Water shortage could cost some regions 6% of GDP: World Bank

World Bank report says combined effects of growing populations, rising incomes and expanding cities will see demand for water rising exponentially, while supply becomes more erratic and uncertain


The combined effects of growing populations, rising incomes and expanding cities will see water demand rising, says report. Photo: AFP
The combined effects of growing populations, rising incomes and expanding cities will see water demand rising, says report. Photo: AFP

New Delhi: Water scarcity, exacerbated by climate change, could cost some regions up to 6% of their gross domestic product (GDP), spur migration and spark conflict, said a report released by the World Bank on Tuesday.

The report, High and dry: Climate change, water and the economy, said the combined effects of growing populations, rising incomes and expanding cities will see demand for water rising exponentially, while supply becomes more erratic and uncertain.

“Unless action is taken soon,” the report said, “water will become scarce in regions where it is currently abundant—such as Central Africa and East Asia—and scarcity will greatly worsen in regions where water is already in short supply—such as the Middle East and Sahel in Africa. These regions could see their growth rates decline by as much as 6% of GDP by 2050 due to water-related impacts on agriculture, health, and incomes.”

The report added that simultaneously, rainfall is projected to become more variable and less predictable, while warmer seas will fuel more violent floods and storm surges.

“Climate change will increase water-related shocks on top of already demanding trends in water use. Reduced freshwater availability and competition from other uses—such as energy and agriculture—could reduce water availability in cities by as much as two-thirds by 2050, compared to 2015 levels.”

World Bank president Jim Yong Kim said in a statement: “Water scarcity is a major threat to economic growth and stability around the world, and climate change is making the problem worse. If countries do not take action to better manage water resources, our analysis shows that some regions with large populations could be living with long periods of negative economic growth. But countries can enact policies now that will help them manage water sustainably for the years ahead.”

The report also warned that water insecurity could multiply the risk of conflict.

“Food price spikes caused by droughts can inflame latent conflicts and drive migration. Where economic growth is impacted by rainfall, episodes of droughts and floods have generated waves of migration and spikes in violence within countries,” it said.

The report stressed that the negative impact of climate change on water could be neutralized with better policy decisions.

“There is a silver lining. When governments respond to water shortages by boosting efficiency and allocating even 25% of water to more highly-valued uses, losses decline dramatically and for some regions may even vanish. Improved water stewardship pays high economic dividends,” said the report’s author Richard Damania, who is also a World Bank economist.

The report called for “water proofing” of economies to limit the impact of extreme weather events and rainfall variability.

“Increasing storage capacities and water reuse systems will go a long way towards building resilience. Better urban planning, risk management, and citizen engagement will likewise reduce the exposure of cities to flood risk. In rural areas, expanding crop insurance programmes can protect farmers against rainfall shocks,” it said.

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