Water in the Green Economy - Global Water Partnership

PERSPECTIVES PAPERThe Global Water Partnership’s vision is for a water secure world. Its mission is to support the sustainabledevelopment and management of water resources at all levels.GWP is a global network of 13 Regional Water Partnerships, 80 Country Water Partnerships and more than2,500 Partner organisations in 164 countries.GWP was founded in 1996 by the World Bank, the United Nations Development Programme (UNDP), and theSwedish International Development Cooperation Agency (SIDA) to foster integrated water resource management(IWRM).IWRM is the coordinated development and management of water, land and related resources in order tomaximise economic and social welfare without compromising the sustainability of eco-systems and theenvironment.The network is open to all organisations involved in water resources management: developed and developingcountry government institutions, agencies of the United Nations, bi- and multi-lateral development banks,professional associations, research institutions, non-governmental organisations, and the private sector.GWP Perspectives Papers are available at the GWP IWRM ToolBox: www.gwptoolbox.orgTowards Integrated Urban Water Management (2011)Increasing Water Security - A Development Imperative (2012)Water in the Green Economy (2012)©Global Water Partnership, June 2012Portions of the text of this publication may be reproduced for educational or non-commercial use without priorpermission from the Global Water Partnership (GWP), provided that the source is acknowledged, with mention of thecomplete name of the report, and that the portions are not used in a misleading context. No use of this publicationmay be made for resale or other commercial purposes without prior written permission of GWP. Opinions expressedin this publication do not imply endorsement by GWP.2

Water in the Green EconomyThe Stockholm Statement (2011) described water asthe ‘bloodstream of the green economy’. Yet waterresources are limited in many parts of the world andpressures are increasing as the demand for water forpeople, food, industry and the environment grows. Ifthe world continues to use water at current rates it isestimated that demand could outstrip supply by asmuch as 40% by 2030, putting both water and foodsecurity at risk, constraining sustainable economicdevelopment, and degrading the ‘green infrastructure’on which everything else depends.Momentum is now building to highlight water andits role in the green economy as a priority issue forRio+20. In November 2011, world leaders andprofessionals gathered in Bonn to prepare for Rio+20and they examined water as the common threadconnecting food, energy, and climate change. TheBonn conference highlighted that sustainabledevelopment and growth beyond poverty eradicationcan be achieved by better management of the world’secosystems and a more informed and optimal use ofwater, land, and other natural resources.We argue that water is not just part of the economy;it is embedded within the economy. Without it theeconomy could not function. Thus water will becentral to the innovative thinking and effectivesolutions required to establish the green economy. Inthis paper we set out the case for an Integrated WaterResources Management (IWRM) approach to watersecurity (Box 1) and its potential to lead the processof ‘greening’ the world’s economies.Shocks and challengesTwenty years on from the first Rio Conference in 1992– the world summit that addressed sustainabledevelopment – the world is still facing immensechallenges. Meeting the Millennium DevelopmentGoals (MDGs) has been clouded by major issues thathave slowed progress. Over the past decade we haveseen increasing globalization, rapid demographicchanges, and the continued presence of hunger andpoverty, particularly in Africa and South Asia, wherethere is little prospect of meeting the MDGs by 2015.The world has also experienced several, and in somecases, unexpected shocks.Box 1: GWP’s vision of a water secureworldA water secure world is vital for a better future: afuture in which there is enough water for social andeconomic development and for ecosystems. A watersecure world integrates a concern for the intrinsicvalue of water together with its full range of uses forhuman survival and well-being. A water secure worldharnesses water's productive power and minimises itsdestructive force. It is a world where every person hasenough safe, affordable water to lead a clean, healthyand productive life. It is a world where communitiesare protected from floods, droughts, landslides,erosion and water-borne diseases. Water security alsomeans addressing environmental protection and thenegative effects of poor management, which willbecome more challenging as climatic variabilityincreases. A water secure world reduces poverty,advances education, and increases living standards. Itis a world where there is an improved quality of lifefor all, especially for the most vulnerable—usuallywomen and children—who benefit most from goodwater governance.Global Water Partnership (GWP) Strategy 2009-2013These include:• the rise in energy prices in 2008 and 2010 andconcerns about energy security;• related food and commodity price rises;• worries about water and food security and how tofeed 9 billion people by 2050;• declining ecosystem services; and• the global economic recession.Climate change adds another level of risk, which maybring the prospect of more extreme and unpredictablefloods and droughts to those parts of the world thatare already struggling to cope with climateuncertainties.All these shocks and challenges impact bothdeveloping and developed countries and they aretesting the optimistic global vision of increasingprosperity and the relevance of the economic growthmodel accepted by industrialized societies. There is agrowing realization that the earth’s resources are3

