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Decades of mismanagement and undervaluation have damaged freshwater and land ecosystems
For the first time in human history, the hydrological cycle is out of balance. This is according to the Global Commission on the Economics of Water’s (GCEW) report, The Economics of Water: Valuing the Hydrological Cycle as a Global Common Good.
The Commission says decades of collective mismanagement and undervaluation of water worldwide have damaged freshwater and land ecosystems and allowed for the continuing contamination of water sources.
“We can no longer count on freshwater availability for our collective future,” highlights the GCEW in the run-up to the UNFCC’s COP29.
Noting that water is a globally shared resource, the report highlights that “we have, fundamentally, put the hydrological cycle under unprecedented stress, with growing consequences for communities and countries everywhere.”
Global policies and the science and economics underpinning them have also overlooked a critical freshwater resource — green water. It is found in soil and plant life, which ultimately circulates through the atmosphere and generates around half the rainfall we receive on land.
“Most gravely, while itself a victim of climate change, the degradation of freshwater ecosystems, including the loss of moisture in the soil, has become a driver of climate change and biodiversity loss,” said the Commission in the report.
This degradation of freshwater systems results in “more frequent and increasingly severe droughts, floods, heat waves, and wildfires” worldwide and “a future of growing water scarcity, with grave consequences for human security.”
Estimates show that almost 3 billion people and more than half of the world’s total food production are now in areas where water storage is projected to decline in the coming years.
Governments can catalyse investments in water in every sector through greater certainty in policies and regulations, especially through patient investment with a long-term direction
The costs and threats of inaction
The Commission warns that the human and economic costs of inaction will be substantial. Globally, total water stored on and beneath the Earth’s surface is unstable and declining across population and economic activity concentration areas and where crops are grown.
High-population density hotspots, including northwestern India, northeastern China and south and Eastern Europe, are particularly vulnerable.
The poorest 10% of the global population obtain over 70% of their annual precipitation from landbased sources and will be hardest hit by deforestation.
If rainfall originating from deforestation hotspots were to disappear, growth rates in Africa and South America could drop significantly – by 0.5 and 0.7 percentage points, respectively.
Intensely irrigated regions tend to see declines in water storage, with some experiencing a rate of decline twice as fast as other regions. If current trends persist, extreme water storage declines could make irrigation unfeasible, leading to a 23% reduction in global cereal production.Furthermore, the economic impacts of such trends will be severe.
The combined effects of changing precipitation patterns and rising temperatures due to climate change, combined with declining total water storage and lack of access to clean water and sanitation, implies that high-income countries could see their GDPs shrink by 8% by 2050 on average while lower-income countries could face even steeper declines of between 10% and 15%.
Disruptions of the hydrological cycle, therefore, have major global economic impacts. The water challenge becomes even more pressing when we recognise how much water each person needs daily to live a dignified life.
While 50 to 100 litres per day is required to meet essential health and hygiene needs, a dignified life – including adequate nutrition and consumption – requires a minimum of about 4,000 litres per person per day.
Most regions cannot secure this much water locally. Although trade could help distribute water resources more equitably, it is hampered by misaligned policies and the water crisis itself.
The water crisis can be stymied
The Commission suggests this crisis can be fixed through collective action and urgency. Restoring the stability of the water cycle is critical not only in its own right but to avoid failing on climate change goals and safeguarding the earth’s ecosystems, as well as on each of the SDGs.
This approach will “preserve food security, keep economies and job opportunities growing, and ensure a just and livable future for everyone.”
In the report’s preface, the co-chairs of the GCEW say they are convinced the world can turn the tide on this crisis “if we acknowledge why existing approaches have failed, embrace a fresh policy lens, and move with the boldness and urgency that the crisis demands.”
The Commission’s report sets out the shifts required to drive radical changes in how water is valued, managed and used.
“The new economics of water begins by recognising the water cycle must be governed as a global common good that can only be fixed collectively, through concerted action in every country, collaboration across boundaries and cultures, and for benefits felt everywhere.”
This includes merging prices, subsidies, and other incentives to ensure water is used efficiently in every sector, more equitably in every population, and more sustainably, notes the report. Furthermore, there is a great need to shape economies that allocate and use water properly from the start and avoid having to fix problems after they occur.
“We must organise all stakeholders, from local to global, around the missions that get to the heart of the global water crisis, to spur a wave of innovations, capacity-building and investments – and evaluate them not in terms of short-run costs and benefits but for how they can catalyse long-run, economy-wide benefits,” said the Commission.
Five mission areas to address the water crisis
To radically transform water use and supply requires a shift from siloed and sectoral thinking to an economy-wide approach to the entire water cycle, including both blue and green water, that shapes and crowds in innovations.
It will require new commitments from many actors and sectors and new roles for governments – including a mission-oriented approach to meeting the most fundamental water challenges.
GCEW offers five such missions as critical adaptive pathways towards safe and just water futures:
Launch a new revolution in food systems.
Conserve and restore natural habitats critical to protecting green water.
Establish a circular water economy.
Enable a clean-energy and AI-rich era with much lower water intensity.
Ensure no child dies from unsafe water by 2030.
It means reorienting the policy tools – pricing, subsidies, regulations, procurement, grants, loans – and the roles of the institutions, such as public development banks, water utilities, and state-owned enterprises, to achieve these critical goals.
Governments can catalyse investments in water in every sector through greater certainty in policies and regulations, especially through patient investment with a long-term direction.
They must also establish more symbiotic partnerships with the private sector, including incorporating conditionalities in contracts, such as ensuring high standards of water use efficiency and environmental protection.
Policymaking must become more collaborative, accountable, and inclusive of all voices, especially youth, women, marginalised communities, and the Indigenous Peoples on the frontlines of water conservation.
“We can and must succeed in tackling five missions that address the most important and interconnected challenges of the global water crisis.” ESI |
