Remarks by Angel Gurría, Secretary-General of the OECD, Stockholm World Water Week,
"Water Security for Better Lives”, OECD - Global Water Partnership Side-Event, 2 September 2013
(As prepared for delivery)
Distinguished representatives from the Global Water Partnership, Ladies and Gentlemen,
I am delighted to be here today to launch the OECD’s flagship report on Water Security for Better Lives.
Water security is one of the key challenges of our time. To put it simply: we, human beings and our ecosystems - the planet - cannot survive without water. And the challenges ahead of us are daunting.
By 2050, the OECD Environmental Outlook projects that more than 40% of the world population – nearly 4 billion people – will live in river basins under severe water stress (where withdrawals exceed safe levels). By 2050, flood risks are projected to be significantly higher than today, affecting more than 1.6 billion people and economic assets worth some USD 45 trillion. And the outlook for water quality is also bleak: by 2050 nitrogen effluents from wastewater are projected to grow by 180% globally! At the same time, climate change is reshaping the future for freshwater – increasing water risks and generating greater uncertainty about future conditions.
Thus, we need to build our capacity to respond to these water security risks appropriately. This means taking action now in order to avoid or at least reduce future risks.
Our report on Water Security focuses on how to best address water risks by identifying them, targeting them and managing them. It suggests a radical shift in our approach, one that would prioritise risk management, clearly define acceptable levels of risk, and ensure policy coherence with other environmental objectives. This new approach has been put into practice in another new OECD report – Water and Climate Change Adaptation: Policies to Navigate Uncharted Waters, which provides guidance to policy makers on how to improve water policies and investment strategies to better deal with increasing water risks and uncertainty.
Shifting to a risk-based water security approach.
The main message of our work is that, first and foremost, we must adopt risk management in any approach to water security. This will bring us beyond the conventional wisdom that has erroneously equated water security with sufficient access to water. We now understand that achieving water security requires a much broader vision than just ensuring access to water; it requires managing risks!
Water security must address the risk of water shortage, of course, but also the risk of water excess (including flood risks), the risk of water pollution, and the risk of crossing critical ecological tipping points that can undermine the resilience of natural water systems, such as rivers, lakes and aquifers.
The cost of these risks to society illustrates their magnitude. Take last year’s drought in the US and the floods in Thailand. These events caused huge economic losses at a time when the global economy was still struggling to recover from the recession. Given the growing interdependencies in production networks and the global value chains that straddle international borders, the floods in Thailand led to considerable disruption to world trade.
In the past, managing water risks focused on protecting human lives and critical assets in the event of disaster rather than on carefully assessing and managing such risks in advance. This is changing. Flood risk maps, for instance, are now required in many OECD countries, including in the European Union thanks to the 2007 EU Floods Directive. There is also more information on areas at risk of water deficit and on areas vulnerable to water pollution.
But more needs to be done. We need to assess how water resources are used and valued. And we need to raise awareness amongst vulnerable populations to ensure that they have the knowledge they need to make informed choices about their own welfare. And we need to help policy makers, businesses and communities understand the scale and significance of the challenge to water security posed by a changing climate. This is why we have just released the results of the OECD survey of policies on water and climate change adaptation. Country profiles for each of our 34 member countries and the European Commission capture a snapshot of the challenge posed by climate change to freshwater and the emerging policy responses. They serve as a solid basis to share experience, identify best practice, and track general trends.
Agreeing on an acceptable level of risk
We can identify and communicate water security risks – both good first steps – but we also need to be able to define the “acceptable level of risk” for society and the environment. This indicator depends on the balance between economic, social and environmental consequences and the costs of amelioration.
Thus, by first identifying the acceptable level of risk, a risk-based approach can then lead to targeted policy responses and promote cost effectiveness within the accepted level of risk.