PERSPECTIVES PAPERbut it is also a threat because of its destructivepowers which can cause poverty and death throughdroughts and floods, and can cause contamination,disease, dispute, and conflict. All aspects of productiondepend on water – agriculture, industry,energy, and transport. Most industrialised nationshave a legacy of ‘easy hydrology’ – low rainfallvariability and rain distributed throughout the yearand perennial rivers sustained by groundwater baseflows (Grey and Sadoff, 2007). They invested heavily inwater infrastructure, institutions and managementcapacity to both exploit the benefits of water and toinsulate society and economic growth against water’sdestructive powers.Developing countries recognise this but lack theinvestment, institutional structures, and capacity toimprove their water security. Most have large ruralpopulations that rely on subsistence agriculture andare exposed to the vagaries of unpredictable seasonsand also to the ‘difficult hydrology’ of absolute waterscarcity and severe flood risk, usually at differenttimes but often in the same place (Grey and Sadoff,2007). More difficult hydrology usually means morecostly infrastructure to control and manage water.Water security is the main aim of investment in water.But does investment in water drive growth or doesgrowth drive investment in water? In most caseswater security is a driver of growth and a prerequisitefor business investment. But in some placesgood water management comes as a consequence ofgrowth. Improved water supply and sanitation, forexample, can boost economic growth. Poor countrieswith improved access to clean water enjoy averageannual growth rates of 3.7% whereas countries withthe same per capita income without access haveaverage growth of only 0.1% (WHO, 2005). What isclear is that water security and growth are symbiotic.The power of Integrated WaterResources Management (IWRM)Agenda 21 (agreed at the UNCED in 1992) explicitlysupports the use of natural resources for social equity,economic development, and a sustainable environment.Integrated Water Resources Management(IWRM) offers a set of principles which help tooperationalize Agenda 21 (Box 4). It addresses keywater related challenges by seeking to balance the‘three Es’ – efficiency, to make water resources go asfar as possible; equity in allocating water acrossdifferent social and economic groups; and environmentalsustainability, to protect the water resourcesbase and eco-systems. These principles recognise thatwater is a public good with both social and economicvalues and that good water manage-ment requiresboth a broad holistic perspective and the appropriateinvolvement of users at different levels (Muller andLenton, 2009). The integrated approach explicitlychallenges conventional, fractional water developmentand management systems and emphasizes morecoordinated decision making across sectors and scales.IWRM is not an end in itself; rather, it is a means toachieving the three strategic objectives.6

PERSPECTIVES PAPERhas for many years supported countries to adopt anIWRM approach. The approach is increasingly seen asa pillar of green growth. A fragmented approach willnot lead to green growth. For example, when awatershed is deforested, it is the value of the timberand the cost to harvest that timber that is generallyaccounted for in the economic analysis and price, notthe clean water no longer being produced by thewatershed or the carbon no longer being sequesteredby the trees (UNEP, 2011b). Water security cannot beachieved without a more enlightened green growthapproach to economic development. Water securityand green growth are synergistic and mutuallyreinforcing.to the sustainable management and use of ecosystemsas the ‘green infrastructure’ which supports economicgrowth and food and water security, includingprotection from floods and droughts.Rethinking water storage holistically is essential,whether through small-scale solutions such asrainwater harvesting and natural storage, or largescalemanagement of reservoirs, storm-water systemsand aquifers. We can seek solutions in time-honouredtraditional ways of safeguarding water as a preciousresource and at the same time utilise the latesttechnologies of remote sensing and geospatialmapping to better understand the water system.Box 5: Synergies between water security and green growthCharacteristics of green growth• More effective use of natural resources in economicgrowth• Valuing eco-systems• Inter-generational economic policies• Increased use of renewable sources of energy• Protection of vital assets from climate relateddisasters• Reduce waste of resources – and financeCharacteristics of water security• Ensure enough water for social and economicdevelopment• Ensure adequate water for maintaining eco-systems• Sustainable water availability for future generations• Balance the intrinsic value of water with its uses forhuman survival and welfare• Harness productive power of water• Minimise the destructive power of water• Maintain water quality and avoid pollution anddegradationIWRM is now well accepted in principle but it takestime and skill to apply it in practice as it requiresconsiderable coordination and information sharingamong multiple sectors and different layers ofauthority. Administrations are still structuredprincipally by economic sectors (as are InternationalFinancial Institutions) whereas water, as a naturalresource, impacts on and is impacted by these sectorsbut often has no institutional home. Water resourcesare thus easily exploited and polluted by users due toits weak management and/or regulation.Managing water better can provide ‘no regrets’opportunities and solutions to support green growthand build resilience to climate change. The profligateuse of water is common in many countries and this iscoupled with low rates of innovation and investmentin water worldwide. Fortunately, there is tremendousscope for adaptation. This applies to all economicsectors including energy, industry, and agriculture, andRecycling and reusing both domestic and industrialwastewater multiplies the volume of water availablefor human use, and treating waste can produceenergy. Agriculture is a key sector where future waterproductivity gains are essential to achieve greengrowth. Since agriculture uses the lion’s share ofwater in many countries (as much as 90% in some),these shifts will have benefits across other sectors –be it environment, energy, domestic waterconsumption, industry, and flood protection.There is a risk that political attention and funding willbe targeted entirely at climate mitigation related toenergy issues while neglecting water or other naturalresources. Of course, in many developing countriesadaptation is the prime issue and building resilienceto climate change is closely linked to achieving watersecurity. (AMCOW & GWP, 2012)8

