Together with air, water is arguably the planet’s most important natural resource. Functioning water systems are one of the technological pillars of civilization, which often makes a water crisis a matter of life or death.
Today, about 2 billion people lack access to safe drinking water, and about half the world’s population experiences severe water scarcity for at least part of the year. Our limited freshwater resources are overburdened by growing populations and water-thirsty economies. By 2030, global water demand is expected to have exceeded the sustainable supply by 40 percent. As demand for water grows and temperatures rise, water scarcity is to threaten more lives and livelihoods — and thus the stability of societies around the world.
How can we turn the tide so that water empowers communities, secures economies and keeps the planet livable? As with global public goods such as a clean environment, there is a tendency to focus on the costs of improvement today, rather than on the greater long-term benefits of investing in the preservation of natural resources. The water sector today is underfinanced and chronically short of capacity to meet demand.
Illustration: Mountain People
However, if we want to achieve the Sustainable Development Goal (SDG) of ensuring clean water and sanitation for everyone, we must increase global spending on water fourfold, to more than US$1 trillion per year, or about 1.21 percent of global GDP. We also must make up for the US$470 billion we lose every year through flood damage and poor irrigation.
By protecting the environment and the climate, every cent invested in the water sector boosts our economies, now and in the future.
When the European Investment Bank in December last year provided a 200 million euros (US$217 million) loan to Jordan to finance a desalination plant on the Red Sea and a pipeline to the capital, Amman, Jordanian Minister of Planning and International Cooperation Zeina Toukan described these projects as crucial for water security and comprehensive economic development.
We all need to adopt similar thinking about how we value and manage water.
As with many other challenges, the public sector cannot fill this large investment gap alone. Businesses have an important role to play.
Estimates by CDP, a nonprofit organization that collects environmental-impact data, show that more than US$300 billion of business value is at risk globally if no action is taken to address water scarcity. Yet it would cost only one-fifth of that total, or about US$55 billion, to tackle the problem.
If businesses deploy new technologies to reduce their water consumption and to exploit wastewater as a source of energy, heat, nutrients and materials, they can reduce their environmental footprint and free up more water for use by others.
The CDP estimates such “water-related opportunities” at US$711 billion, reflecting not just savings on water use, but also the growth of long-term potential markets in water-smart technology and the benefits of better community relations.
Because water is cheap in most parts of the world, businesses often have little incentive to invest in saving water or in boosting the efficiency of water-intensive production processes. To persuade the private sector to focus on water-system preservation, we first need to start thinking of money spent on water as a real investment, rather than as a cost that can never be recovered.
Second, the right value must be assigned to this water to create the necessary incentives for users and businesses to use it more efficiently, and for preservation to be economically rewarding. In the case of water, this requires a delicate balancing act, because affordable access to drinkable water and sanitation is a recognized human right — which means it is nonnegotiable.
Third, global cooperation and new cross-border programs to mobilize greater investments in water would overcome market failures, and prevent water from being politicized and weaponized.
This week’s UN Water Conference in New York, the first such gathering since 1977, is a unique opportunity to discuss water security and tackle the crisis head-on, as well as to acknowledge that water investment is as critical to a sustainable and just economy as is clean-energy investment.
We can establish new guidelines for fixing the water cycle and ensuring a more holistic approach to sustainable development everywhere, from the Netherlands and Luxembourg to Nigeria and Laos. We must also find more ways to incentivize water financing from public and private sources that are willing to wait for their investments to bear fruit.
Water is what is to carry the SDGs across the finish line. We must finally start recognizing it as a fundamental part of our investment portfolios, and put it at the center of our economic policies.
Ambroise Fayolle is vice president of the European Investment Bank. Henk Ovink is the Dutch special envoy for international water affairs.
Copyright: Project Syndicate
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