Water scarcity may threaten global GDP

By 2050 one-quarter of global GDP could be generated by those located in the world’s most populous river basins, but only if water resources are better managed warns researchers

New research carried out for HSBC, forecasts that if population and GDP grow in line with projections by 2050 the world’s 10 most populous river basins will be generating more for the global economy than the US, Japan and Germany combined.

Researchers from Frontier Economics, predict the river basins could be contributing US$46.8 billion to global GDP each year, up from just US$6.2 billion in 2010.

However, if no action is taken to better manage water resources, consumption will have reached unsustainable levels in seven of the 10 basins, including the Ganges, the Nile and the Niger, threatening the potential economic contribution from populations in the areas.

The research predicts that water consumption in the Ganges river basin, for example, could reach close to 80% of natural water run off – a proportion more than 40% is classified as an area with sever water scarcity.

The report concludes that effective water management will be crucial in ensuring economic growth and protecting ecosystems from permanent damage. It argues that investing in infrastructure, education and water efficiency technologies to improve global access to water in line with Millennium Development Goals will require a one off investment of US$65 billion, but will increase GDP by US$56 billion a year by 2050.

It also concludes that in some countries payback on investment could be as little as 2.5-4 years, with returns on investment in Africa being US$2 for every dollar spent, and as much as US$16 in South America.

“The findings show that the future of river basins is critical for global economic growth...[and] highlight the powerful economic rationale for improving access to freshwater and sanitation,” said Douglas Flint, chair of HSBC Group. “Rapid, collaborative action worldwide is needed to improve water resource management in river basins.”

The research was released at the launch of the HSBC Water Programme, a five-year project in which it will invest US$100 million and work with the WWF, WaterAid and Earthwatch to help improve access to water and improve management of water resources.

The project will see WWF working with communities and businesses operating in the Yangtze, Ganges, Mekong, Pantanal and Rift Valley river basins to improve water efficiency.

“Recent figures from WWF show that freshwater ecosystems have declined by 70% since 1970,” confirmed David Nussbaum WWF chief executive. “As part of the new HSBC Water Programme we’ll be working with more than 1,000 businesses and over 100,000 fishers and farmers to promote more efficient use of water in their practices, while working with governments across the globe to advise on better river basin management which will help to secure water supplies for the future needs of both the human population and the environment.”

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the environmentalist September 2014