access to safe drinking water and its impact on global economic

Access to Safe Drinking Water and Its Impact on Global Economic Growth

A S t u d y f o r H a l o S o u r c e , I n c .

by Josephine Fogden

with the assistance of Geo!rey Wood,

Professor of Economics, the Cass Business School, London

HaloSource, Inc.1631 220th St. SE, Suite 100, Bothell, WA 98021, USA

© 2009 by HaloSource, Inc. All rights reserved. Published 2009.No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or by any

means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of HaloSource, Inc.

HaloSource, HaloPure, HaloPure BR, HaloShield, SeaKlear and StormKlear are registered trademarks of HaloSource, Inc.

iii

Foreword by John Kaestle, CEO, HaloSource

Over the last 30 years, following the 1977 UN Conference on Water at Mar del Plata, in Argentina,

there has been a concerted e!ort by a range of international bodies to improve global access to safe

drinking water.

It has become increasingly clear over that period that access not only is a matter of survival, but also has

profound social and economic impact. "is study seeks to develop a better understanding of that impact,

a subject of great importance to HaloSource because we develop technologies to provide safe, clean,

a!ordable drinking water to the home, particularly in developing economies.

"ere are good reasons to believe that point of use purification has a major contribution to make in

the e!ective delivery of usable drinking water. Large-scale, capital-intensive clean water projects are

expensive, particularly in areas where population density is low. And because purified water is highly

susceptible to subsequent contamination while in storage or transfer, such projects are not always as

e!ective as planned. Comparatively, point of use purification is cheap, simple and practical.

Despite e!orts made since 1977, it is concerning that the rate of improvement in access to safe drinking

water is now falling. Our research suggests that this trend will continue and that access might even start

to decline in 2010. Within the next 50 years it’s possible that the level of access will be lower than at the

time of the Mar del Plata conference.

"e economic impact and social implications of such a failure are enormous. Global economic growth

could be a!ected by 2050, with the emerging economies hit hardest.

We at HaloSource are pleased to have been involved in this research project, which we hope will make

a contribution to a greater understanding of the value and impact of access to safe drinking water. "e

research has been completed by Josephine Fogden and its methodology reviewed, commented on and

endorsed by Geo!rey Wood, Professor of Economics at the Cass Business School, London. We thank

both of them for their work on this important subject.

John Kaestle

October 2009

v

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3. Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4. What is meant by “access to safe drinking water”? . . . . . . . . . . . . . . . . . 7

5. !e extent of the drinking water crisis . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5.1 Drinking water from 1970 to 2006

5.2 "e future of access to safe drinking water

5.3 Why access to safe drinking water is expected to be in decline

6. !e impact of access to safe drinking water . . . . . . . . . . . . . . . . . . . . . 19

6.1 "e health e!ects of unsafe drinking water

6.2 "e impact of unsafe drinking water on education

6.3 "e costs of a lack of safe drinking water

7. Will drinking water drought stall economic growth by 2050? . . . . . . 23

7.1 When is growth most likely to be a!ected?

7.2 How is growth expected to be a!ected?

8. What can be done? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

8.1 Conserving water

8.2 Increasing supply

8.3 Increasing investment in the water sector

9. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Appendixes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Selected bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Access to Safe Drinking Water and Its Impact on Global Economic Growth

1

1. Introduction

Despite a concentrated international e!ort, significant investment and widespread educational

campaigns, access to safe drinking water appears to be in decline. HaloSource, a leading global clean

water and antimicrobial technology company, set out to examine the possible reasons for this decline and

the potential impact it may have on global economic growth.

"e paper answers the following questions:

How serious is the problem?

> When will access to safe drinking water decline and to what extent?

> Why will access to safe drinking water decline?

How does access to safe drinking water a!ect economic growth?

> When might the world economy su!er from a decline in access to safe drinking water?

> How can the possible negative economic consequences from a fall in access to safe drinking

water be averted?

3

2. Executive summary

"is study was undertaken by HaloSource to contribute to the debate about the impact of the

availability of safe drinking water on global economic growth.

"e key findings are:

"e rate of improvement in access to safe drinking water has long been in decline; the

percentage of the world population with access to safe drinking water rose by 11.1% between

1970 and 1975 but grew by only 2.4% between 2000 and 2006.

Access to safe drinking water could start to decline as early as 2010. Within the next half-

century, access to safe drinking water may fall below the level of 1977, when the international

community launched its first attempt to increase access to safe drinking water.1

"e lack of access to safe drinking water is likely to impinge upon economic growth by 2050,

if not earlier.

"e emerging economies are expected to be the first to su!er from a decline in access to safe

drinking water.

Because the emerging economies are an important engine for world economic growth,

the impact on those economies’ performance is likely to have wider implications for the

global economy.

Industry, governments and supranational agencies have an important role to play in conserving

and increasing the supply of potential safe drinking water.

Water purification at the point of use is expected to make a major contribution in increasing

access to safe drinking water around the world.

1 The First World Water Conference was held in 1977 at Mar del Plata, Argentina.

5

3. Methodology

Data for access to safe drinking water, as measured by the percentage of the population with access to

safe drinking water and gross domestic product (GDP) per capita growth rates, were collected for 1970

to the present day from international sources. Statistical methods were used to calculate mathematical

models tracking the improvement in access to safe drinking water from 1970 to 2006 and its relation to

economic growth. "e methodology of this analysis has been reviewed, commented on and endorsed by

Geo!rey Wood, Professor of Economics of the Cass Business School in London.

"is report uses data provided by the international sources listed in table 1, dating back to 1970. In some

cases data were collected by the sources on an irregular basis. "is study used the most recent data as of

the date of publication.

Table 1:: Sources used in the study2

Variable Access to safe drinking water

Economic growth

What it measures

% population within 1 kilometer of an “improved water source”

% change in GDP per capita at Purchasing Power Parity3

Source

World Health Organization (WHO)

United Nations (UN) Development Indicators

UN statistics database

Publication date(s)2

1970, 1975, 1980, 1985, 2006

1990, 1995, 2000, 2004

1970, 1975, 1980, 1985, 1990, 1995, 2000, 2004, 2006

3

2 Data are collected on an irregular basis throughout the world. The data used are the most recent as of the date of publication.3 The Purchasing Power Parity uses the long-run equilibrium exchange rate of two currencies to equalize their purchasing power.

7

4. What is meant by “access to safe drinking water”?

Safe drinking water is drawn from freshwater sources, which represent only 2.5% of the 1.4 billion cubic

kilometers of water covering the earth.4 Less than 1% of this fresh water is safe to drink without prior

treatment.5 Safe drinking water can also be obtained from salt water through desalination.

!ere are no universal definitions of “safe drinking water” and “access.” As a result, this report will

use the definitions of the international organizations that have provided the data.

Monitoring organizations, under the supervision of the Joint Monitoring Programme ( JMP),6 define

“safe drinking water” as water from an “improved water source,” which includes household connections,

public standpipes, boreholes, protected dug wells, protected springs and rainwater collections.7

"e volume of water required to meet basic needs is estimated at 20 liters per day.8 International

monitoring organizations therefore define “access” as the availability of at least 20 liters per person per

day from an “improved” source within 1 kilometer of the user’s dwelling.9

4 Global Freshwater Resources website, http://www.gipsymoth.org/WaterFresh.asp.5 Ibid.6 The JMP was established by the World Health Organization (WHO) and the United Nations Children’s Fund (UNICEF) to report on the

status of water supply and sanitation around the world and help countries monitor this sector.7 Joint Monitoring Programme, MDG Assessment Report 2008, http://www.wssinfo.org/en/40_MDG2008.html.8 Ibid.9 Ibid.

9

5. The extent of the drinking water crisis

5.1 Drinking water from 1970 to 2006

Over the past three decades there has been a concerted international e!ort to increase access to safe

drinking water, including:

Five World Water Forums

"ree global targets10 to increase access to safe drinking water

$3 billion11 per annum of aid spent on the water sector in addition to $1.5 billion in noncon-

cessionary lending, mainly by the World Bank, and contributions from national governments12

"e increase in access to safe drinking water around the world between 1970 and 2006 is seen in figure 1.

Figure 1:: Average global access to safe drinking water, 1970–200613

120

100

80

60

40

20

0

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Year y = -0.0289x2 + 116.05x – 116460

Acc

ess t

o sa

fe d

rink

ing

wat

er (%

pop

ulat

ion)

Figure 1 shows that:

From 1970 to 2006, the percentage of the world’s population with access to safe drinking water

increased from 45% to 85%.14

10 Targets set out by the UN’s World Water Assessment Programme (WWAP) supported by government and nongovernment organizations worldwide.

11 Dollar amounts are cited in U.S. dollars throughout this paper.12 “Water, a Shared Responsbility,” the 2nd United Nations World Water Development Report, UNESCO website, 2006, http://unesdoc.

unesco.org/images/0014/001454/145405E.pdf.13 The curve was calculated by Excel using nonlinear regression techniques applied to data for access to safe drinking water for 151 countries,

listed in appendix 1.14 The global average of the percentage of the population with access to safe drinking water for 151 countries, listed in appendix 1, as

surveyed by WHO.

10

"e rate at which access to safe drinking water is growing is already in decline. Between 1970

and 1975, the percentage of the world’s population with access to safe drinking water increased

by 11.1%. "is is compared to a 2.4% rise between 2000 and 2006.15

In 2008, more than 1 billion people around the world lacked access to safe drinking water16 and, barring

significant intervention, that number is likely to increase.

5.2 !e future of access to safe drinking water

Based on current trends, predictions for future levels of access to safe drinking water have been

calculated by regression analysis, using the restricted data available and assuming an unchanging

relationship between variables. "e results are seen in figure 2.

Figure 2:: Projection of global access to safe drinking water

120

100

80

60

40

20

0

1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Year y = -0.0289x2 + 116.05x - 116460

Acc

ess t

o sa

fe d

rink

ing

wat

er (%

pop

ulat

ion)

Figure 2 shows that:

"e global average of access to safe drinking water could decline as early as 2010.

Within the next half-century, access to safe drinking water may fall below the level of 1977,

when the international community launched its first attempt to increase access to safe drinking

water.17

15 Percentages were calculated to one decimal place from the average percentages of populations with access to safe drinking water, as stated by WHO.

16

17 The First World Water Conference was held in 1977 at Mar del Plata, Argentina.


11

"e analysis reflects a declining rate of increase, which, if continued, is expected to turn into

absolute decline.

Some regions are expected to su!er from a decline in access to safe drinking water earlier than others.

Data provided by international monitoring organizations have been split into three groups, representing

the developed world, the emerging markets and the developing world.18 "e average percentages of the

population in each group with access to safe drinking water have been calculated for the years 1970 to

2006. "ose data have been used to calculate predictions for future levels of access in each economic

region. "e results are seen in figures 3, 4 and 5.19

Figure 3:: Access to safe drinking water in the developed world

120

100

80

60

40

20

0

1985 1990 1995 2000 2005 2010 2015 2020

Year y = -0.0289x2 + 116.05x - 116460

Ave

rage

per

cent

age

of th

e po

pula

tion

with

acce

ss to

safe

dri

nkin

g w

ater

(%)

Figure 3 shows that access for the developed world began to decline before 2005. "e data points

represent the regionally grouped averages of the 29 developed economies identified in appendix 2.

"e shape of the line of best fit reflects a declining rate of increase, which, if continued, is expected to

turn into absolute decline.

18 See appendix 2 for the list of countries.19


12


Figure 4:: Access to safe drinking water in the emerging economies90

80

70

60

50

40

30

20

10

0

1960 1970 1980 1990 2000 2010 2020

Year y = -0.0289x2 + 116.05x - 116460

Ave

rage

per

cent

age

of th

e po

pula

tion

with

ac

cess

to sa

fe d

rink

ing

wat

er (%

)

Figure 4 demonstrates that access to safe drinking water began to decline in the emerging economies as

early as 2000. "e data points represent the regionally grouped averages of the 107 emerging economies

identified in appendix 2.



