The Global Water Challenge:

Poverty, Growth & International Relations

David Grey, Sr. Water AdvisorClaudia Sadoff, Lead Economist

The World Bank

Global Issues Seminar SeriesJanuary 25, 2006

A blue planet: ….but

The world’s water resources

Glaciers, Snow & permafrost 1.725%

Ground water 0.075%

Lakes, swamps & rivers 0.025%

Oceans 97.5%

3

3 Messages: Global Water & the Future

2. Without major water investments, many poor economies cannot grow

3. Without ‘riparian’ cooperation, water will increasingly breed conflict

1. The world’s water resources are under rapidly growing pressure

4

Growing water scarcity(1995-2075)

SEI - Criticality index (Source: WaterGAP)

5

Per capita water availability

0

2

4

6

8

10

12

14

16

1960 1990 2025

Africa

Asia

MEast & NAfrica

Th

ou

sa

nd

m3

World

6

Water Resources Management

Water supply & sanitation

Irrigation & drainage

Energy

Environ-mental

services

Infrastructure for Infrastructure for management of floods management of floods

and droughts, and droughts, multipurpose storage, multipurpose storage,

water quality and water quality and source protectionsource protection

Institutional Institutional frameworkframework

Management Management instrumentsinstruments

Political economy of Political economy of water managementwater management

Other uses including

industry and navigation

Water Resources – Many Uses, Many Users

…

7

Physical, economic water scarcity..& freedom

8

3 Messages: Global Water & the Future

3. Without ‘riparian’ cooperation, water will increasingly breed conflict

2. Without major water investments, many poor economies cannot grow

1. The world’s water resources are under rapidly growing pressure

9

Climate Variability & GrowthClimate Variability & Growth

Risk of recurrent Risk of recurrent droughtdrought

Natural legacy: Natural legacy: extreme climate variabilityextreme climate variability

10/97 – 2/98 Flood Infrastructure Damage $2.39 b10/98 –5/00 Drought Crop loss $0.24 b

Livestock loss $0.14 bReduction in hydropower $0.64 b

Reduced industrial prod. $1.39 bTOTAL $2.41 b $2.39 b

10/97 – 05/00 Cost of Climate Variability $4.8 b

Approx (annual) GDP ($9 b/yr) $22 bImpact as % GDP/annum 22%

Kenya: variability & shock

10

-80

-60

-40

-20

0

20

40

60

80

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

year

pe

rce

nta

ge

-30

-25

-20

-15

-10

-5

0

5

10

15

20

25

rainfall variation around the mean

GDP growth

-80

-60

-40

-20

0

20

40

60

80

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

year

pe

rce

nta

ge

-30

-25

-20

-15

-10

-5

0

5

10

15

20

25

rainfall variation around the mean

GDP growth

Rainfall & GDP growth: Ethiopia 1982-2000

-10.0

-5.0

0.0

5.0

10.0

15.0

19

79

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

YearsR

eal

GD

P g

row

th (

%)

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

Vari

ab

ilit

y i

n R

ain

fall

(M

ete

r)

Real GDP grow th (%)

Variability in Rainfall (Meter)

Rainfall & GDP growth: Zimbabwe 1978-1993

Economy-wide impacts

11

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

GDP Growth rate Ag GDP Non-Ag GDP

An

nu

al R

ates

Smoothed

Drought

Variability

38%decline in avg. projected GDP growth rate when historical levels of variability are assumed

40% decline in Ag GDP

34% decline in non-Ag GDP

BaselineScenario

Ethiopia – Impacts of historical levels of variability on projected GDP growth/economic performance

Hydrological variability slows growth rates 38%

12

Water storage in m3/cap

43746

1,287 1,406

2,486

3,255

4,729

6,150

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Eth

iop

ia

So

uth

Afr

ica

Th

aila

nd

La

os

Ch

ina

Bra

zil

Au

stra

lia

No

rth

Am

eric

a

Water storage and the poverty trap

Water availability versus storage

0

200

400

600

800

1000

0 1,000 2,000 3,000 4,000 5,000

storage/ capita (m3)

wit

hd

raw

al/

cap

ita (

m3)

Ethiopia

S. Africa

SpainAustralia

• Stable pop. & GDP, raising Ethiopia’s storage to South Africa (12% of USA) ~ 6 X GDP

