Water Goals Have Big Costs, But Bigger Returns

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  • 2013•11•29     Hamilton

    Meting the anticipated global water goals of the Post-2015 Development Agenda will require an investment of between US$840 billion and $1.8 trillion per year over the next two decades. But that investment would deliver more than $3 trillion per year in economic, environmental and social benefits.

    So says a new report, Catalyzing Water for Sustainable Development and Growth, produced by the UNU Institute for Water, Environment and Health (UNU-INWEH) and the UN Office of Sustainable Development (UNOSD), in collaboration with Stockholm Environment Institute (SEI).

    Catalyzing Water for Sustainable Development and Growth Cover

    The report, published this week, assembles and integrates a large volume of available data and previously estimated costs of meeting key global water challenges — including universal access to safe drinking water and sanitation, increased irrigation for food production and renewable energy production. It is the first comprehensive, evidence-based analysis of options for integrating water into the Sustainable Development Goals (SDGs) that will define the international development agenda after the UN Millennium Development Goals (MDGs) expire in 2015.

    A global investment of $840 billion to $1.8 trillion per year for 20 years to provide water for sustainable development and economic growth (spread across both developed and developing countries) would require a major increase from current annual spending, but it would generate more than $3 trillion per year in direct economic return, livelihood creation, health system savings, and preservation of nature’s ecosystem services, among other benefits.

    In the health sector alone, a World Health Organization study estimates that each dollar spent on improving access to sanitation and drinking water generates a return of $4.30. Substantial economic benefits also accrue from spending in wastewater treatment, irrigation and environmental services.

    In any accounting of water-related expenses, however, “corruption is the elephant in the room”, warns UNU-INWEH Director Zafar Adeel, a report co-author. According to a study by Transparency International, as much as 30% of spending on water-related infrastructure today is lost to corruption. The Catalyzing Water report notes that losses to corruption, extrapolated at the same level, would add dramatically to the expense.

    “Water, being trans-sectoral and a resource under stress, is an easy target for corruption”, says the report. “Its management is dispersed and its infrastructure requires large financial investments, both of which can facilitate corruption, as can the involvement of private and informal entities.”

    “Cleaning up the system is essential to progress,” says Dr. Adeel. “If somehow corruption could be eliminated instantaneously, the investment needed to meet water goals would be 1.2%–2.2% of GDP annually (up from 0.73%) — and return trillions of dollars in lower health and other social costs. This offers a strong argument for investments into better governance.”

    Water is a key to social development, environmental integrity and economic growth, says Dr. Adeel.  “Sizeable progress has been achieved under the MDGs, and that must continue. But our post-2015 goals must also recognize water’s vital and cross-cutting role in national development and growth plans and in the international development agenda.”

    “Unless we see something approaching a two- to three-fold increase over the amounts currently invested in water, sanitation and hygiene, real progress on global growth and sustainable development will be extremely difficult to achieve”, says UNU-INWEH researcher Corinne Schuster-Wallace. But “there really isn’t any other choice. We need to invest broadly in water, and we need to start now”.

    The report notes that innovative financing mechanisms (alongside traditional mechanisms such as taxation, subsidies, user charges and private investment) could become increasingly important in implementing a post-2015 agenda — reflecting the changing ownership of water issues, from government to grass roots. These include micro-credit schemes, online “crowdsourcing” and the reinvestment of efficiency savings, as well as revenues generated through sector by-products (such as biosolids).

    “As we approach some planetary tipping points, and resulting irreversible changes, innovative perspectives and paradigm shifts are necessary. This report is meant to enable that process,” says Nikhil Seth, Director of the Division of Sustainable Development, UN Department of Economic and Social Affairs.

    According to the report, the world faces a number of water-related challenges in decades to come, including increased water consumption, increased food demand and changing diets, increased demand for and access to energy, climate change impacts and new geopolitical dynamics.

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    For a longer version of this story, see Water Goals Have Big Costs & Bigger Returns on the UNU-INWEH website.