Figure 5:: Access to safe drinking water in the developing world

60

50

40

30

20

10

0

1960 1970 1980 1990 2000 2010 2020 2030 2040

Year y = -0.0289x2 + 116.05x - 116460

Ave

rage

per

cent

age

of th

e po

pula

tion

with

ac

cess

to sa

fe d

rink

ing

wat

er (%

)

13


Using regression analysis on the best available data, figure 5 shows that access to safe drinking water

is expected to decline in the developing world by 2015. Please note that the data points represent the

regionally grouped averages of the 15 developing economies identified in appendix 2.



"ese results are summarized in table 2.

Table 2:: When access to safe drinking water is likely to start to decline (by economic region)20

Region

Developed economies

Emerging markets

Developing world

Estimated year of decline20

2005

2000

2015

Access to safe drinking water has already begun to decline in the developed and emerging worlds. "e

developing world is expected to follow before long.

5.3 Why access to safe drinking water is expected to be in decline

5.3.1 Demand for potential drinking water is outpacing supply

Rising demand Water use has been growing at more than twice the rate of population growth in the last century.21

Research suggests that the world population could peak at 9 billion by 2070.22 "is level of population

growth will result in increased demand for potential drinking water from agricultural, industrial and

domestic sectors of the economy.

2021 “Water,” Climate Institute, http://www.climate.org/topics/water.html. 22 Emma Young, “Global Population to Peak in 2070,” New Scientist, 2 August 2001, http://technology.newscientist.com/article/dn1108.

14


Figure 6:: Global water consumption by sector (%)23

Agriculture

Industry

Domestic69%

8%

23%

Demand from agriculture

Agriculture is the biggest consumer of fresh water. It takes 3 cubic meters of water to produce just 1

kilogram of rice.24 Irrigation is extremely water intensive, leading to withdrawals of 2,000 to 2,555 cubic

kilometers of fresh water per year. Irrigation is also ine#cient; only 35–50% of water actually reaches

the crops.25 Land devoted to agricultural use has increased by 12% since the 1960s,26 and the total area

under irrigation has tripled.27 By 2025, water consumption by the agricultural sector is expected to rise

by a factor of 1.2.28

Demand from industry

In high-income countries, industry accounts for up to 59% of total water use.29 In terms of value added

per liter used, the industrial sector is 60 times more productive than the agricultural sector.30 Some

industrial processes are extremely water intensive. For example, 1,500 liters of water are required to

produce 1 kilogram of aluminum.31 In spite of new, less water-intensive processes, the annual volume of

water used by industry is expected to rise to 1,170 cubic kilometers per year by 2025, which represents

21% of freshwater withdrawals.32

23 “Facts and Figures: Water Use” in the International Year of Freshwater 2003 website, December 12, 2002, http://www.unesco.org/water/iyfw2/water_use.shtml.

24 Ibid.25 “Irrigation,” Peopleandplanet.net, 26 March 2008, http://www.peopleandplanet.net/doc.php?id=626.26 “Facts and Figures: Water Use” in the International Year of Freshwater 2003 website, December 12, 2002, http://www.unesco.org/water/

iyfw2/water_use.shtml.27 “Irrigation,” Peopleandplanet.net, 26 March 2008, http://www.peopleandplanet.net/doc.php?id=626.28 Global Freshwater Resources website, http://www.gipsymoth.org/WaterFresh.asp.29 “Facts and Figures: Water Use” in the International Year of Freshwater 2003 website, December 12, 2002, http://www.unesco.org/water/

iyfw2/water_use.shtml.30 Global Issues website, http://www.globalissues.org/.31 Ibid.32 “Facts and Figures: Water Use” in the International Year of Freshwater 2003 website, December 12, 2002, http://www.unesco.org/water/

iyfw2/water_use.shtml.

15


Demand from the domestic sector

It is estimated that the average person in developed countries uses 200–800 liters per day, compared

to 60–150 liters per day in developing nations. Some 100,000 people enter the middle class each day

in India alone,33,34 enjoying ever more water-intensive lifestyles. As a result, demand from the domestic

sector looks set to rise further.

Declining supplies Supplies of potential drinking water sources are in decline largely due to climate change, which

is expected to account for 20% of the global increase in water scarcity35 this century.36 "e

Intergovernmental Panel on Climate Change (IPCC) estimates that the average global surface

temperature will rise by another 1.8˚C to 4˚C this century. Glaciers such as those in the Himalayas are

already in retreat,37 and underground aquifers are running dry.

Rapidly rising demand and falling supplies of fresh water are leaving ever more nations to face chronic

water shortages. By 2025, 1.8 billion people are expected to be living in countries or regions with

absolute water scarcity, and two-thirds of the world population could be under stress conditions.38

5.3.2 !e deteriorating quality of drinking water sources

Rising levels of biological and chemical pollution mean that the quality of drinking water is deteriorating.

“Microbial pollution” is the term given to water contaminated with biological pathogens such as bacteria,

viruses and protozoa. "ese may enter drinking water through fecal contamination or may grow in the

water itself. Drinking water can also become contaminated by chemical pollutants, which can enter the

water from agricultural, industrial and household sources.

Industrial pollutants enter the water system either through the disposal of industrial waste into sewerage

systems or by filtering through into the groundwater from a landfill or incineration site. "e destruction

of a chemical store in Basel, Switzerland, in 1986, for example, released 32 di!erent chemicals into

European waters.39

"e widespread use of intensive agricultural practices also poses a great risk to the cleanliness of

drinking water. "e amount of pesticides used in agriculture has increased 26 times over the last 50

years.40 As a result there are now up to 5 million acute pesticide poisonings a year, which can result in

cancer, developmental disorders, birth defects and immunological or neurological diseases.41 33 McKinsey Global Institute, by Diana Farrell and Eric Beinhocker, 19 May 2007 “Next Big Spenders: India’s Middle Class.” http://www.

mckinsey.com/mgi/mginews/bigspenders.asp34 “Troubled Waters,” Development Alternatives website, http://www.devalt.org/water/WaterinIndia/issues.htm.35 “Water scarcity” refers to an inadequate supply of water to satisfy demand..36 “Water Scarcity and Global Warming,” Time for Change website, http://www.timeforchange.org/water-scarcity-and-global-warming.37 David Cyranoski, “Climate Change: The Long Range Forecast,” Nature 438 (2005): 275–76.38 “Did You Know...? Facts and Figures about Water Scarcity,” UNESCO, http://www.unesco.org/water/news/newsletter/180.shtml#know.39 Dr. Rosalind Stanwell Smith, “Industrial Pollution,” Water Sanitation and Health unit of the World Health Organization, 2002, http://www.

who.int/water_sanitation_health/industrypollution/en/index1.html.40 “Pollution,” BBC website, http://www.bbc.co.uk/nature/programmes/tv/state_planet/pollution.shtml.41 “Pesticides and Chemical Pollution,” Peopleandplanet.net, 29 September 2007, http://www.peopleandplanet.net/doc.php?id=109.

16


Modern warfare is another source of chemical pollution. In the aftermath of the Balkan War, for

example, the World Wildlife Fund found that drinking water supplies contained high levels of chemical

contaminants in places hit by the North Atlantic Treaty Organization (NATO) bombs.42

Internationally, there is a growing commitment to reducing water pollution through international and

national agreements, public-private partnerships and improved surveillance of its health e!ects.43

5.3.3 Cultural constraints

Cultural factors play an important part in the allocation of drinking water in many parts of the world.

In South Asia, caste is often an important factor in determining access. In Andhra Pradesh, India, for

example, low-caste women cannot draw water from wells in high-caste villages. Similarly, ethnic divisions

in much of Latin America restrict certain communities’ access to potable water. In Bolivia, the average rate

of access to piped water is 49% for indigenous speakers, compared to 80% for nonindigenous speakers.44

5.3.4 !e rising cost of safe drinking water

Water prices are rising throughout the world. "e price of water is largely determined by three factors:

Government intervention in the form of subsidies

Demand

Cost of supply

Declining government intervention

Traditionally, the price of water has been largely determined by government subsidies: it is estimated

that 40% of municipal suppliers do not charge enough to meet their basic costs.45

However, there is a trend toward formal water markets, in which the price of water is determined solely

by the laws of supply and demand. "is is already the case in the United States and Australia. "e price

of water in these markets is rising rapidly. In Australia, for example, the markets peaked at 75¢ per cubic

meter in December 2006, a tenfold rise year-on-year.46 "is reflects the growing tension between supply

and demand and the e!ects of rising supply costs, discussed below.

42 Alex Kirby, “Danube Pollution Warning,” BBC News, 14 September 1999, http://news.bbc.co.uk/1/hi/sci/tech/446226.stm.43

health/dwq/gdwq3rev/en/index.htm.44 “Human Development Report 2006: Beyond Scarcity: Power, Poverty and the Global Water Crisis,” United Nations Development Pro-

gramme, 2006, http://hdr.undp.org/hdr2006/pdfs/report/HDR06-complete.pdf.45 Edwin Clark II, “Water Prices Rising Worldwide,” Earth Policy Institute, 7 March 2007, http://www.earth-policy.org/Updates/2007/Update64.

htm.46 Ibid.

17


Growing tension between supply and demand

Water prices are usually higher in regions where water is scarce. In Northern China, for example, farmers

in Hebei pay between 0.075 and 0.1 RMB (1¢ and 1.5¢) per cubic meter.47 By contrast, farmers in the

water-rich Southern province of Guangdong pay only 0.01 RMB (.015¢) per cubic meter. As demand

for potential safe drinking water increases and the total volume of available freshwater resources falls, the

price of drinking water is likely to increase.

Rising supply costs

Supply is also determined by the infrastructure costs involved in sourcing, cleaning and transporting

drinking water. "ese supply costs are rising for the following reasons:

"e decline in freshwater resources means that water companies have to employ ever more

extreme measures to extract water.

"e cost of energy is rising; the UK water industry consumes 3% of energy used in the UK.48

Aging infrastructure needs to be maintained and replaced. More than half the mains below

London are believed to be over 100 years old, and one-third are over 150 years old.49

As demand increases, the water infrastructure has to be extended to serve more consumers.

Between 2005 and 2010, 1 million more properties are expected to be connected to the water

system in the UK, necessitating 22,000 kilometers of new piping.

47 Erin Henry, “Water Scarcity in the North China Plain: Water Saving Irrigation and Its Implications for Water Conservation,” 8 July 2004, http://forestry.msu.edu/China/New%20Folder/Erin.pdf.

48

49 “Waterfacts: Water Resources,” Water UK website, March 2007, http://www.water.org.uk/home/resources-and-links/waterfacts/resources.

19

6. The impact of access to safe drinking water

"roughout the world there is a strong correlation between access to safe drinking water and economic

growth.50 "at correlation may be explained in three ways:

Higher levels of access to safe drinking water are likely to increase the rate of economic growth

by improving the health and education of a population and minimizing the costs of unsafe

drinking water.

Economic growth and access to safe drinking water both depend on the same factors, such as

socioeconomic stability.

Economic growth results in higher levels of access to safe drinking water because governments

may increase spending on water infrastructure.

"is report explores the ways in which access to safe drinking water and economic growth may be linked.

6.1 !e health e"ects of unsafe drinking water

According to the World Bank, 88% of disease in the developing world is caused by unsafe drinking water.

Diseases from microbial pollution may be the result of the contamination of drinking water by:

Human or animal feces containing pathogenic bacteria and viruses that may cause cholera,

amoebic and bacillary dysentery and other diarrheal diseases.

Parasites, such as Dracunculus medinensis, in organisms living in the water.

