Topic Guide: Water security and economic development

Abstract

Too little water (scarcity), too much water (flooding) and poor quality water (pollution) represent a risk to sustained economic growth. Evidence suggests that inter and intra-annual variability in water availability, coupled with poor water resource management, can reduce GDP by up to a third (Grey & Sadoff, 2007). Under conditions of increasing water demand and more erratic water supply due to the impacts of climate change, the economic costs could be even greater. By contrast, well-managed water resources can underpin economic growth and support pro-poor development. Historical narratives show the importance of major water infrastructure in driving social and economic development in both developed and developing countries. Water is a critical input to agriculture, energy and industry; it drives hydropower turbines and cools thermal power stations; it supports vast swathes of rainfed and irrigated agriculture; it is filtered and purified for use in the electronics industry and it is used in bulk in the steel industry. The dual nature of water as both a destructive and productive agent is key to understanding how investments in water security can underpin economic growth. Reducing the negative economic costs associated with scarcity, flooding and pollution, and capitalising on the economic benefits of using water productively and sustainably, can drive long-term economic growth. The Topic Guide is split into four parts: Part 1 provides an introduction to the topic of water security and its contribution to economic growth and especially pro-poor growth, as well as setting out the importance of various social, economic and institutional barriers to water security; Part 2 of the report is organised around the four pillars of water security: economic development; drinking water and human wellbeing, ecosystems, and water-related hazards. It presents the evidence around the economic benefits of improving water security for these four pillars; Part 3 of the guide discusses the need to scale up investment in information, infrastructure and institutions in order to deliver improved water security; Part 4 presents key concepts and tools that can be used to assess water-security issues and the potential economic benefits of doing so in particular contexts. This Topic Guide has been produced by Evidence on Demand with the assistance of the UK Department for International Development (DFID) contracted through the Climate, Environment, Infrastructure and Livelihoods Professional Evidence and Applied Knowledge Services (CEIL PEAKS) programme, jointly managed by HTSPE Limited and IMC Worldwide Limited