World will fail on climate and development if it fails on water, says global group of experts

The unprecedented floods, droughts, and other extreme water events of the last year are not freak episodes but evidence of a systemic crisis that results from decades-long human mismanagement of water, the Global Commission on the Economics of Water says in a report published today. A sustainable and just water future can be achieved, it says, but this will require transforming the economics and restructuring the governance of water.

New York City, 17 March 2023 — The Global Commission on the Economics of Water today published “Turning the Tide: A Call to Collective Action”, a report which alerts the world to a growing global water crisis and lays out actions that can and must be taken urgently and collectively to arrest it. Failing which, they highlight, the world will also fail on climate action and on all the UN’s Sustainable Development Goals.

Dangerously, the water crisis is entangled with global warming and the loss of biodiversity, with each reinforcing the other. Human activities are changing patterns of rainfall, the source of all freshwater, leading to a shift in the supply of water across the entire world. “Every view of climate change that excludes water is incomplete,” said Johan Rockström, Director of the Potsdam Institute for Climate Impact Research and co-chair of the Commission. “For the first time in human history, we can no longer count on the source of all freshwater, our precipitation. We are changing the entire global hydrological cycle”. As an example he takes climate. “Each 1°C of global warming adds about 7% moisture to the water cycle, supercharging and intensifying it, leading to more and more extreme weather events”, continuing: “Water is thus both a driver and a victim of climate change.”

Water is also key to achieving all Sustainable Development Goals. More than two billion people still lack access to safely managed water. One child under five dies every 80 seconds from diseases caused by polluted water. “We need to develop a new economics of water that will help us reduce water waste, improve water efficiency, and provide opportunities for greater water equity,” said Ngozi Okonjo-Iweala, Director-General of the World Trade Organization and co-chair of the Commission, adding that “Water cannot be put back on a sustainable trajectory without justice and equity in every corner of the globe.”

The world can only get out of this impasse by moving collectively and urgently in the current decade: through actions that are bolder, and more integrated and networked at national, regional, and global levels. The Commission’s Call to Collective Action lays out a seven-point agenda to achieve this.

Crucially, the world must recognize and manage the water cycle as a global common good, restoring and safeguarding it for all. The current, largely localised approaches to water management fail to recognise that countries are interconnected and depend on each other. This is due not only to transboundary rivers or streams of groundwater, but also due to atmospheric flows of water vapour originating from ecosystems on land. The water crisis is deeply intertwined with climate change and countries need to collaborate to resolve it.

To design a new economics that safeguards the water cycle, the Commission proposes an outcomes-focused, mission-driven approach which reflects the many roles water plays in human well-being. It must mobilize water stakeholders, including public, private, civil society and local community and utilize innovation policy to catalyze solutions to concrete problems; and scale up investments in water through new types of public-private partnerships.

“We need new economic thinking to help move from reactively fixing to proactively shaping economies to become inclusive and sustainable” said Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London and co-chair of the Commission, adding that “moving from sectoral to mission-oriented innovation policies with a common good approach can help us put equity and justice at the centre of water partnerships and bring multiple sectors together to tackle our biggest water challenges.”

The group also argues that the world must cease undervaluing and underpricing water. Combined with targeted support for the poor and vulnerable, making sure water is properly priced will enable it to be used more efficiently in every sector, more equitably in every population and more sustainably both locally and globally.

Also, some USD 700 billion of subsidies in agriculture and water, which often fuel excessive water consumption and other environmentally damaging practices, must be phased out, and the resources that are freed up used instead to incentivise water conservation and universal access. Efforts to require disclosure of water footprints should be accelerated so as to spur a rechanneling of finance towards sustainable practices.

The group proposes establishing Just Water Partnerships (JWPs) to enable investments in water access, resilience, and sustainability in low- and middle-income countries, in ways that contribute to both national development goals and the global common good. JWPs should drive down the cost of capital by bringing together different streams of finance – including leveraging on the Multilateral Development Banks and Development Finance Institutions to crowd in private investments.

The world should also act on opportunities that can move the needle significantly in the current decade. These include fortifying freshwater storage systems, developing the urban circular water economy especially by recycling industrial and urban wastewater, reducing water footprints in manufacturing, as well as shifting agriculture to precision irrigation, less water-intensive crops and drought-resilient farming.

Finally, the group argues that the multilateral governance of water, which is currently fragmented and not up to the challenge, must be reshaped. Trade policy should also be used as a tool for more sustainable use of water, for example, by not exacerbating scarcity in water-stressed regions. Multilateralism should also support capacity building for all, prioritize gender equality in water decision-making, and empower farmers, women, youth, Indigenous Peoples and local communities, and consumers who are at the frontlines of water conservation.

“Solving the water challenge requires higher ambition, but it’s an ambition that is actually achievable if we work collectively and accelerate actions in the current decade,” said Tharman Shanmugaratnam, Senior Minister in Singapore and co-chair of the Commission, adding: “We have the scientific expertise, we know what the basic policy reorientations should be, and there is no real lack of finance globally. The task is to organise these resources for a sustainable and globally-equitable future – that’s in every nation’s interest.”

Accompanying the release of the Call to Action, the Commission also published “The What, Why and How of the World Water Crisis: Global Commission on the Economics of Water Phase 1 Review and Findings”, which brings together the latest knowledge and findings on the water crisis.

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Johannes Mengel, +49 163 712 4732, [email protected]