Table 3:: Incidence rate and cause of diseases related to drinking water

Disease Cholera

Diarrheal diseases

Dracunculiasis

Poliomyelitis

Morbidity (incidence of disease/year in 1,000s)

14051

1,000,00052

10053

114,00054

Relationship of disease to drinking water

Caused by the presence of the bacterium Vibrio cholerae in drinking water

Caused by a host of bacterial, viral and parasitic organisms in contaminated drinking water

Caused by the presence of a Cyclops that has ingested the larvae of the large nematode (roundworm) Dracunculus medinensis

Caused by the presence of the polio virus in water

51 52 53 54

50 See appendix 5.51 See appendix 3.52 Ibid.53 Ibid.54 Ibid.

20


Chemical pollution is also a frequent cause of disease. "e health e!ects caused by chemical pollutants

often arise after many years and may even be intergenerational. "e increased rate of cancer in China is,

for example, blamed on chemical pollution in its waters.55

Five million people, mostly children, die from diseases caused by poor-quality water supplies every year.56

"is explains the strong correlation between access to safe drinking water and child mortality and life

expectancy rates.57

Water-related diseases are of particular concern in countries with high numbers of people with

HIV/AIDS.58 At the start of the Decade for Action,59 where he spoke about hope in the fight against

HIV/AIDS, Kofi Annan declared, “We shall not finally defeat the infectious diseases that plague the

developing world until we have also won the battle for basic health care, sanitation and safe drinking

water.”60

6.2 !e impact of unsafe drinking water on education

"e findings in “E!ect of Water and Sanitation on Childhood Health in a Poor Peruvian Peri-Urban

Community,” as well as in the study “Early Childhood Diarrhea Predicts Impaired School Performance,”

suggest that improving education standards in much of the developing world is dependent upon access

to safe drinking water.61 Table 4 shows the correlation coe#cients between access to safe drinking water

and the percentage of children reaching grade 5, as published by the UN. "is is used as a measure of the

level of education in a nation, for regions of low, medium and high human development.62 "e correlation

coe#cients across these regions are greater than zero. "is reveals that there is a strong link between high

levels of access to safe drinking water and high levels of education.

55 Joseph Kahn and Jim Yardley, “As China Roars, Pollution Reaches Deadly Extremes,” New York Times, 26 August 2007, http://www.nytimes.com/2007/08/26/world/asia/26china.html.

56 “Water-Related Diseases,” Wildfowl & Wetlands Trust website, http://www.wwt.org.uk/text/686/water_related_diseases.html.57 See appendix 3.58 “Water, Sanitation and Hygiene: Common Water and Sanitation-Related Diseases,” UNICEF, 1 April 2005, http://www.unicef.org/wes/in-

dex_wes_related.html.59

Water for Life, to focus on water-related issues with particular emphasis on the role of women.60 UN press release, 30 November 2001, http://www.un.org/News/Press/docs/2001/sgsm8055.doc.htm.61 Dr. William Checkley, et al., “Effect of Water and Sanitation on Childhood Health in a Poor Peruvian Peri-Urban Community,” The Lancet

363, no. 9403 (10 January 2004): 112–118. Breyette Lorntz, et al., “Early Childhood Diarrhea Predicts Impaired School Performance,” The Pediatric Infectious Disease Journal, VOL 25, Issue 6 (June 2006): 513–520.

62incorporating life expectancy, knowledge and income.

21


Table 4:: Correlation between access to safe drinking water and level of education 63 64 65

Correlation of access to safe drinking water63, 64

Children reaching grade 5

65

Regions of low human development

0.3146

Regions of medium human development

0.6614

Regions of highhuman development

0.3223

Global

0.4328

Table 4 shows that, in regions of low and medium development, there is a strong relationship between

access to safe drinking water and educational achievement, as measured by the number of children reach-

ing grade 5. In regions of greater development, access to safe drinking water is nearly universal and so

changes to this level are small and have little e!ect.

A decline in access to safe drinking water has a negative impact on education:

Illness related to drinking water and the time spent collecting water can, in some cases, prevent

children from attending school. In Tanzania, for example, school attendance levels are 12%

higher for girls who live within 15 minutes of a source than for girls who live an hour away.66 It

is estimated that a lack of safe drinking water costs 443 million school days a year throughout

the world.67

"e children who do attend school are believed to have a reduced learning potential as a result

of parasitic infection, which, according to the 2006 Human Development Report, a!ects 150

million children throughout the world each year.68

6.3 !e costs of a lack of safe drinking water

A lack of safe drinking water can create a heavy cost burden on nations’ economies, potentially

hindering growth.

"e economic costs incurred by a lack of access to safe drinking water can be divided into the direct costs

of contracting disease, the indirect costs related to disease and the cost of time lost due to the lack of access.

6.3.1 Direct costs of contracting disease

"e cost of the treatment of water-related diseases is a heavy burden on families throughout the

developing world. Many nations have a roughly static incidence rate of three episodes of diarrhea every

63 -

resents perfect positive correlation, 0 equates to no correlation and negative 1 indicates positive negative correlation. Thus, the closer the value is to positive or negative 1, the stronger the correlation.

64 WHO 2006.65 World Development Indicators Database 2004.66 “Human Development Report 2006: Beyond Scarcity: Power, Poverty and the Global Water Crisis,” United Nations Development Pro-

gramme, 2006, http://hdr.undp.org/hdr2006/pdfs/report/HDR06-complete.pdf.67 Ibid.68 Ibid.

22


year; in these nations, a child could su!er from a water-related disease every four months. In a family

of four young children, the parents would be likely to have a child with a potentially fatal disease once a

month.69 At these rates, even the cheapest drugs, such as oral rehydration therapy, become expensive.70

6.3.2 Indirect costs related to the disease

"e cost burden of ill health on the economy is twofold:

Lost economic contribution of the sick or prematurely deceased

Lower productivity resulting from sick and less educated workers

"e indirect costs may accrue from lost work and lower productivity of those a$icted in addition to

those who care for the a$icted.

6.3.3 Costs related to time spent on water collection

In many parts of the world, collecting safe drinking water is extremely time-consuming. It is, for

example, estimated that the average time each household in India spends on water collection every day

is 56 minutes.71 "is is time that could be spent on economic activity. A study conducted by the Self

Employed Women’s Association (SEWA) in India found that reducing water collection by one hour a

day would enable a woman to earn up to $100 more a year, depending on her enterprise.72

69 Olivier Fontaine, Paul Garner and M. K. Bahn, “Oral Rehydration Therapy: The Simple Solution for Saving Lives,” BMJ 334 (2007): supplement 1, http://www.bmj.com/cgi/content/full/334/suppl_1/s14.

70 Ibid.71 “Human Development Report 2006: Beyond Scarcity: Power, Poverty and the Global Water Crisis,” United Nations Development Pro-

gramme, 2006, http://hdr.undp.org/hdr2006/pdfs/report/HDR06-complete.pdf.72 Ibid.

23

7. Will drinking water drought stall economic growth by 2050?

7.1 When is growth most likely to be a"ected?

Using historical data for GDP per capita growth rates and levels of access to safe drinking water

throughout the world, one can examine in greater depth the impact of a likely fall in access to safe

drinking water on future per capita growth.

Figure 7 shows access to safe drinking water relative to gross domestic product per capita growth for all

nations for the years 1970 to 2006.73

Each data point shows the percentage of the population with access to safe drinking water and

the GDP per capita growth rate for a nation in any given year.

"e line of best fit 74 shows the predicted level of global GDP per capita growth at each level of

access to safe drinking water.

Figure 7:: Global access to safe drinking water relative to average global GDP per capita growth

120

100

80

60

40

20

0

–40 –20 0 20 40 60 80 100 120

Average GDP per capita growth (%) y = -0.0289x2 + 116.05x - 116460

73.4%

Acc

ess t

o sa

fe d

rink

ing

wat

er (%

pop

ulat

ion)

Figure 7 shows that GDP per capita growth is expected to be 0% when only 73.4% of the world

population has access to safe drinking water.

73 See appendix 1 for the list of countries.74

24


Figure 8 shows predictions for the percentage of the world population with access to safe drinking water.

It reveals that the level of access corresponding to negligible growth is expected to be reached by 2050 at

the latest.

Figure 8:: Projection of global access to safe drinking water

120

100

80

60

40

20

0

1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Year y = -0.0289x2 + 116.05x - 116460

Acc

ess t

o sa

fe d

rink

ing

wat

er (%

pop

ulat

ion)

Using the averages for the percentage of the population with access to safe drinking water in the

developed, emerging and developing economies, one can estimate when a lack of access to safe drinking

water is likely to a!ect growth in each economic region.

In figures 9, 10 and 11, the regional average of the percentage of the population with access to safe

drinking water is plotted against the average GDP growth rate of each region for the years 1970 to 2006.

"ese figures reveal the average percentage of the population with access to safe drinking water that cor-

responds to zero growth, other factors being equal, for each region.

25


Figure 9:: Access to safe drinking water relative to GDP per capita growth for the developed world

120

100

80

60

40

20

0

–1 0 1 2 3 4 5 6

GDP per capita growth rate (%) y = -0.0289x2 + 116.05x - 116460

52.4%

Ave

rage

per

cent

age

of th

e po

pula

tion

with

acce

ss to

safe

dri

nkin

g w

ater

(%)

Growth is predicted to stall when less than 52.4% of the developed world has access to safe drinking

water. Please note that the data points represent the regionally grouped averages of the 29 developed

economies as listed in appendix 2.

Figure 10:: Access to safe drinking water relative to GDP per capita growth for the emerging economies

90

80

70

60

50

40

30

20

10

0

–1 0 1 2 3 4 5 6 7


39.6%

Ave

rage

per

cent

age

of th

e po

pula

tion

with

acce

ss to

safe

dri

nkin

g w

ater

(%)

Growth is expected to su!er when less than 39.6% of the emerging markets have access to safe drinking

water. Please note that the data points represent the regionally grouped averages of the 107 emerging


26


Figure 11:: Access to safe drinking water relative to GDP per capita growth for the developing world

60

50

40

30

20

10

0

–1 0 1 2 3 4 5 6 7


21.3%

Ave

rage

per

cent

age

of th

e po

pula

tion

with

ac

cess

to sa

fe d

rink

ing

wat

er (%

)

Growth is likely to be a!ected when less than 21.3% of the developing world has access to safe drinking

water. Please note that the data points represent the regionally grouped averages of the 15 developing


"e results of the above figures are summarized in table 5.

Table 5:: Level of access that corresponds to 0% GDP per capita growth

Region

Developed world

Emerging markets

Developing world

% population with access to safe drinking water

52.4

39.6

21.3

Figures 12, 13 and 14 show predictions for future levels of access to safe drinking water in the developed

world, emerging markets and developing world. "ey reveal the year when the lack of access to safe

drinking water is expected to coincide with negligible growth.

27


Figure 12:: Predictions for future levels of access to safe drinking water for the developed world120

100

80

60

40

20

0

1985 1990 1995 2000 2005 2010 2015 2020

Year y = -0.0289x2 + 116.05x - 116460

52.4%

Ave

rage

per

cent

age

of th

e po

pula

tion

with

acce

ss to

safe

dri

nkin

g w

ater

(%)

In the developed world, the level of access to safe drinking water corresponding to zero growth is

expected to be reached by 2015. Please note that the data points represent the regionally grouped

averages of the 29 developed economies as listed in appendix 2.

Figure 13:: Predictions for future levels of access to safe drinking water for the emerging economies

1960 1970 1980 1990 2000 2010 2020

Year y = -0.0289x2 + 116.05x - 116460

90

80

70

60

50

40

30

20

10

0

39.6%

Ave

rage

per

cent

age

of th

e po

pula

tion

with

acce

ss to

safe

dri

nkin

g w

ater

(%)

In the emerging markets, the level of access to safe drinking water corresponding to zero growth is


averages of the 107 emerging economies as listed in appendix 2.

