OECD WATER OUTLOOK TO 2050:
MANAGING WATER RISKS & SEIZING GREEN GROWTH
OPPORTUNITIES
CNI Sustainability: Water Opportunities and Challenges for Development in Brazil
Rio de Janeiro, 24 October 2013
Kathleen Dominique, Environmental Economist

Water demand to increase by 55% by 2050
Global water demand, baseline 2000 and 2050
Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE
2

Human and economic costs of a changing climate: uncertain future for freshwater
Change in annual temperature from 1990-2050
Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE 3

Number of people living in water-stressed river basins no water stress low water stress medium water stress severe water stress
10 000
9 000
8 000
7 000
6 000
5 000
4 000
3 000
2 000
1 000
0
2000 2050
OECD
2000 2050
BRIICS
2000
RoW
2050 2000
World
2050
Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE

Water pollution from urban sewage to increase 3-fold
Nitrogen effluents from wastewater: baseline 1970 to 2050
Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE 5

Population lacking access to an improved water source or basic sanitation 1990-2050
OECD BRIICS RoW OECD
700
600
500
400
300
200
100
0
1 100
1 000
900
800
2 000
1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
1990 2010
Urban
2030 2050 1990 2010
Rural
2030 2050 1990
Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE
2010
Urban
2030
BRIICS ROW
2050 1990 2010
Rural
2030 2050

Ranking of coastal cities at risk from future flood losses, 2005
City
1 Guangzhou
2 Miami
3 New York – Newark
4 New Orleans
5 Mumbai
6 Nagoya
7 Tampa – St Petersburg
8 Boston
9 Shenzen
10 Osaka - Kobe
Average Annual
Losses (US$ mill)
687
672
628
507
284
260
244
237
169
120
Average Annual
Losses (% of GDP)
1.32%
0.30%
0.08%
1.21%
0.47%
0.26%
0.26%
0.13%
0.38%
0.03%
Costs of global flood damage could rise from USD 6 billion to USD 1 trillion p.a. by 2050.
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

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%.

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.

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.
11

Policy action: managing water risks and seizing green growth opportunities
• Improve incentives for managing risk
– Robust water resource allocation (efficient, flexible, equitable risk sharing)
– Remove environmentally-harmful subsidies (e.g. under pricing water, productionlinked 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

Decoupling water use from growth
OECD freshwater abstraction by major use and GDP (1990=100)
160
GDP
Population
Irrigation
Public supply
150
140
130
120
110
100
90
080
Source : OECD Environmental Data
13

Water pricing - reducing demand
% Ownership against fee structure
Source : OECD (2011), Greening Household Behaviour: The Role of Public Policy
14

Policy action: managing water risks and seizing green growth opportunities
• 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

www.oecd.org/water
Contact: Kathleen.Dominique@oecd.org