Water in the Green EconomyManaging the transitionA key question is how to best manage the transitionto a water secure green economy. It will requireprioritisation as not everything can be done at once.Possible actions will need categorising to optimisespinoffs and sequence activities for the short,medium, long term. The transition will require:• Policy instruments that promotecomplementarities (economic, social,environmental) and leverage change• Fiscal instruments that give a price toenvironmental goods• Strengthened institutional arrangements thatfunction within increasing complexity, cuttingacross sectoral silos and sovereign boundaries• A new generation of financial instruments thatshare risk between governments and investors andmake new technology affordable• Skills development that support the emerginggreen sectors in the economy• Information and monitoring: set targets, definetrajectories and gather the right information tomonitor progress (e.g., on water/energyefficiencies)• Innovation planning: increasing water productivity,developing stress tolerant materials that canaddress water scarcity, salinization, groundwatercontamination, as well as water quality andwastewater treatment.The transition to a water secure and green economywill require contextualization and differentiation, andthis will depend on each country’s specific conditions.In the richer countries, the challenge will be tochange lifestyles and reduce the consumption ofnatural resources to sustainable levels. In thedeveloping countries, the transition will follow adifferent path as the challenge will be to stimulateeconomic growth in a way that water security and thegreen economy coincide with sustainable development.While hunger and poverty prevail, both waterand food security will be high on the political agenda.A traditional approach to development through aidthat tries to stimulate production is insufficient, andinnovative ways of achieving growth are needed (Box6).9

PERSPECTIVES PAPERBox 6: Achieving green growth – the roleof food securityIn sub-Saharan Africa, where more than 80% ofthe population are smallholder farmers, with fewexceptions all the effort and investment bygovernments and development agencies over thepast 50 years have failed to improve productivityand stimulate growth in agriculture. Attentionhas focused on improving seed varieties, usingfertilizers, and building agricultural extensionservices and on restoring water and ecosystemsto reverse anthropogenic damage. But farmersrarely adopt productivity enhancing technologieswhen the links to cash markets are poor. So thereare few incentives to grow more than householdneeds and in such circumstances people becometrapped in subsistence farming and in poverty.Pushing productivity is necessary but notsufficient. It is equally important to considerhow to deal with crops once they are harvested;how to develop agricultural value chains whichlink farmers and consumers; how to improvepostharvest handling, value addition processing,and develop thriving and profitable market-drivenfood sectors. These are the ‘pull’ factors whichdrive most modern market economies and in turndrive productivity and growth. Fewer farmers maybe needed as productivity increases but morepeople will be needed to work along the valuechain. So employment shifts from farming toagriculture in its broadest sense. In the UK forexample, less than 4% of the population work infarming whereas up to 25% work in the foodindustry. The opportunities are there and the twinpressures of scarce water resources and agrowing consumer demand for safe, quality foodproducts with sound provenance can provide theconditions for both growth and sustainabledevelopment – the very essence of the greeneconomy.Kilimo Trust, 2012River basins are a natural and logical place for spatialplanning and making visible upstream/downstreameffects on resource use. Stimulating business developmentwill require a trans-disciplinary approach whichbrings together the different sectors and stakeholderlevels. By focusing on responsible business developmentthis would encourage ‘river basin developmentand management planning’ rather than the moretraditional focus on water and ‘river basin managementplanning’. This would bring together privateinvestors to work with spatial planners and watermanagers in a more constructive dialogue. Thedevelopment of new business could be guided by theparticipatory processes of IWRM. This would enablebusinesses to assess the reliability of available waterresources from an investment perspective and wouldenable planners to elaborate strategies for managingdrought and flood risks and indicate clear limitationsfor investors.However, moving from a conservative approach tosustainability to something more dynamic will requirea strong and flexible framework to guide developmentinitiatives. Froebrich (2011) suggests using the IWRMapproach together with ‘Basis-Boost-Balance’ as auseful framework for achieving growth (Box 8).Such frameworks are in their infancy and whateveremerges, for the developing world boosting innovationand business must be at the centre of development.Tools will be needed to quantify the magnitude ofproduction upstream with restrictions downstream ina manner that is easily communicated to stakeholders,decision makers, and planners. Shared understandingand agreements between business development and10