28


Figure 14:: Predictions for future levels of access to safe drinking water for the developing world

1960 1970 1980 1990 2000 2010 2020 2030 2040

Year y = -0.0289x2 + 116.05x - 116460

21.3%

Ave

rage

per

cent

age

of th

e po

pula

tion

with

acce

ss to

safe

dri

nkin

g w

ater

(%)

60

50

40

30

20

10

0

In the developing world, the level of access to safe drinking water corresponding to zero growth is


averages of the 15 developing economies as listed in appendix 2.

"e results are summarized in table 6.

Table 6:: When a lack of access to safe drinking water is expected to impinge upon growth

2015

2015

2035

"e models suggest that these are the dates at which GDP growth is expected to fall to 0%. At this point,

significant e!orts will have to be employed to increase access to safe drinking water. By 2050, the world is

expected to be su!ering from a water-induced growth crisis. "is is likely to a!ect the economies of the

emerging and the developed world first before reaching the developing economies.

7.2 How is growth expected to be a"ected?

7.2.1 !e emerging markets

"e emerging markets are likely to be the first economies to su!er from a fall in access to safe drinking

water. "ese economies include the BRIC economies of Brazil, Russia, India and China, which analysts

have predicted will become the largest economies by 2050.75

75 Dominic Wilson and Roopa Purushothaman, “Dreaming with BRICs: The Path to 2050,” Global Economics paper 99, the Goldman Sachs Group, 1 October 2003, http://www2.goldmansachs.com/ideas/brics/book/99-dreaming.pdf.

29


Case studies of China and India in appendix 6 demonstrate how a lack of access to safe drinking water

might prevent the emerging economies from sustaining the record growth rates predicted by analysts.

Instead of high growth and prosperity, these regions may see:

Rising labor costs fueled by a rise in drinking water prices.

Lower productivity; the higher incidence of disease may lower productivity in the short run

and undermine expenditures on education in the long run.

Greater investment risk; a lack of safe drinking water could ignite ethnic and regional tensions.

Furthermore, the evidence suggests that the worst-a!ected regions could be the most economically active

areas of the emerging markets, such as Northern China and Tirupur, the Indian “Knitwear capital.” 76

7.2.2 !e developed world

"e focus of our world economy is already shifting toward the emerging nations.77 According to

Goldman Sachs, the BRIC economies contributed to 30% of global growth in the last five years. Yet their

economies are by no means isolated. Since predictions of their future growth were first suggested, the

BRIC economies have received a flood of investments from the developed world, and today they are the

destination for over 15% of the world’s foreign direct investment.78 Furthermore, their share of global

trade has doubled since 2001 to 15%.79 Not only are the economies of the developed world therefore

heavily invested in the emerging markets, but the domestic industries of those nations also rely heavily

on their expanding import/export markets. A case study of California80 demonstrates how the impact of

the decline in access to safe drinking water in the developed world could be compounded by the decline

of the emerging economies. Growth in the developed world may therefore also su!er from:

"e loss of export markets in the emerging and developing world.

Decline in travel and tourism.

Rising labor costs in agriculture and industry.

Lower productivity due to an increased health burden.

76 Nina Brooks, “Impending Water Crisis in China,” Arlington Institute website, http://www.arlingtoninstitute.org/wbp/global-water-crisis/457#.77 Dominic Wilson and Roopa Purushothaman, “Dreaming with BRICs: The Path to 2050,” Global Economics paper 99, the Goldman Sachs

Group, 1 October 2003, http://www2.goldmansachs.com/ideas/brics/book/99-dreaming.pdf.78 Dominic Wilson, Roopa Purushothaman, Jim O’Neill and Anna Stupnytska, “How Solid Are the BRICs?” Global Economics paper 134, the

GoldmanSachsNextEleven1205.pdf.79 Ibid.80 See appendix 6 for an in-depth study of drinking water in California.

30


7.2.3 !e developing world

"e evidence suggests that the economies of the developing world will be the last to su!er from a lack of

access to safe drinking water. However, they continue to depend on the developed world and increasingly

rely on the emerging economies for aid and assistance in increasing access to safe drinking water and

attaining other development goals, which foster economic growth. A growth crisis in the developed and

emerging economies could therefore reduce access to safe drinking water and cause growth to slow much

sooner than expected. For example, Uganda, whose drinking water sector is the subject of a case study in

appendix 6, would be expected to su!er from:

Loss of export markets in the emerging and developed world.

Lower productivity.

Rising labor costs.

31

8. What can be done?

"is section looks at possible solutions to declining access to safe drinking water. It examines the

expected volume of water saved, the anticipated cost and the practicality of the method.

8.1 Conserving water

8.1.1 Reducing leakage

Method

For long-term success, water infrastructure typically requires a “full fix.” In the short-term, however, local

repairs or sleeves can minimize leakage from pipes.81

Volume of water saved

It is estimated that replacing aging pipes in the United States can reduce leaks of treated water from

10–20% to as little as 2%.82

Cost

"e cost of replacing aging water pipes in the United States over the next two decades is estimated at

$1 trillion.83

Practicality

"is is most applicable to urban areas with large water infrastructure systems.

8.1.2 Recycling water

Method

“Recycling water” refers to the purification of waste water on a large scale for direct or indirect potable

uses, whereby the treated water is released to another water body, such as a reservoir, before reuse.84


"e volume of fresh water is extended, so this is a sustainable option.

Cost

It is expensive, as shown by the $481 million plant that opened in Orange County, California, in 2008.85

81 Michael McNamara, et al. “Clean Technology Primer,” Jefferies CleanTech Review 3, no. 2 (2008).82 Ibid.83 M. Tullmin, “Costs Related to Water and Water Infrastructure,” Corrosion-Club.com website, http://www.corrosion-club.com/watercosts.htm.8485 Randal C. Archibold. “From Sewage, Added Water for Drinking,” New York Times, 27 November 2007, http://www.nytimes.

com/2007/11/27/us/27conserve.html?ex=1353906000&en=58e0e5919db461b5&ei=5124&partner=permalink&exprod=permalink.

32


Practicality

"ere are environmental benefits:86

Water recycling eliminates the need to divert water from sensitive ecosystems.

It reduces pollution as waste water is no longer disposed of without treatment.

It extends available freshwater supplies.

8.1.3 Water pricing87

Method

Increase the price of water to reduce demand and o!set the real cost of providing it.


Wastage of water is minimized, and investment in infrastructure is encouraged.

Cost

"ere is a cost benefit to the government, which no longer has to subsidize the water sector.

Practicality

"e introduction of water pricing must not harm the poor. One solution that has been proposed is to

use a block-rate pricing system that charges more for higher levels of consumption.

8.1.4 Improving irrigation methods88

Method

Eradicate water leaks in the lining of water channels.

Store water in underground aquifers during the nongrowing season to be released on demand in the growing season.


A 10% drop in irrigation water would save more than is used by all consumers.89

Cost

"ere are large cost savings involved. In Kenya, for example, there is an estimated $20 return on each

$15 spent on a bucket drip irrigation kit.90

86water/recycling/.

87 Edwin Clark II, “Water Prices Rising Worldwide,” Earth Policy Institute, 7 March 2007, http://www.earth-policy.org/Updates/2007/Update64.htm.

8889 Ibid.90 “Improving Irrigation Technology,” Pakissan.com website, http://www.pakissan.com/english/newtech/improving.irrigation.technology.shtml.

33


Practicality

It eliminates the need for large surface reservoirs, which are ine#cient, particularly in the hot,

dry areas most severely a!ected by the water crisis.

As the area of land under irrigation is extended, improving irrigation methods will become

ever more important in conserving water.

8.1.5 Virtual water trade91

Method

Countries with low supplies of fresh water are encouraged to import food and other water-intensive

agricultural products. In this way, remaining freshwater reserves can be devoted to increasing the supply

of drinking water.


It is estimated that global free trade could increase the total volume of virtual water traded

internationally to more than 1.7 trillion cubic meters from its present level of 800 billion cubic meters.

Cost

"e costs involved in restructuring entire economies cannot be quantified.

Practicality

"e nations in question would lose their self-su#ciency.

8.1.6 Drought-resistant crops

Method

Drought-resistant crops are not widely used currently. For long-term success, these genetically modified

plants need to be widely accepted as a food source, particularly in LEDCs (less economically developed

countries). It will take four to five years of field testing and clearing regulatory hurdles before the

drought-resistant plants can be sold.92


Drought-resistant crops can grow with a third of the normal water requirement.93

91 Ibid.92 “Drought Resistant GM Crops Ready ‘in 4 Years,’ ” Checkbiotech.org website, 8 October 2008, http://greenbio.checkbiotech.org/news/

drought_resistant_gm_crops_ready_four_years.93 “Crops for a Drought,” Times Online, 27 November 2007, http://www.timesonline.co.uk/tol/news/uk/article2951028.ece.

34


Cost

Although specific cost studies on drought-resistant crops have not taken place, an example of the type of

cost that could be avoided through the use of drought-resistant crops can been seen in Australia,

where the unreliability of rain and the inability of the crops to survive through drought have cost the

government more than AUS $3 billion ($2.5 billion) in relief since 2001.94

Practicality

"e use of drought-resistant crops is most applicable to poverty-stricken areas prone to drought, such

as Somalia and Zimbabwe. Drought-resistant crops could greatly reduce the number of people dying of

starvation by providing reliable crops that would have a higher resistance to drought conditions.

8.2 Increasing supply

Conserving water alone will not be enough to meet projected demand. New technology that makes

unsafe drinking water safe to drink must also be used to increase supply. Such technology can be adopted

on a large scale and at a household level.

8.2.1 Desalination

Method

"e most frequent method of desalination is through the use of reverse osmosis, in which a semipermeable

membrane separates salt from the water. Numerous countries have adopted this technology to solve their

water problems.

Volume of water produced

According to the International Desalination Association, 13,080 desalination plants worldwide produce

more than 12 billion gallons (54.5 billion liters) of water a day.95

Cost

Desalination is extremely energy intensive, and the water produced is very expensive due to the cost of

moving large volumes of desalinated water across land. As a result, desalination requires heavy subsidies.

Practicality

"e large amounts of brine that are produced and then disposed of may have a significant

environmental impact.

94 John Dale Dunn, MD, PhD, “Australia Will Promote Drought-Resistant Crops,” the Heartland Institute, 1 March 2008, http://www.heartland.org/publications/environment%20climate/article/22793/Australia_Will_Promote_DroughtResistant_Crops.html.

95 Kathryn Kranhold, “Water, Water Everywhere....” Wall Street Journal, 17 January 2008, Wall Street Journal Online http://online.wsj.com/article/SB120053698876396483.html?mod=googlenews_wsj.

35


8.2.2 Water purification at the point of use

Large-scale initiatives to purify drinking water are not always suitable solutions for two reasons:

Contamination may occur after purification and before consumption—i.e., “on its way” to the

end user. "is is a widespread and significant occurrence in the developing world.96

"e cost of large-scale initiatives is hard to justify in areas of low population density.

Due to the expense associated with centralized water treatment, approaches for decentralized and

household water treatment technologies are practical and desired in both the developed and developing

world. "ere are many di!erent types of household water treatment technologies, but the e#cacy of

those technologies is often undermined by a lack of sanitation in water storage methods.

Furthermore, regardless of the achievement of the desired water quality, emergencies, engineering delays

and periodic treatment failures occur. Point-of-use (POU) technology can provide e!ective controls;

however, choosing the right POU treatment technology is largely dependent on the contaminants to be

removed and regional resources for treatment.

Globally, nitrates, arsenic and fluoride are the chemical contaminants of greatest concern and can be

challenging to remove. Sometimes, chemical contaminants are detectable by the consumer because of an

unacceptable taste, odor or appearance, whereas the presence of harmful or even deadly microbial agents

can easily go unnoticed.97

Technologies that purify water at the point of use overcome those hurdles. "e examples of water treat-

ment presented in table 7 reveal their ability to purify water rapidly at a low cost anywhere in the world.

