An international group of leaders and experts warns that unless humanity acts with greater boldness and urgency, an increasingly out-of-balance water cycle will ‘wreak havoc on economies and humanity worldwide’.
In a new report, ‘The Economics of Water: Valuing the Hydrological Cycle as a Global Common Good’, the Global Commission on the Economics of Water says the water crisis puts at risk more than half of the world’s food production by 2050. It also threatens an 8% loss of GDP in countries around the world on average by 2050, with as much as a 15% loss in lower-income countries, and even larger economic consequences beyond.
Weak economics, destructive land use, and the persistent mismanagement of water resources have combined with the worsening climate crisis to put the global water cycle under unprecedented stress, the Commission says.
Nearly three billion people and over half of the world’s food production are in areas experiencing drying, or unstable trends in total water availability. Further, several cities are sinking due to the loss of water below the ground.
The report argues that existing approaches have led to the water crisis. They ignore the multiple values of water across whole economies and in preserving nature’s critical ecosystems. The widespread under-pricing of water today also encourages its profligate use across the economy and skews the locations of the most water-intensive crops and industries, such as data centres / centers and coal-fired power plants, to areas most at risk of water stress. Proper pricing, subsidies and other incentives must be used to ensure water is used more efficiently in every sector, more equitably in every population, and more sustainably.
Current approaches also deal predominantly with the water we can see – the ‘blue water’ in our rivers, lakes, and aquifers. They typically overlook a critical freshwater resource, namely ‘green water’ – the moisture in our soils and plant life, which ultimately returns and circulates through the atmosphere, generating around half the rainfall we receive on land. A stable supply of green water is hence linked inextricably to stable patterns of rainfall, itself critical to economies and livelihoods. It also provides crucial support for the natural storage of carbon dioxide in the soil and mitigation of climate change.
The Commission argues that the crisis demands bolder, more integrated thinking, and a recasting of policy frameworks – in short, a new economics of water. It begins by recognising that the water cycle must now be governed as a global common good. This can only be done collectively, through concerted action in every country, through collaboration across boundaries and cultures, and for benefits that will be felt everywhere. Critically, we must redefine the way we value water properly to reflect its scarcity, while at the same time recognising the multiple benefits of water and a stable global hydrological cycle across economies. We must shape economies to allocate and use water properly from the start, and avoid having to fix problems such as water pollution and other ‘externalities’ after the fact.
The report calls for a fundamental regearing of where water sits in economies, enabled by a ‘mission-driven’ approach. This paradigm shift requires the participation of all stakeholders, from local to global, to achieve the missions that address the most important challenges of the global water crisis. Such missions would encourage innovations, capacity building and investments, and be evaluated not in terms of short-run costs and benefits but, rather, for how they can catalyse long-run, economy-wide benefits.
The report recommends five such missions:
Mission 1: Launch a new revolution in food systems
Transform agriculture to sustain the planet by scaling up micro-irrigation and radically improving water productivity, reducing reliance on nitrogen-based fertilisers, spreading regenerative agriculture, and shifting progressively away from animal to plant-based diets.
Mission 2: Conserve and restore natural habitats critical to protecting green water
Conserve 30% of forests and restore 30% of degraded ecosystems by 2030. Priority should be given to protecting and restoring those areas that can best contribute to a stable water cycle.
Mission 3: Establish a circular water economy
Capture the full value of every drop by treating and reusing wastewater, reducing distribution inefficiencies and recovering valuable resources.
Mission 4: Enable a clean-energy and AI-rich era with much lower water intensity
Renewable energy, semiconductors and artificial intelligence (AI) are defining a new economic era. We must spur innovation with high ambitions and secure equity, sustainability and efficiency to ensure their growth does not exacerbate global water stresses or constrain the benefits they provide.
Mission 5: Ensure no child dies from unsafe water by 2030
Currently, over 1,000 children die every day from unsafe water. Ensure access to clean water for rural and hard-to-reach communities, including investing in decentralized water treatment and sanitation systems.
