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OECD WATER OUTLOOK TO 2050:
MANAGING WATER RISKS & SEIZING GREEN GROWTH
OPPORTUNITIES
CNI Sustainability: Water Opportunities and Challenges for Development in BrazilRio de Janeiro, 24 October 2013
Kathleen Dominique, Environmental Economist
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Water demand to increase by 55% by 2050
2
Global water demand, baseline 2000 and 2050
Rapidly growing
water demand from
cities, industry and
energy suppliers
will challenge water
for irrigation to
2050.
Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE
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Almost 40%
of people in 2050
(3.9 billion) will live
in severely water-
stressed regions
Change in annual temperature from 1990-2050
Human and economic costs of a changing climate: uncertain future for freshwater
Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE
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Number of people living in water-stressed river basins
2000 2050 2000 2050 2000 2050 2000 2050OECD BRIICS RoW World
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
10 000no water stress low water stress medium water stress severe water stress
Mill
ions
of
peop
le
Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE
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Water pollution from urban sewageto increase 3-fold
5
Nitrogen effluents from wastewater: baseline 1970 to 2050
Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE
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Population lacking access to an improved water source or basic sanitation 1990-2050
0
100
200
300
400
500
600
700
800
900
1 000
1 100
1990 2010 2030 2050 1990 2010 2030 2050
Urban Rural
mill
ions
of p
eopl
e
OECD BRIICS RoW
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
1990 2010 2030 2050 1990 2010 2030 2050
Urban Rural
mill
ions
of p
eopl
e
OECD BRIICS ROW
240 million people
without access to
water supply in 2050 1.4 billio
n people
without access to
sanitation in 2050
Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE
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City Average Annual Losses (US$ mill)
Average Annual Losses (% of
GDP)
1 Guangzhou 687 1.32%
2 Miami 672 0.30%
3 New York – Newark 628 0.08%
4 New Orleans 507 1.21%
5 Mumbai 284 0.47%
6 Nagoya 260 0.26%
7 Tampa – St Petersburg
244 0.26%
8 Boston 237 0.13%
9 Shenzen 169 0.38%
10 Osaka - Kobe 120 0.03%
Source: Stephane Hallegatte, Colin Green, Robert J. Nicholls and Jan Corfee-Morlot: “Future flood losses in major coastal cities” in nature climate change, 18 August 2013.
7
Ranking of coastal cities at risk from future flood losses, 2005
Costs of global flood damage could rise from USD 6 billion to USD 1 trillion p.a. by 2050.
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Water security risks
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Drought in Brazil 2012 caused significant drop in production of food and raw materials and strained energy production. Government emergency credit fund of R$2.4 billion.
2011 floods in Thailand slashed 4th quarter GDP growth by 12%.
Costs of water insecurity
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“Know”, “target” and “manage” risks
The future is uncertain. The risk approach encourages thinking systematically about uncertainty.
The level of assessment and governance should be proportional to the risk faced.
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What is acceptable?
Balance between economic, social and environmental consequences and the cost of improvement.
For business community, help to secure social license to operate.
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• Improve incentives for managing risk
– Robust water resource allocation (efficient, flexible, equitable risk sharing)
– Remove environmentally-harmful subsidies (e.g. under pricing water, production-linked agricultural subsidies)
– Water pricing, abstraction charges, pollution charges, insurance schemes
• Encourage green innovation– Change the economics: make pollution and wasteful production &
consumption more expensive
– Reduce barriers to uptake and diffusion of innovative water technologies and techniques
12
Policy action: managing water risks and seizing green growth opportunities
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19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
80
90
100
110
120
130
140
150
160GDP Irrigation PopulationPublic supply Total water abstraction
0-
Source: OECD Environmental Data 13
Decoupling water use from growth
Over 1/3 of
OECD
countries have
reduced their
total water
abstractions
since 1990
OECD freshwater abstraction by major use and GDP (1990=100)
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Water pricing - reducing demand
20% less water use in households that pay for their water
Source: OECD (2011), Greening Household Behaviour: The Role of Public Policy
% Ownership against fee structure
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• Improve information and data – Better “knowing” the risks, including perceptions
• Invest in infrastructure (“grey” and “green”)
– Financing needs considerable:
• 0.35-1.2% of GDP over next 20 years in OECD countries
• Developing countries: USD 54 billion to maintain systems, another USD 17 billion to meet MDGs (per year, estimates vary widely)
– Sources: 3 T’s (tariffs, taxes, transfers)
– Principles: beneficiary pays, polluter pays, equity and coherence
– Combine “grey” and “green” to improve scalability and flexibility to adjust to change
• Making water reform happen– National Policy Dialogues
15
Policy action: managing water risks and seizing green growth opportunities