96 Jim Wright, Stephen Gundry and Ronan Conroy, “Household Drinking Water in Developing Countries,” Tropical Medicine and International Health 9, no. 1 (January 2004): 106–117.

972009), http://www.wcponline.com/pdf/0901On_Tap.pdf.

36


Table 7:: Methods of water purification at the point of use

Type of water treatment

Mechanical (disposable cartridge)

Biological

Chemical

Adsorption

Bacteriostatic

Heat

Irradiation

Oxidation

HaloPure technology

Material

Cloth/paper/plastic

Ceramic/sand

Alum/chitosan/resin

Carbon block/zeolite

Silver

Boil/distill

UV (solar/electric)

Bleach/iodine/ozone

Contact biocide

Cost

$

$$

$$$

$$

$$$

$/$$

$/$$

$$$$

$

Filtered Purified Health benefit

8.3 Increasing investment in the water sector

Investment in the water sector is key to the adoption of the above technologies to increase the provision

of access to safe drinking water. "e responsibility for this investment relies on:

"e international community, including bilateral and multilateral aid

National governments

Private utility companies

Other governmental and nongovernmental organizations

Funds that provide capital for research and development and the adoption of new technologies

8.3.1 !e international community

"e international community finances the water sector through grants or microfinance loans.

37


Grants

"e water sector receives, on average, $3 billion per annum in grants, in addition to $1.5 billion of

nonconcessionary lending, mainly by the World Bank, and contributions from national governments.

Further analysis of this aid reveals two points of concern:

"e value of the aid devoted to the water sector is in decline: excluding aid sent to Iraq, the real

value of aid supplied to the water sector is lower than in 1996.98

Water aid is given less priority by the international community: overseas development aid

(ODA) for water as a percentage of total ODA has fallen from 8.7% in 1996 to 6.5% in 2002.

"ere are signs of an increase in aid supplied in the form of grants from multilateral organizations,

such as the World Bank’s International Development Organization (IDA) and the European Union.

Experience shows that such multilateral grants are better targeted to those most in need.99

Microfinance

"e adoption of microfinance in the water sector, which provides communities with loans to cover the

cost of water projects, is a fairly recent development. "is works on the assumption that people with low

incomes are willing to pay toward water systems if they are able to. "ese schemes have two advantages:

"is is an alternative to having to apply and wait for a grant.

"e approach is scalable as the loan repayments from an initial investment can be lent to others

in need.

Nonmonetary intervention in the water sector

"e international community also has an important role in:

Raising awareness of the consequences of declining access to safe drinking water.

Laying down guidelines to preserve freshwater sources.

Encouraging and providing incentives for water conservation.

8.3.2 National governments100

Government intervention in the water sector is justified on three grounds:

Safe drinking water is considered a merit good as it has public as well as private benefits.

98751&L=ht...38.121%2Frobots.txt%3F%3F%2F.

99 Ibid.100 David Le Blanc, “A Framework for Analyzing Tariffs and Subsidies in Water Provision to Urban Households in Developing Countries,” United

Nations Division for Sustainable Development, February 2007, http://www.un.org/esa/sustdev/publications/water_tariffs.pdf.

38


Economies of scale in the water sector favor bulk provision of the resource.

"e provision of safe drinking water is extremely capital intensive. As a result, the required

investment is beyond the means of individual households and prevents utility companies from

carrying the additional cost of water subsidies.

National intervention in the financing of the water sector frequently takes the form of subsidies. Water

subsidies lower the price of water relative to other consumption goods, which should in theory increase

uptake and ultimately the consumption of safe drinking water. Subsidies in the water sector may take the

form of direct or indirect subsidies.

In indirect subsidies, the government subsidizes utility companies for losses incurred from below-cost

tari!s. For example, under the increasing block tari! (IBT), consumers using less than a threshold

quantity of water pay a discounted price.

Direct subsidies are paid directly to consumers to cover the costs involved in securing access to safe

drinking water. For example, direct consumption subsidies are paid directly to eligible households to

cover their water bills.

8.3.3 !e private sector

In many countries such as the UK the water sector has been deregulated. In this case, private utility

companies are also responsible for financing investment in the water sector.

It is estimated that private utility companies in England and Wales will have invested £88 billion ($144

billion) in the water sector from 1980 to 2010. "ese investments are necessary to increase the quantity

of water supplied, ensure environmental sustainability and improve the quality of drinking water:

Between 2005 and 2010, 1 million more properties are due to be connected to the water

system, necessitating 22,000 kilometers of new piping.

Investment is needed to alleviate the flooding of sewers.

"e quality of drinking water is of a high standard throughout the UK, with over 99.5% of

water reaching national standards.

8.3.4 Other national organizations

In nations with a deregulated water sector, other governmental and nongovernmental organizations play

an important role in ensuring e#ciency in the financing of the water sector. In the UK, these include

regulators such as OfWat (in England and Wales), Utility Regulator for Northern Ireland (in Northern

Ireland) and the Water Industry Commission for Scotland (in Scotland). Consumer organizations such

39

as the Waterwatchdog and the Consumer Commission for Water (CCWater) in England and Wales also

keep a check on prices.

8.3.5 Investment in water funds

Water funds, which invest in individual cleantech companies, are becoming increasingly popular among

institutional investors:

Exchange, raised $100 million.

billion in 2008.101

101 Michael McNamara, et al. “Clean Technology Primer,” Jefferies CleanTech Review 3, no. 2 (2008).


41

9. Conclusion

Economic growth seems to be dependent on high levels of access to safe drinking water.

Access to safe drinking water is already beginning to decline in the emerging markets due to growing

demand for supplies of an increasingly scarce resource.

Furthermore, the quality of drinking water is in decline in many parts of the world, and increasing

socioeconomic barriers, such as rising water prices, mean that fewer people have access to safe

drinking water.

"is decline in access to safe drinking water is expected to result in:

A higher disease burden

Lower education levels

Lower worker productivity

Higher labor costs

Slower economic growth

Research suggests that the economies of the fastest-growing regions in the world, such as Northern

China and other emerging markets, are likely to be the first to su!er as a result of a fall in access to safe

drinking water. Globalization and interdependence among the world’s economies mean that a growth

crisis in one such region could have a subsequent e!ect on the developed world.

Possible measures to avert the crisis include increasing the investment in the conservation and supply of

safe drinking water throughout the world and improving the management of these resources through

greater cooperation on international and local levels.

In summary, failing to prevent a fall in access to safe drinking water in economically productive areas

on which the developed world is becoming increasingly dependent, such as Northern China and the

other emerging economies, has the potential to have a significant impact on the outlook for economic

growth worldwide.

43

Appendixes

Appendix 1: Countries used in the analysis of global trends in access to safe drinking water from 1970 to 2006Albania Germany Papua New Guinea Algeria Ghana Peru Angola Greece Philippines Antigua and Barbuda Grenada Poland Armenia Guinea-Bissau Portugal Australia Guyana Qatar Austria Haiti Romania Azerbaijan Honduras Russian Federation Bahamas Hong Kong, China Rwanda Bahrain Hungary Saint Kitts and Nevis Barbados Iceland Saint Lucia Belarus India Saint Vincent and the Grenadines Belgium Ireland Samoa Benin Israel Saudi Arabia Bhutan Italy Senegal Bosnia and Herzegovina Jamaica Seychelles Brazil Japan Sierra Leone Brunei Darussalam Jordan Singapore Bulgaria Kazakhstan Slovakia Burkina Faso Kenya Slovenia Cambodia Korea Solomon Islands Cameroon Kuwait South Africa Canada Kyrgyzstan Spain Cape Verde Lao People’s Democratic Republic Sri Lanka Central African Republic Latvia Sudan Chad Lebanon Suriname Chile Lesotho Sweden China Libyan Arab Jamahiriya Switzerland Colombia Lithuania Syrian Arab Republic Comoros Luxembourg Tajikistan Congo Macedonia (FYROM) TanzaniaCosta Rica Madagascar "ailand Côte d’Ivoire Malaysia Timor-LesteCroatia Maldives Togo Cuba Mali Tonga Cyprus Malta Trinidad and Tobago Czech Republic Mauritania Tunisia Denmark Mauritius Turkey Dominica Mexico Turkmenistan Egypt Moldova Ukraine El Salvador Mongolia United Arab Emirates Equatorial Guinea Morocco United Kingdom Eritrea Namibia United States Estonia Netherlands Uruguay Ethiopia New Zealand Uzbekistan Finland Niger Venezuela France Nigeria Vietnam Gabon Norway Zambia Gambia Occupied Palestinian Territories Zimbabwe Georgia Pakistan Panama

44

Appendixes

Appendix 2: Country classifications

DevelopedAustralia Hong Kong, China Norway Austria Iceland Portugal Belgium Ireland Singapore Canada Israel Slovenia Cyprus Italy Spain Denmark Japan Sweden Finland Korea Switzerland France Luxembourg United Kingdom Germany Netherlands United States Greece New Zealand

DevelopingAngola Guinea-Bissau Benin Mali Burkina Faso Niger Central African Republic Rwanda Chad Sierra Leone Congo Tanzania Côte d’Ivoire Zambia Ethiopia

EmergingAlbania Grenada Philippines Algeria Guyana Poland Antigua and Barbuda Haiti Qatar Armenia Honduras Romania Azerbaijan Hungary Russian Federation Bahamas India Saint Kitts and Nevis Bahrain Jamaica Saint Lucia Barbados Jordan Saint Vincent and the Grenadines Belarus Kazakhstan Samoa Bhutan Kenya Saudi Arabia Bosnia and Herzegovina Kuwait Senegal Brazil Kyrgyzstan Seychelles Brunei Darussalam Lao People’s Democratic Republic Slovakia Bulgaria Latvia Solomon Islands Cambodia Lebanon South Africa Cameroon Lesotho Sri Lanka Cape Verde Libyan Arab Jamahiriya Sudan Chile Lithuania Suriname China Macedonia (FYROM) Syrian Arab Republic Colombia Madagascar Tajikistan Comoros Malaysia "ailand Congo Maldives Timor-LesteCosta Rica Malta Togo Croatia Mauritania Tonga Cuba Mauritius Trinidad and Tobago Czech Republic Mexico Tunisia Dominica Moldova Turkey Egypt Mongolia Turkmenistan El Salvador Morocco Ukraine Equatorial Guinea Namibia United Arab Emirates Eritrea Nigeria Uruguay Estonia Occupied Palestinian Territories Uzbekistan

45

Appendixes

Gabon Pakistan VenezuelaGambia Panama Vietnam Georgia Papua New Guinea Zimbabwe Ghana Peru

Appendix 3: !e correlation between access to safe drinking water and indicators of health

Correlation of access to safe drinking water (WHO 2006) with...

Under 5 mortality (per 1,000) live births (UN 2005) (percentage)

Life expectancy at birth (UN 2000–05) (percentage)


–0.3354

0.1298


–0.6449

0.537635

Regions of highhuman development

–0.5703

0.3001

Global

–0.5169

0.322515

Appendix 4: !e importance of access to safe drinking water to the role of women

"e provision of access to safe drinking water is crucial to breaking down the gender divide throughout

the world.

A lack of access to safe drinking water imposes an enormous burden on women in particular. In Ghana,

for example, it is estimated that each woman spends 700 hours a year fetching water.102 As the role of

collecting water and looking after ill children falls to women, the time required to gather water prevents

more girls than boys from attending school, thereby reinforcing gender inequalities in opportunity.

Correlation of access to safe drinking water (WHO 2006) with...