Water in the Green EconomyBox 7: Facilitating green growth by extending the IWRM process• Putting an organized process for business innovation at the centre of development• Specifying the related needs on land, water, energy, and biodiversity• Specifying the acceptable damages from risks of droughts and floods• Specifying related inter sector interactions• Elaborating sustainable production limits and related adaptations for business development• Specifying related uses of land and water resources at basin scale• Formulating the River basin development and management plansresource management will be essential. It will becrucial, for example, for water and environmentalmanagers to understand that farmers are driven byquestions of investment, harvest risks, and the impactof markets rather than by managing the restrictedavailability of natural resources. Only when all theactors are involved can there be a common accordand successful discussions on green growth.Demographic, economic, and social transitions will allbe needed as well as core changes in institutions andgovernance. Domestic institutions may play a majorrole in either facilitating or inhibiting the transition.The higher the level of institutionalization andgovernance, the more the transition is likely to befacilitated. Technology and solidarity are two keydrivers for this transition. It includes both South-South solidarity and cooperation, mainly with regardsto sharing trans-boundary waters, and North-Southsolidarity in the form of transfers of technology,training and capacity building, investments, andgreater market access (Figure 1).Figure 111

PERSPECTIVES PAPERMoving forwardAn IWRM approach to development is a potentiallypowerful tool to facilitate and lead the process of‘greening’ the world’s economies.Green growth requires a significant shift in thinkingon the way economies are run. There is a risk thatchange will be too slow. There are dangers that greengrowth will be hijacked by advocates who manipulateBox 8: Extending IWRM to encourage entrepreneurship (Basis - Boost – Balance)‘Basis’ is about sustaining production systems – maintaining and protecting land, water, and ecosystems asthe foundation for green growth.‘Boost’ is about economic growth. There are examples of development, such as irrigated farming, that havehelped to increase production but have not necessarily contributed to poverty eradication and the developmentof entrepreneurship. Transboundary water resource issues are often restricted to compacts andagreements only to share water and often overlook the opportunities to share products and trade amongriparian states. Economic development does not necessarily emerge by itself, rather it requires stimulus toinitiate innovative business opportunities. Green growth requires dedicated initiation of activities that leadto both technical and non-technical innovations which can speed up poverty eradi-cation and economicdevelopment using implicit knowledge, public participation, and co-creation processes.‘Balance’ is about getting the right balance between economic growth and maintaining the naturalresource base. There are many examples, such as the disappearance of the Aral Sea in Central Asia andLake Chad in Central Africa and the irreversible biodiversity losses worldwide that have resulted from notgetting this balance right. There are helpful, widely available instruments such as environmental impactassessments, water footprints, and lifecycle analyses. But they are often used only for single activities suchas building a dam. So it is still difficult to address the intrinsic interactions at different scales – local,catchment, regional, global.Froebrich, 201112