For example, flood risk management in London, Shanghai and Amsterdam targets protection against “1 in 1000 year” events. In New York, the acceptable level of risk has been based on “1 in 100 year” flood events, although the value of the assets at risk is higher. In fact, New York is now looking at how to strengthen their flood defences following Hurricane Sandy, which ranks among the largest global natural disasters, with damages estimated at about USD 75 billion (0.5% of 2011 US GDP) .
Policy makers must not only anticipate where impacts might occur but also understand risk perceptions on the part of individuals and businesses. This is a key element in assigning clear roles and responsibilities for managing risks.
Managing risk needs policy coherence.
Water risks are closely interconnected with other policy issues, like food, energy, climate and biodiversity. To tackle these challenges, we need an integrated approach to setting water security targets to ensure that interventions complement one another rather than conflict.
Managing risks is also about understanding and dealing with policy trade-offs. For instance, increased diversions to prevent water shortages can disrupt water ecosystems. Biofuel production to improve energy security can come at a cost to water security. And agricultural support to enhance food security can lead to overuse of pesticides and fertilisers, and contribute to water pollution.
More coherent policy approaches are slowly beginning to take shape in a growing number of OECD countries. Agricultural support is being shifted away from direct production and input support, which encourages the use of water, fertilisers and pesticides, to payments that take into account environmental concerns and help to reduce water pollution from agriculture.
The bottom line is that setting water security targets should be the result of well-informed trade-offs between water security and other policy objectives, such as food and energy security, climate change and biodiversity. And once set, water security targets should be achieved at the least possible economic cost by using appropriate economic instruments.
To illustrate this point, if scarcity prices had been introduced a few years ago to address the water shortage in Sydney, Australia, it would have reduced water demand to a level which would have obviated the premature construction of a costly desalination plant. Welfare losses valued at hundreds of millions of dollars per year could therefore have been avoided!
Ladies and Gentlemen,
In the cacophony of the economic crisis, the voice of water is being drowned. Uncertainties regarding water availability, water quality, floods and droughts are growing, while the outlook for water stress and water pollution is gloomy. This calls for urgent action!
Increasing water security will create major benefits for human welfare, the economy and the environment. But it will require concerted action on the part of governments to tackle the challenges involved in shifting to a risk-based and holistic approach for water management.
Before my appointment as Secretary-General of the OECD, I had the privilege of participating in the Camdessus Panel on Water Challenges which presented its findings to the Kyoto 3rd World Water Forum in 2003. I then led its successor “Gurría Task Force on Financing Water for All”, which presented its findings to the 4th World Water Forum in Mexico in 2006. Task Force members agreed that their work should continue to advance the global policy dialogue on water. In the intervening period, we created the UNSGAB, originally chaired by the late Japanese Prime Minister Ryutaro Hashimoto, then by today’s King Willem Alexander of the Netherlands and presently by H.R.H. Prince El Hassan Bin Talal of Jordan. We are proud to be a member and support its work.
In 2005, I campaigned for the job of Secretary-General of the OECD, and I defined water as one of my three priorities. Since I took office, we have been diligently working on best practices in water policies and participated actively in both Istanbul and Marseille’s WWF in 2009 and 2012 and enthusiastically, every year, in the Stockholm World Water Week. We have produced dozens of books, papers, analyses and increasingly detailed policy recommendations to individual countries, to regional groupings and to the community of nations at large.
Today, the OECD proposes a new approach to identify, target and manage water risks in an integrated way. One that incorporates the risks of supply, demand, quantity and quality. One that takes into consideration both efficiency as well as equity issues and risks. I am pleased to launch Water Security for Better Lives and highlight the release of Water and Climate Change Adaptation: Policies to Navigate Uncharted Waters. It is, in essence, an agenda for reform to make our societies more water resilient.
I am also pleased to be able to provide the OECD’s support to the Global Dialogue on Water Security and Sustainable Growth. Our report will provide a reference point for this Global Dialogue, which will also tap into the Global Water Partnership’s strong international network to help ensure that we take the water security agenda forward. It will help rally our collective efforts around the water challenge on the way to the 7th World Water Forum in Korea in 2015.