Female adult literacy rate (percentage aged 15 and older (UN 1995–2005)

Male adult literacy rate (percentage aged 15 and older (UN 1995–2005)


0.089707

0.033352


0.445381

0.431296

"e health of women without access to safe drinking water is also more at risk than that of their male

counterparts. In addition to the dangers of drinking unsafe drinking water, these women may su!er as

a result of carrying loads of up to 50 pounds (equivalent of 23 kilograms) on the head, hip or back as

they fetch water.103 Another risk for many women and girls is the threat of sexual attack as they leave the

village in search of water.104

102 “Gender Aspects of Water and Sanitation,” WaterAid website, http://www.wateraid.org/documents/plugin_documents/microsoft_word__gender_aspects.pdf.

103 Yifat Susskind, “Why Water Rights Are Women’s Rights,” AlterNet website, 5 August 2008, http://www.alternet.org/water/93903/why_water_rights_are_women%27s_rights/.

104 Ibid.

46

Appendixes

"e above examples highlight the importance of access to safe drinking water for improving health and

education as well as increasing gender equality. It is thus vital in the human development of a nation.

Appendix 5: !e correlation between access to safe drinking water and GDP per capita growth rates

0.616828 0.014343 0.676017 0.645268

"e positive values reveal that high levels of access to safe drinking water equate to high levels of GDP

per capita growth. "is is most likely to be a case of bivariate correlation, whereby the causation runs in

both directions—i.e., an improvement in access to safe drinking water increases GDP per capita growth,

and higher GDP per capita growth increases levels of access to safe drinking water.105

Appendix 6: Case studies in the political ramifications of access to safe drinking water

Case study: China

In a recent poll of 4 million people by the All-China Environmental Federation (ACEF), 96% of those

surveyed believed that China was already experiencing a water shortage crisis.106

China is indeed facing immense problems in balancing supply with demand, and this situation looks set

to worsen in the coming years due to falling supplies of freshwater resources, widespread wastage of the

resource and rising demand for drinking water.

"e supply of water available is decreasing due to climate change:

An MSNBC report published in 2006 revealed that the glaciers in the Qinghai-Tibetan

Plateau are shrinking at a rate of 7% a year, which is already a!ecting the availability of water in

the dry season.107

Over the past 15 years the lakes in the Yangtze River region have decreased by 10.64% and the

Ministry of Water Resources has reported a drop of 10% in the water level of the Yellow River,

Huai River and Hai River basins.108

105 This can be tested by the Granger or Sims method.106 “Drinking Water Worry Tops Chinese Environmental Concerns,” Water Quality and Health Council, 8 August 2005, http://www.

waterandhealth.org/news_center/in_news080805.php3.107 Nina Brooks, “Impending Water Crisis in China,” Arlington Institute website, http://www.arlingtoninstitute.org/wbp/global-water-crisis/457#.108 Ibid.

47

Appendixes

"e problem is compounded by the extraordinary pace of desertification in the north of the

country, where the desert is expanding at a rate of 950 square miles (the equivalent of 2,460

square kilometers) a year.109

Wastage of water in the agricultural sector, which accounts for 69% of China’s water use, is putting a

further strain on resources:110

95% of Chinese farms use gravity flow irrigation systems—which have an e#ciency rate of

only 35–60%111 —to grow water-intensive crops such as rice and wheat. It is estimated that

8.5% of the world’s water is wasted in this way.112

Consequently water is being extracted from groundwater and surface water sources faster than

it can be replenished by precipitation. In the Hai River, the extraction rate is as high as 90%,

which is far above the 30% needed to conserve the resource.113

In the face of rapidly diminishing freshwater resources, demand looks likely to increase at record levels:

It is estimated that by 2030 there will be 1.5 billion people in China, and per capita water

resources could fall to 1,750 cubic meters, barely above the 1,700 cubic meters measurement

that defines a water-scarce nation.114

"e Chinese authorities are beginning to make some progress to conserve the nation’s water supplies.

In 2004, Beijing announced that it would veto water-intensive industries and reward those firms using

water-saving technology.115

"e quality of China’s drinking water is also cause for concern:

According to the State Environmental Protection Agency, 70% of China’s rivers and lakes are

polluted and 90% of groundwater is too polluted to drink.

According to research by the World Bank, 60,000 people die prematurely each year from the

e!ects of this polluted water.116

"e Chinese government has been slow to respond to this rising pollution. In fact, investment in

environmental protection is still only 1.3% of China’s GDP.117

109 Ibid.110 Ibid.111 Erin Henry, “Water Scarcity in the North China Plain: Water Saving Irrigation and Its Implications for Water Conservation,” 8 July 2004,

http://forestry.msu.edu/China/New%20Folder/Erin.pdf.112 Nina Brooks, “Impending Water Crisis in China,” Arlington Institute website, http://www.arlingtoninstitute.org/wbp/global-water-crisis/457#.113 Ibid.114 Erin Henry, “Water Scarcity in the North China Plain: Water Saving Irrigation and Its Implications for Water Conservation,” 8 July 2004,

http://forestry.msu.edu/China/New%20Folder/Erin.pdf.115 “Dry Beijing to Shun Water-Intensive Industry,” U.S. Water News Online, March 2004, http://www.uswaternews.com/archives/

arcglobal/4dryxbeij3.html.116117 “Drinking Water Worry Tops Chinese Environmental Concerns,” Water Quality and Health Council, 8 August 2005, http://www.

waterandhealth.org/news_center/in_news080805.php3.

48

Appendixes

However, pressure from the international community is beginning to take e!ect.118 In 2007, the Asia

Development Bank launched plans to help China develop a pollution management scheme. "at e!ort

has already led to the adoption of stricter laws governing water pollution.119

Similarly, China is beginning to take action to increase the provision of safe drinking water.

China invested 22.3 billion yuan ($3.27 billion) from 2001 to 2005 to provide 67 million people with

safe water.120

China plans to overcome its water crisis with two large-scale projects:

"e "ree Gorges Dam, 2.4 kilometers wide and 183 meters high, is due to be completed in

2009. It is being hailed by the government as the solution to China’s water problems. However,

environmentalists claim that the water behind the dam in a 644-kilometer-long reservoir is

already heavily polluted.121

A second project, first proposed by Mao Zedong in 1952, is the North-South Water Diversion

Project. Due to be completed in 2050, it will eventually divert 44.8 billion cubic meters of

water from the south to the water-scarce northern region of the country.122

"e e!ects of a lack of safe drinking water will be felt most acutely in the north of the country, which has

just 7% of water supplies. "is is the heartland of the Chinese economy, responsible for 40–45% of GDP.123

"e decline in drinking water will most likely raise labor costs as workers demand pay raises in response

to rising water prices.

"ere will be an increased incidence of disease as people are forced to drink increasingly polluted water for

want of fresh water. "e diseases contracted will not be limited to the microbial diseases such as diarrhea,

which can be treated at a not-insignificant cost, but also illnesses brought on by chemical pollution.124

Cancer has already become China’s biggest killer thanks to chemical pollution. Furthermore, a lack of

pure drinking water could trigger an outbreak of avian flu because the virus, which enters the drinking

water through the feces of water birds, can survive in surface water for months.125 "e higher disease

burden in these economically active areas will greatly reduce the quality of human capital: in the short

run, sick workers will be less productive, while in the long run, the level of education among the general

population will decline.

118 “Clean, Safe Drinking Water for All Chinese Rural Residents by 2015,” China.org.cn, 5 September 2006, http://www.china.org.cn/english/2006/Sep/180067.htm.

119 M. E. Tusneem, “Managing Water Resources in China,” Asia Development Bank website, 18 March 2003, http://www.adb.org/documents/speeches/2003/ms2003013.asp.

120 “Clean, Safe Drinking Water for All Chinese Rural Residents by 2015,” China.org.cn, 5 September 2006, http://www.china.org.cn/english/2006/Sep/180067.htm.

121 Nina Brooks, “Impending Water Crisis in China,” Arlington Institute website, http://www.arlingtoninstitute.org/wbp/global-water-crisis/457#.122 Ibid.123 John McAlister, “China’s Water Crisis,” Deutsche Bank special report, March 2005.124 Xie Chuanjiao, “Pollution Makes Cancer the Top Killer,” China Daily, 21 May 2007, http://www.chinadaily.net/china/2007-05/21/

content_876476.htm.125

alaska.gov/PDFs/drinking%20water.pdf.

49

Appendixes

"ose problems will be compounded by conflict on a local and regional scale. A 2005 chemical spill

revealed water’s potential to ignite conflict. As the price of water doubled within hours, people began

migrating and fights for water broke out.126 In 2005, the disturbance was limited to a single province, but

it is a microcosm of what could soon occur on a national scale. Such regional tension would increase the

risk of investing in China.

A rise in labor costs and risk along with an expected decline in human capital means that, in the short

term, production will decline and growth will slow. In the long term, businesses will be forced to relocate

and investment in the a!ected regions also will fall.

Case study: India

“If we become rich or poor as a nation, it’s because of water.”127 "ese words of Sunita Narain from

the Centre for Science and Environment in Delhi get at the heart of the importance of water for India,

which, according to the World Bank, will face a severe water crisis within the next two decades.

Water pollution, primarily from untreated domestic, agricultural and industrial waste, is of growing

concern in India, where it is estimated that 1,600 lives are lost to waterborne diseases every single day:128

"e domestic sector is responsible for the majority of India’s water pollution. Over half of the

3.6 million cubic meters of sewage produced by the city of New Delhi enters the water supply

every day.129

Following the recent expansion of agrochemical use in India, the groundwater contains

increasingly high levels of fertilizers and pesticides, several of which are considered extremely

hazardous by the World Health Organization. Furthermore, soil erosion and degradation due

to improper land practices have increased the total suspended solids, which renders the water

in question unsafe and useless.

"e industrial sector still commands only 3% of annual water withdrawals in India.130 It is

estimated that industry generates 55,000 million cubic meters of waste water a day, including

68.5 million cubic meters dumped directly into rivers and streams.131

Like China, India is already su!ering from a scarcity of water supplies:

-

ing in the Ganges, are retreating at a rate of 33 to 49 feet (equivalent to 10 to 15 meters) a year.132

126 Nina Brooks, “Impending Water Crisis in China,” Arlington Institute website, http://www.arlingtoninstitute.org/wbp/global-water-crisis/457#.127 Somini Sengupta, “Water Crisis Grows Worse as India Gets Richer,” International Herald Tribune, 28 September 2006, http://www.iht.com/

articles/2006/09/28/news/water.php.128 http://www.water.org.129 Nina Brooks, “Imminent Water Crisis in India,” Arlington Institute website, http://www.arlingtoninstitute.org/wbp/global-water-crisis/606.130 Ibid.131 “Troubled Waters,” Development Alternatives website, http://www.devalt.org/water/WaterinIndia/issues.htm.132 Nina Brooks, “Imminent Water Crisis in India,” Arlington Institute website, http://www.arlingtoninstitute.org/wbp/global-water-crisis/606.

50

Appendixes

"e problem of diminishing freshwater supplies is compounded by human wastage of water:

Poor legal management of the resource and low prices encourage the overuse of water in the

domestic, agricultural and industrial sectors.

Aging infrastructure means that a large proportion of water in the system never reaches the

consumer. "e Delhi Jal Board pumps 30 million cubic meters of water a day into its pipes, but

only 17 million cubic meters actually reach users, who obtain the rest of the water they need

from ine#cient and expensive tankers sent in to solve the problem.133

Demand for increasingly scarce drinking water is likely to rise in the future. "e Indian population is

predicted to overtake that of China by 2050, when it will peak at 1.6 billion.134 Everyday, 100,000 people

are entering the middle classes, thus adopting more water-intensive lifestyles. As a result, the overall

water demand is expected to increase from 552 billion cubic meters to 1,050 billion cubic meters by

2025, which will require the exploitation of all the available water resources in the country.135

"e Indian water industry is also plagued by poor legal and financial management:

"ere is no law governing the use of groundwater in India. As a consequence, groundwater is

overexploited and polluted.