Water in the Green EconomyThe transition from current practice will require aparadigm shift. Integration is central to achievingsuch a fundamental shift, as is harnessing strongpartnerships between policy makers, professionals andlocal communities in both the developing anddeveloped world.it to fit their own political agendas. This could lead toinefficient and costly policies that achieve neithergrowth, nor natural resources protection, nor intergenerationalequity. There is discussion about employmentimpacts with some seeing opportunities andothers using the rhetoric of ‘green jobs’ to promoteunrelated policy aims. Poverty reduction is a keyelement of green growth but some may use it topromote anti-trade positions that militate againstreducing poverty. Similarly, businesses can market the‘green’ label while continuing to pollute or lobbyselectively against policies that threaten their nongreenpractices.Such approaches are unhelpful, not thought through,and contradicted by both economic theory and theexperience of the world economy.Experience shows that such concepts can lead toendless academic debate, studies, and revised policiesand plans, all of which delay action. Green growth hasto address natural resources more broadly, in particularfor water. However, there is a risk that politicalattention and funding will be targeted entirely atclimate mitigation related to energy issues whileneglecting water or other natural resources. This isalready happening to some extent.Governments need policy instruments that accelerateprogress to a green economy. Seeking a greeneconomy will not be easy and will require unpopulardecisions. For example, the price of natural resourceswill have to increase. This is happening for oil andminerals, and water and food may have to go thesame way if it is to be taken as a serious part of thegreen economy and not just exploited. Similarly,subsidies for environmental ‘bads’, including waterpollution, have to be removed and taxes reformed topromote natural resource efficiency not profligatewaste. Incentives are needed for business to adoptgreen practices and government investmentprogrammes should target climate adaptation (e.g.,flood measures, water reuse and recycling) andresearch for new green technologies. This will have tobe accompanied by public awareness to promotegreen solutions. It is essential that we develop aframework for green growth and water security thatincorporates the integrated approach and addresseswater within wider socio-economic goals.Box 9: Green growth creates new watermarket opportunities and new employmentThe global water industry is on the cusp ofmassive change. By 2016 the capital expenditureon water infrastructure is estimated to increase1.5 times from US$90 billion in 2010 to US$ 131billion (Global Water Intelligence, 2011)About 0.5 million new jobs will be created by2025 in South Africa as a direct result of greeneconomic initiatives, half of them in naturalresources management. This is according to astudy by the Industrial Development Cooperation,the Development Bank of Southern Africa, andTrade and Industry Policy and Strategies.Maia et al, 201113

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Water in the Green EconomyReferencesAit Kadi M (2010) Exploring the role of water securityin regional economic development. Keynote at 2010GWP Consulting Partners Meeting, www.gwp.org.Ait Kadi M (2011) Water Security and Green Economy:links through IWRM – Panel communication at theEU Green Week, Brussels, 24-27 May 2011AMCOW and GWP (2012) Water Security and ClimateResilient Development: Strategic FrameworkFroebrich J (2011) GWP Perspectives note on EnablingGreen Growth – Unpacking the concept (draft note)Global Water Intelligence (2011) Global Water MarketReport, www.globalwaterintel.comGrey D and Sadoff C (2007) Sink or Swim? Watersecurity for growth and development. Water Policy 9:545–571GWP (2000) Integrated Water Resources Management.Technical Committee Background Paper No 4. GlobalWater Partnership, www.gwp.orgGWP (2004) IWRM and Water efficiency Plans,Technical Committee Background Paper No. 10,Global Water Partnership, www.gwp.orgGWP (2009) GWP Strategy 2009-2013, www.gwp.orgHall A (2011) GWP Perspectives note on Green Growthand Water (draft note)Hiroki K (2011) Green Growth with Water. Bulletin ofthe Academy Hassan II for Sciences and Techniques,No 10, December 2011Kilimo Trust (2012) Making Markets for FoodStaples Work in the East African Community.Kampala, UgandaMaia J, Giordano T, Kelder N, Bardien G, Bodibe M, DuPlooy P, Jafta X, Jarvis D, Kruger-Clote E, Kuhn G,Lepple R, Makajulule L, Mosoma K, Neoh S, NetshitomboniN. Ngozo T. Swanepole J (2011) GreenJobs: Estimate of the direct employment potential ofa greening South African economy, IDC, DBSA andTIPS. ISBN 987-0-620-51994-6Muller M and R Lenton (eds) (2009) Integrated WaterResources Management in Practice: Better Managementfor Development. Global Water Partnership andEarthscan, LondonOECD (2011) Towards Green Growth, A Summary forPolicy MakersSEI (2011) Understanding the Nexus: Background paperfor the Bonn 2011 Nexus Conference, 16-18 November2011. Stockholm Environment InstituteSIWI (2011) Stockholm Statement to Rio+20,www.worldwaterweek.orgSIWI (2005) Making water a part of economic development.Swedish International Water Institute in collaborationwith World Health Organisation and theNorwegian Agency for Development CooperationUNEP (2011a) Towards a Green Economy: Pathways toSustainable Development and Poverty Eradication,www.unep.org/greeneconomyUNEP (2011b) Putting Ecosystems Management in theVision of Africa’s Development. Policy Brief 7UN-Water (2012) Status Report on the Application ofIntegrated Approaches to Water Resources Management15

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