Water Outlook to 2050: The OECD calls for early and strategic action

May 21st, 2012

Dr. Xavier Leflaive, OECD Environment Directorate, Paris

Around the world, cities, farmers, industries, energy suppliers, and ecosystems are increasingly competing for their daily water needs. Without proper water management, the costs of this situation can be high – not just financially, but also in terms of lost opportunities, compromised health and environmental damage. The OECD and PBL Netherlands Environmental Assessment Agency have reviewed recent trends, projected plausible future trends, and explored potential policy responses.

Trends and projections

The Water Outlook1 covers four issues: the availability of the resource, water quality, access to water supply and sanitation, and water-related disasters.

1. Resource availability

Water demand is projected to increase by 55% globally between 2000 and 2050. The increase in demand will come mainly from manufacturing (+400%), electricity (+140%) and domestic use (+130%). In the face of these competing demands, there will be little scope for increasing water for irrigation.

This situation is compounded by two factors. First, the number of people living in river basins under severe water stress is projected to reach 3.9 billion by 2050, totalling over 40% of the world’s population (see Understanding water scarcity). In water stressed basins, small changes in water regimes (droughts) can have major consequences. Second, groundwaterdepletion, which more than doubled between 1960 and 2000, may become the greatest threat to agriculture and urban water supplies in several regions in the coming decades.

2. Water quality

The quality of surface water outside the OECD is expected to deteriorate in the coming decades (see Figures 2a and 2b). The consequences will be increased eutrophication, biodiversity loss and disease. Micro-pollutants(medicines, cosmetics, cleaning agents, and biocide residues) are an emerging concern.

3. Water supply and sanitation

Despite tremendous efforts in the last two decades, the number of city dwellers without access to an improved water source has increased since 1990; as urbanisation has outpaced the development of infrastructure. More than 240 million people (most of them in rural areas) will still be without access to an improved water source by 2050 (see Figure 3a). The situation is even more daunting given that access to an improved water source does not always mean access to safe water. In addition, 1.4 billion people are projected to be without access to basic sanitation in 2050, with severe consequences on health and environment, as well as hampering water uses downstream (see Figure 3b).

4. Water-related disasters

The number of people at risk from floodsis projected to rise from 1.2 billion today to around 1.6 billion in 2050 (nearly 20% of the world’s population). The economic value of assets at risk is expected to be around USD 45 trillion by 2050, a growth of over 340% from 2010.

Policy options and needs

Governments and authorities in charge of water management need to act to reverse these trends and to make the water outlook manageable. A number of initiatives have already taken place. A more strategic approach can save cost and accelerate favourable outcomes.

Improved water efficiency remains a policy imperative in most regions of the world. Water pricing can be used to signal scarcity and to create incentives for efficient water use in all sectors (e.g. agriculture, industry, domestic). Social consequences are best addressed through well-designed tariff structures or targeted measures.

Water storage capacities will secure access to the resource. At the same time, they should not conflict with other environmental objectives (e.g. preservation of ecosystem services, forests or biodiversity). Green technologies (such as groundwater recharge, floodplains and wetlands restoration) are available and could be scaled up in most parts of the world.

Flexible mechanisms are required, to allocate water where it is most needed. This requires appropriately defined water rights, an issue which is insufficiently considered in many regions.

Water policies need to place quantity and quality issues on an equal footing. Wastewater collection (sewerage systems) needs to be systematically coupled with wastewater treatment.

Innovative techniques and business models will be needed, to secure water-related services (including water supply and sanitation), while consuming less water, energy or capital. The private sector will be an important player. Public policies can support the development and diffusion of such innovations, including in developing countries.

These initiatives work best when integrated with policies that have an impact on water availability and use, primarily agriculture, energy, and land use. Water governance needs to be reformed to ensure such coherence. One requisite is the engagement of all relevant stakeholders (different levels of government, water user groups, and private companies).

One pragmatic step forward would be assessing the vast number of subsidies that encourage unsustainable water use, with a view to phasing them out. For example, the reform of agricultural support in the European Union has helped to better align agricultural and environmental objectives, typically by reducing production and input related support, as well as shifting toward agro-environmental measures thereby helping to ease stress on the environment, including water. Similarly, removing incentives which encourage people to settle or invest in risk-prone areas will reduce the impact and occurrence of water-related disasters.

In all of these domains, early action will avoid being locked in costly and detrimental trajectories.

References:

1. OECD (2012a), OECD Environmental Outlook to 2050: The Consequences of Inaction, OECD Publishing, Paris

2. OECD (2012b), Water Quality and Agriculture. Meeting the Policy Challenge, OECD Publishing

3. OECD (2010), Alternative Ways of Providing Water. Emerging Options and Their Policy Implications, OECD Publishing, Paris

Xavier Leflaive is a principal administrator at the OECD Environment Directorate, where he heads the water unit. His work covers urban water, the economics and financial dimension of water resources management, and water as a driver for (green) growth. Before joining the OECD, Xavier Leflaive has worked as a consultant, advising French authorities and international water utilities on policy and corporate responses to future water trends. Xavier Leflaive studied business administration and social theory in France, Canada and the UK. He holds a PhD in Social and Political Sciences from the University of Cambridge, UK. For more information, please contact Xavier Leflaive in OECD’s Environment directorate: Xavier.Leflaive@oecd.org or visit www.oecd.org/environment/outlookto2050.

The views expressed in this article belong to the individual authors and do not represent the views of the Global Water Forum, the UNESCO Chair in Water Economics and Transboundary Water Governance, UNESCO, the Australian National University, or any of the institutions to which the authors are associated. Please see the Global Water Forum terms and conditions here.