"e water sector is also facing a major financing gap. It is estimated that Rs 200 billion ($4

billion) are needed just to maintain the existing infrastructure. However, in recent years annual

allocations have fallen far short of that amount, varying between Rs 90 billion and Rs 170

billion ($1.84 billion and $3.48 billion).136 Furthermore, these modest sums are frequently

mismanaged as no Indian state has an asset management plan.

Poor management has resulted in aging infrastructure. India has often been said to adopt a policy of

“build-neglect-rebuild.” "e result is large-scale wastage of water in old and broken piping. In comparison

with other countries, India can store very little water: while China can store up to 1,000 cubic meters,

India can store only 200 cubic meters per capita.137 Large quantities of fresh water are therefore wasted.

India has not as yet found a solution to the impending water crisis. Various solutions have been

proposed, including:

Improving the financial and legal management of the water sector. "e government has made

some progress on this front; the prime minister recently called for the establishment of a “TVA138

for the Brahmaputra” to combine water infrastructure with modern management approaches.

133 Ibid.134 Ibid.135 “Troubled Waters,” Development Alternatives website, http://www.devalt.org/water/WaterinIndia/issues.htm.136 “Shoring Up Water Infrastructure,” World Bank website, http://go.worldbank.org/I7M6HR9BP0.137 Ibid.138

electricity generation, fertilizer manufacturing and economic development in the Tennessee Valley.

51

Appendixes

Privatizing the water supply, but critics cite the poor track record of privatization in other

nations and fear a sharp rise in prices.

Funding large-scale projects, such as the $112 billion (Rs 5.48 trillion) Interlinking Rivers

Project, which aims to link all 37 rivers.139 However, a substantial budget deficit and a slowing

economy mean that such large-scale investments are unlikely to be undertaken in the short term.

"e water crisis will hit in the heart of the Indian economy as growth in many of the most economically

active areas has been driven by water. In Tirupur, India’s “Knitwear capital,” for example, the garment

industry has grown at record rates aided by the availability of cheap water from the aquifers.140 However, as

water supplies are exhausted, this growth will decline due to falling human capital and higher wage costs.

Increasing levels of chemical pollution will have a long-term e!ect on the health of the population.

Increased incidence of disease will undermine investment in education, which has risen above Rs 200

billion ($4.09 billion) in recent years. As a result, a sharp decline in human capital is inevitable. "e

consequences of this fall in human capital will be felt throughout the Indian economy: in agriculture,

lower human capital will delay the adoption of new technology, and in industry, a less healthy and less

educated workforce will become less productive.

At the same time, labor costs are likely to rise. "is poses a risk to the Indian outsourcing industry,

which, as it represents 25% of the global outsourcing industry, is a key component in India’s recent

economic success. Indeed, global research shows that employee costs need to be 30–35% of total costs

to sustain the growth of outsourcing services. Labor costs in India already exceed this level. India is

therefore at risk of losing its competitive advantage in this sector if rising drinking water prices drive a

rise in wage costs.

In addition to this, poor legal management of water supplies will serve to increase regional tensions on

a national and international scale. "ere are no guidelines in place to govern the many interstate rivers

that drain 90% of India’s territory, which have already been the subject of high-profile interstate disputes,

to the extent that the minister of water resources has been known to refer to himself as the “minister of

water conflicts.”141

Tension also looks set to increase between India and its neighbors, most importantly Bangladesh and

Pakistan. India already has treaties governing the water shared with those nations (the Indus Waters

Treaty with Pakistan and the Ganga Treaty with Bangladesh), but it is questionable whether the treaties

will be adhered to when the water crisis materializes.

139 Nina Brooks, “Imminent Water Crisis in India,” Arlington Institute website, http://www.arlingtoninstitute.org/wbp/global-water-crisis/606.140 Ibid.141 “India’s Water Economy: Bracing for a Turbulent Future,” World Bank website, http://www.worldbank.org.in/WBSITE/EXTERNAL/

COUNTRIES/SOUTHASIAEXT/INDIAEXTN/0,,contentMDK:20674796~pagePK:141137~piPK:141127~theSitePK:295584,00.html.

52

Appendixes

Case study: California

Californian drinking water is becoming increasingly polluted.

Californians are already beginning to feel the consequences of water shortages resulting from falling

supply in the face of rising demand.

Supply is falling rapidly due to climate change:

2007 was the driest year on record, and the Sierra Nevada snow pack, which supplies 90%

of the water used in Los Angeles and stores 35% of the state’s supply,142 was at its lowest on

record.

Climate forecasters at Stanford University and the University of California–Los Angeles

predict that by 2050 the Sierra Nevada snow pack will have shrunk by 35%.143

"e Sacramento–San Joaquin Delta, part of the largest estuary on the West Coast, is of

particular concern. It is vital to the state’s water supply because melted snow from the Cascades

and the Sierra Nevada drains into the Sacramento River before flowing into the delta at its

northern edge. Pumps at the southern end of the delta then channel water to the Bay Area

and Southern California. Two-thirds of the state’s residents and millions of acres of farmland

are supplied with water from this source. Some 1,610 kilometers of manmade levees have

been constructed on the delta to control the terrain of the islands in it. However, the levees are

becoming ever more expensive to maintain as the landscape su!ers from the e!ects of farming.

"ere is a further worry that this source of water could disappear altogether: if a flood or

earthquake causes the levees to fail, seawater would rush in, transforming the delta’s ecology

overnight and making its water useless to farms and residents to the south and west.

Demand is rising rapidly:

Per capita, U.S. citizens are the most profligate water users in the world.144

It is estimated that by 2050, the population of California will have tripled to 60 million.145

"e key to averting a water crisis in California is increasing investment. It is 30 years since the last

investment was made in the state infrastructure, which was originally designed for a population of 20

million.146 California and Texas are the only states without a water management plan.

A fall in access to safe drinking water will a!ect the export, agricultural and tourist industries, which

together form the basis of the Californian economy.

142 http://www.waterinfo.org.143 http://www.drreese.com.144 “Unequal Consumption,” UNEP and UNESCO Youthxchange website, http://www.youthxchange.net/main/ff2b215_drinkingwater-d.asp.145 http://www.drreese.com.146 “California’s Water: A Crisis We Can’t Ignore,” Association of California Water Agencies, September 2007, http://www.calwatercrisis.org/pdf/

ACWA_FactSheet_Sept2007.pdf.

53

Appendixes

"e Californian economy relies heavily on the export of computers, transportation, nonelectrical

machinery and chemicals. "ere are two ways in which the export industry, which accounts for 5.3% of

California’s jobs, could be a!ected by a decline in access to safe drinking water.147

Firstly, manufacturing industries require high levels of human capital, which has been found to be

negatively a!ected by a lack of safe drinking water. Studies have shown that California will not have

enough skilled workers to meet the demands of its economy in the coming years.148

Secondly, the export industry is reliant upon the emerging markets. China and South Korea are among

the top five destinations for Californian goods, worth $10.6 billion and $7.4 billion respectively.149 If

these economies were to falter, due to a lack of access to safe drinking water, the Californian economy

would lose these valuable markets.

California is also dependent upon the tourist industry. During 2005, travel spending directly supported

911,800 jobs (up 5.4% from final 2004 figures) with earnings of $28.0 billion.150 A scarcity of safe drink-

ing water could render California a far less attractive tourist destination.

Bringing in $31.68 billion in revenue in 2004 alone, Californian agriculture is twice the size of any other

state’s agricultural sector.151 Overall, 22% of farm workers in California in 2003 to 2004 had incomes below

the federal poverty level,152 which in 2003 was $9,573 for an individual and $14,680 for a family of three.153

"e price of drinking water has already risen by 27% in the United States in the last five years.154 If prices

continue to rise at these rates, it will become increasingly di#cult to sustain these low wages.

Lastly, a drinking water crisis could have a negative impact on an already unstable housing market in

California. "is could have consequences throughout the economy, with a likely increase in the number

of redundancies and bankruptcies in addition to a sharp decline in the $33 billion in property tax

collected by the state each year.155

If the Californian economy were to decline because of losses incurred from a lack of access to safe

drinking water, the U.S. economy as a whole could su!er. California is responsible for 13% of the total

GDP of the United States.156

147 -ment of Commerce, 8 July 2008, http://www.ita.doc.gov/td/industry/otea/state_reports/california.html.

148 “California Needs More Skilled Workers with Advanced Education,” Workpermit.com website, 25 May 2007, http://www.workpermit.com/news/2007-05-25/us/california_skilled_professionals_education.htm.

149 Ibid.150 “Tourism Continues to Boost California Economy 2005,” Entertainment Magazine, 28 March 2006, http://emol.org/emclub/?q=californiatouri

smeconomicboost.151 “Economy of California,” Wikipedia website, http://en.wikipedia.org/wiki/Economy_of_California.152 “The California Farm Labor Force: Overview and Trends from the National Agricultural Workers Survey,” Aguirre International, June 2005,

http://agcenter.ucdavis.edu/AgDoc/CalifFarmLaborForceNAWS.pdf.153 Ibid.154 Edwin H. Clark II, “Water Prices Rising Worldwide,” Global Policy Forum website, http://www.globalpolicy.org/socecon/

gpg/2007/0307waterprices.htm.155 “California,” Wikipedia website, http://en.wikipedia.org/wiki/California.156 “Economy of California,” Wikipedia website, http://en.wikipedia.org/wiki/Economy_of_California.

54

Appendixes

Case study: Uganda

Uganda’s goal for water supply and sanitation, which is crucial to the long-term economic success of the

nation, is stated as follows:

To manage and develop the water resources of Uganda in an integrated and sustainable manner so

as to secure and provide water of adequate quality and quantity for all social and economic needs for

present and future generations with the full participation of stakeholders.157

"e quality of drinking water is cause for concern in Uganda. "e fourth Water and Sanitation Sector

Performance Assessment of 2006 concluded that 90% of drinking water from protected and treated

water supplies met national standards.158 However, only 56% of the rural population of Uganda

has access to those water sources.159 As a result, outbreaks of waterborne diseases are frequent and

catastrophic in their e!ects. In 2005, for example, an outbreak of cholera in 11 provinces and one slum

resulted in 2,200 cases and 56 deaths.160

Uganda is facing problems of supply and demand. Demand for drinking water is expected to increase rap-

idly in the coming years. In 2008, the population grew at 3.6%, far above the world average of 1.2%. Indeed a

fertility rate of 6.9 children, compared to a world average of 2.7, means that according to latest estimates issued

by the Population Reference Bureau (PRB), Uganda will experience the highest population growth rate in the

world within the next few decades.161 By 2050, the population is expected to exceed 150 million, putting an

ever greater strain on falling freshwater resources. "ere are indications that Lake Victoria, the largest lake in

Africa, is shrinking.162

Since 1986, significant progress has been made in extending the provision of safe drinking water, as

the opening statement suggests. Uganda has formally adopted a Sector Wide Approach to Planning

in the water sector, which plays a key part in its Poverty Eradication Action Plan (PEAP). Yet this

commitment has yet to deliver results. Five years into its creation the Uganda Water Partnership has

not financed a single project. Uganda still has a long way to go to achieve the Millennium Development

Goals, let alone those set by Africa Water Vision, which aims for a 70% reduction in those without

access to safe drinking water by 2015.163 Indeed it is estimated that to achieve these goals, 1,000 new

wells or boreholes with hand pipes and 30 piped systems will need to be constructed every year from

now until 2015.

157 Ministry of Water and Environment presentation, http://www.unepdhi.org/MWR2015/Presentation%20-%20IWRM%20experiences%20and%20MDGs%20in%20Uganda.pdf.

158 “Coverage Estimates: Improved Drinking Water—Uganda,” WHO/UNICEF Joint Monitoring Programme for Water Supply and Sanitation, 2006, http://www.wssinfo.org/pdf/country/UGA_wat.pdf.

