2050: The Consequences of Inaction; output from IMAGE model suite.
Green growth policies in the water sector need to address both quantity and quality issues, encourage water-related innovation and investment in green infrastructures, and they need to be integrated with policies in sectors that have an impact on water availability and use - especially agriculture, energy, and land use. Sustainable financing, effective governance and policy coherence are key.
Environment, health and related dividends
Restoring environmental flows and allocating more water to watershed services will help maintain the valuable ecosystem services they provide. Removing incentives which encourage people to settle or invest in flood-prone areas can reduce the impact of water-related disasters.
Investing in water supply and sanitation infrastructure brings important dividends, in particular in urban slums where unsafe water and lack of sanitation generates huge health costs and lost economic opportunities. Innovative techniques and business models with private sector involvement will be needed.
Additional benefits can include saving energy and cutting investment requirements and operation and maintenance costs.
Pricing and innovation, two related pillars of water policies for green growth
Sustainable pricing of water and water related services can signal the scarcity of the resource, promote efficiency and manage demand. Targeted social support is more effective than low tariffs (or the absence of tariffs) to combine investment in water supply and sanitation systems and affordability for poor households.
Water related innovation is key. OECD work on this issue explores economic and policy issues associated with the use of alternative water resources and innovative technologies, such as smart water systems. Public support for water-related R&D and building the capacity of users is justified to improve and increase the use of appropriate wastewater treatment equipment and techniques, and the efficient management of nutrients and agricultural run-off. Experience shows that building the capacity of users (essentially that of farmers) in target economies through training and education can be even more relevant and effective than transferring technologies.
Current OECD work
Sound water management makes a fundamental contribution to green growth. However, there are a number of aspects of water management that are critical from a green growth perspective, including water allocation, with privileged access to sectors which add most value; investment and innovation, in particular in areas which lower costs and enhance water efficiency; storage, to secure access in the face of uncertainty; and access to water supply and sanitation to all, as huge economic, social and environmental benefits will accrue.
Ongoing OECD work is looking at how these issues are being dealt with by countries to explore policy options in these areas.
OECD work on green growth
Further reading on green growth