159 Ibid.160 “Unusual Cholera Strain Spreads in Uganda,” Mail & Guardian Online, 5 August 2005, http://www.mg.co.za/article/2005-08-05-unusual-

cholera-strain-spreads-in-uganda.161 Herro, Alana. “Uganda on Track to Have World’s Highest Population Growth.” Worldwatch Institute, 18 September 2006, http://www.

worldwatch.org/node/4525.162 Jessica Partnow, “Battle for Resources Grows as Lake Victoria Shrinks,” National Public Radio, 29 May 2008, http://www.npr.org/templates/

story/story.php?storyId=90931419&ft=1&f=1025.163 Anne Perkins, “Background: Water in Uganda,” The Guardian website, 28 March 2008, http://www.guardian.co.uk/katine/2008/mar/28/

katinegoalbackground.water.

55

Appendixes

Furthermore, a large expenditure in education will need to be made to train the technicians needed to

maintain these new water sources.

Uganda prides itself on being one of the fastest-growing African nations. GDP growth over the last

decade has averaged 6% per annum. However, a lack of access to safe drinking water could threaten this

growth in coming years.

Uganda will su!er primarily because of the decline of the developed and emerging economies.

A likely reduction in aid as the more prosperous nations ail will hit the Ugandan economy hard. Low

tax revenue, due to poor exploitation of a narrow tax base, and widespread corruption mean that in

the face of a chronic deficit in public spending, Uganda remains heavily dependent on donor funds.

Approximately half of Ugandan public expenditure is funded by such aid.

Furthermore, the decline of the developed and emerging nations threatens the revival of Uganda’s export

market. Uganda is currently trying to reduce its deficit in foreign trade through strategies to promote

the export of co!ee, tea and flowers.164 "e success of those strategies depends on the economic success

of the economies of its export markets, which are all developed nations, such as Netherlands, Belgium,

Germany and France.165

A reduction in aid and a failure to revive the Ugandan export market will compound the economic

challenges that a decline in access to safe drinking water will impose upon Uganda directly. If access

to safe drinking water begins to decline once more, human capital will decline sharply. Investments in

education to improve the low literacy rate of 66.8% of the population will go to waste. Furthermore, as

waterborne diseases again become more prevalent, life expectancy will fall. Less educated, less healthy

workers will become less productive, ultimately preventing Uganda from diversifying its economy away

from agriculture, which currently employs 82% of the workforce.166

Another worry is that a lack of access to safe drinking water could destabilize the nation by exacerbating

existing tensions among hostile ethnic groups, rebels, armed gangs, militias and various government forces.

164 “Poverty and Development in Uganda,” Ministry of Foreign Affairs of Denmark, 2004, http://www.um.dk/Publikationer/Danida/English/CountriesAndRegions/Uganda/Strategy/kap02.asp.

165 “Africa: Uganda,” U.S. Central Intelligence Agency World Factbook, https://www.cia.gov/library/publications/the-world-factbook/geos/ug.html.166 Ibid.

56

Appendixes

Appendix 7: About HaloSource

HaloSource® is a leading provider of clean-water and antimicrobial technology. It is headquartered in

the United States with operations in India and China. "e company provides proprietary solutions to

clean and purify water, killing bacteria and viruses that may cause disease. Revenues are derived from

HaloPure BR®, which provides safer drinking water; HaloShield®, which forms the active ingredient that

imparts antimicrobial properties to household cleaning products such as dishcloths; and SeaKlear® and

StormKlear® products, which provide water clarification applications for treating recreational and industrial

waste water. HaloSource’s strong and rapidly expanding IP portfolio is founded on two core technologies:

N-halamine technology, which harnesses the power of chlorine and bromine, for the company’s

drinking water and antimicrobial businesses

Chitosan chemistry, which causes particles in water to bind together so that they can be filtered

o!, for the company’s swimming pool and industrial waste water businesses

R & D is led in-house at the company’s U.S. headquarters by a world-class technology team including

chemists, biochemists, microbiologists and virologists. HaloSource manufactures in India, Pakistan and

China. Key investors include Mars, Unilever Technology Ventures, Origo Resource Partners and the

Masdar Clean Tech Fund.

!ree main operating divisions

Drinking water

HaloPure® applications kill disease-causing bacteria and viruses and remove impurities to provide safe

drinking water at the point of use. "e technology in HaloPure is e!ective against a wide range of

germs. HaloSource generates revenues from sales of proprietary HaloPure-based components to partner

companies involved in the manufacturing and distribution of water purification devices to the end user.

"e global drinking water market is estimated to be worth $18 billion.

In 2006, HaloPure was launched in India in partnership with the country’s leading provider of home

water filters, Eureka Forbes. HaloPure also has a partnership with Chanitex, a leading Chinese water

treatment company, and with Everest, a consumer device manufacturer, in Brazil.

In early 2009, HaloPure was granted U.S. Environmental Protection Agency (EPA) registration. "is

EPA registration will broaden the reach of the technology while extending the potential range of partners

interested in supporting clean drinking water in developed and developing economies worldwide. It also

reinforces HaloPure’s position as the most significant, nonelectric drinking water technology.

Negotiations are under way with a number of key companies for the use of HaloPure technology in a

variety of consumer product applications around the world.

57

Appendixes

Antimicrobial coatings

HaloShield is a patented, antimicrobial coating technology that facilitates the binding of chlorine-based

bleach to textiles and surfaces, for consumer, commercial and military applications. HaloSource generates

revenues from HaloShield through royalties paid by global partners with cobranded applications. Clorox®,

the leading bleach brand in the United States, has partnered with HaloSource to produce Clorox’s

FreshCare towels with HaloShield, which are sold at Wal-Mart® stores across the United States.

Water clarification

SeaKlear treats recreational water such as pools, spas and water parks while StormKlear is used to treat

storm and industrial water, including construction site runo!. HaloSource generates revenues from the

sale of SeaKlear-branded and StormKlear-branded products through distributors and retailers to the

consumer and commercial markets.

Company history

HaloSource was founded in 1998 by Senior Vice President and Chief Technology O#cer Je! Williams,

PhD, to develop and commercialize applications that address the rising demand for safe drinking water and

technologies aimed at reducing infection. In 2001, HaloSource began licensing its powerful antimicrobial

technologies to leading domestic and international partners for integration into their products. In 2002,

HaloSource Corp. merged with Vanson Inc., the chitosan technology company, to combine intellectual

property platforms, share R & D, and capitalize on joint manufacturing facilities and distribution channels

to better serve existing customers in the water purification and clarification industries.

Timeline

1998: HaloSource founded

2001: HaloSource named one of the top 25 private companies in the northwestern United States

2002: HaloSource Corp. merged with Vanson Inc. to form Vanson HaloSource, Inc.

2002: Vanson HaloSource closes $9 million in equity fundraising

2004: John Kaestle joins as chief executive o#cer, and James "ompson joins as chief financial o#cer

2005: Vanson HaloSource receives $5 million in funding from Mars, Inc.

2006: Vanson HaloSource, Inc., renamed as HaloSource, Inc.

2006: HaloPure launched in India with Eureka Forbes

March 2007: $6 million in fundraising with Unilever Technology Ventures

July 2007: $15 million in fundraising with Masdar Clean Tech Fund LP

58

Appendixes

2008: Clorox’s FreshCare towels with HaloShield launched at Wal-Mart stores across the United States

2008: HaloSource opens Shanghai facility and starts exporting from India to Latin America

2008: HaloSource receives $11.5 million in funding from Origo Sino-India, Origo Resource Partners

Limited, and Unilever Technology Ventures

Key executives

John Kaestle, CEO

John Kaestle joined HaloSource in 2004. Prior to joining, he was executive vice president and general

manager of the Global Resins Business of Borden Chemical. "is $900 million business included 37

operations in nine countries across the world. His career also includes 20 years with Weyerhaeuser

Company. John is a graduate of Haverford College, where he received a degree in economics and

quantitative methods. He received an MBA from the Tuck School of Business at Dartmouth College.

Dr. Je" Williams, Vice President and Chief Technology O#cer

Dr. Je! Williams is the cofounder of HaloSource. He was a professor of microbiology at Michigan State

University for 26 years. Je! is an experienced consultant to the research units of major pharmaceutical

companies, including Merck (1980–83) and Pharmacia & Upjohn. Je! received BVSc and MRCVS

degrees in veterinary medicine from the University of Bristol (UK) in 1964, and in 1968 he received his

PhD in pathobiology from the University of Pennsylvania, where he was a Fulbright Scholar.

He has published more than 200 scientific papers and book chapters in the fields of tropical and

infectious diseases.

James !ompson, Chief Financial O#cer

James "ompson joined HaloSource in 2004. Prior to joining the company, James was a principal in

Alexander Hutton Venture Partners (AHVP), a major investor in HaloSource. While at AHVP, James

led the investment in and provided board-level support to early-stage technology companies. Prior to

joining AHVP, James was a securities analyst with Security Capital Group, an opportunity fund focused

on investing in public and private equities. James has a BA from Gonzaga University and an MBA from

the University of Washington.

Andrew Clews, Vice President, Marketing and Product Development

Andrew Clews joined HaloSource in 2007 following over 15 years of experience in international

business and marketing throughout Asia, Australasia and North America. Andrew leads the company’s

global marketing and branding strategies, product management, public relations, partner alliances and

the commercialization of the company’s clean water and infection control products. Prior to joining

HaloSource, he was senior manager of global brands for Alticor Inc., the parent company of worldwide

59

Appendixes

direct-selling giant, Amway Corporation. Andrew holds a BA in political science from the University of

Auckland, in addition to his postgraduate studies in international business and marketing.

Rick Lockett, Senior Vice President, Water Businesses

Rick Lockett has been with HaloSource since 2003 in regional management and national sales

management, and he now holds the role of senior vice president of water businesses. Rick has a deep

background in commercial sales management in the hospitality, multi-housing, government and water

park industries. He is a National Merit Scholarship recipient from the University of Texas at Austin.

Eric Robinson, Executive Vice President, Operations

Eric Robinson joined HaloSource in 2004 to lead operations, regulatory and supply capabilities in

both national and international markets. Prior to joining HaloSource, Eric spent 19 years with Hexion

Specialty Chemicals (Borden Chemical) and FMC Corporation, where he served in progressively more

responsible roles in operations; the supply chain; marketing; environmental health and safety (EH&S);

and technical functions in the specialty, food and electronic chemicals businesses. In his last position at

Borden Chemical, Eric had responsibility for engineering, quality, EH&S and operations for a 36-plant

global network of specialty chemical operations. Eric holds a BS degree in chemical engineering from the

University of California, Davis.

61

Glossary

Borehole

Generalized term for any narrow shaft drilled in the ground, either vertically or horizontally. Boreholes

are often constructed to extract groundwater from underground aquifers.

Gross domestic product (GDP)

"e total market value of all final goods and services produced within an economy.

Human development index (HDI)

A measure of development that combines the following factors:

Life expectancy (as determined by life expectancy at birth)

Knowledge (determined by the adult literacy rate and the combined gross primary, secondary

and tertiary enrollment rate, which are given weightings of two-thirds and one-third,

respectively)

Standard of living (determined by the natural logarithm of the gross domestic product per

capita at purchasing power parity in U.S. dollars)

Merit good

A commodity that the public sector provides free or cheaply because the government wishes to

encourage its consumption, e.g., a health service.

Point-of-use water purification

A device enabling the purification process to take place for immediate use. For example, a point-of-use

water device enables water to be drunk from its original source.

Purchasing power parity (PPP)

"is theory uses the long-term equilibrium exchange rate of two currencies to equalize their purchasing

power, so that, in ideally e#cient markets, identical goods should have only one price.

63

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access to safe drinking water and its impact on global economic

Documents