• Or 5% of GDP for over 100 yrs

13

18

4

85

21 1

26

55

38

29

20

4

11

4

58

1

90

0

43

0

2108

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Ca

me

roo

n

Nig

eri

a

Eth

iop

ia

Ke

nya

Ta

nza

nia

Ug

an

da

Bu

rkin

a F

aso

Gh

an

a

Se

ne

ga

l

Alg

eri

a

Eg

ypt

Mo

rocc

o

Wo

rld

Ave

rag

e

Ele

c c

on

su

mp

tio

n (

kW

h/y

r)/C

ap

ita (United States consumption - 11994 kWh/yr/capita)

500 kWh/capita-year minimum consumption for reasonable quality of lifeThe electricity

gap

Africa

EuropeN America

S AmericaAsia (incl.

China)

0%

20%

40%

60%

80%

100%

Hydropower potential tapped

14

The Water Supply & Sanitation

Gap

175

235

175

40 350

275

175

190

152

175

178

36

350

368

188

0

100

200

300

400

500

600

700

800

900

1000P

op

ula

tio

n (

mil

lio

n)

Rural2000

Urban2000

Total2000

Rural2015

Urban2015

Total2015

Water Supply Coverage in Africa

Served 2000 Added 2000-2015 Not Served

Africa’s MDG Challenge

15

Irrigation can lift rural poor out of poverty

Incom

e p

er

cap

ita

Average income levels & irrigation intensity in India 16

FT, June 18, 2001: Rain in India…

"Every one of my budgets was largely a gamble on rain.“ Finance Minister of Government of India 17

World Bank Lending f or Water over Past Three Years

0%

2%

4%

6%

8%

10%

FY02 FY03 FY04

% o

f all

Ban

k len

din

g

Irrigation Serv Irrigation WR Urban WSS ServUrban WSS WR Rural WSS Serv Rural WSS WRHydropow er Serv Hydropow er WR WR St/Alone Components

World Bank Water Sector Strategy & Infrastructure Action Plan: scaling up

18

Discussion

19

3 Messages: Global Water & the Future

3. Without ‘riparian’ cooperation, water will increasingly breed conflict

2. Without major water investments, many poor economies cannot grow

1. The world’s water resources are under rapidly growing pressure

20

                                                                                                 

           

260 international basins: +/- tensions: longstanding, always,

growing with demand

“Fierce competition for fresh water may well become a source of conflict & wars in

the future.” Kofi Annan, March 2001

21

Africa’s historical legacy: numerous international rivers

• 60+ international rivers

• many countries per basin

• many basins per country

• weak capacity

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...all cases can be rational. The

choice among them will depend

upon perceptions of their relative

benefits.

1 2

Case 1

1 2

3

Case 2

1 2

3

Case 3

Country 1’s preferred agenda

Country 2’s preferred agenda

Cooperative agenda 3

Why would riparian states cooperate? - converging national agendas

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Unilateral Action

Coordination

•Communication and notification

•Information sharing

•Regional assessments

Collaboration

•Identify, negotiate & implement sets of national investments that capture cooperative gains

•Adapt national plans to mitigate regional costs

•Adapt national plans to capture regional gains

Joint Action

•Joint project assessment and design

•Joint ownership

•Joint institutions

•Joint investment

Cooperation ContinuumDispute Integration

A Cooperation Continuum

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Benefits of Cooperation: changing perceptions

The Challenges The Opportunities

Limited water resour. management: degraded watersheds, wetlands, biodiversity, & water quality.

Improved water quality, riverflow characteristics, soil conservation, biodiversity

Type 1:

Increasing Benefits

To the river

Sub-optimal water resources development

Improved hydropower & agricultural production, flood-drought management, environmental conservation & water quality

Type 2:

Increasing Benefits

From the river

Tense (+/-) regional relations & political economy impacts

Policy shift to cooperation & development, from dispute; from food & energy self-sufficiency to security; reduced conflict risk & military expenditure (+/-)

Type 3:

Reducing Costs

Because of the river

Regional fragmentation

Integration of regional infrastructure, markets & trade

Type 4:

Increasing Benefits

Beyond the the river 25

India

Pakistan

The Indus

Eugene Black was asked about the most significant events during his presidency. He talked about his involvement in the Middle East, in connection with the Aswan Dam and the Suez Canal. " and I was also very much involved in India and Pakistan, the Indus River dispute. I was trying to get the Indian government and the Pakistani government together …. That took a very long time [1952 to 1960].”

The Bank’s World, May 1988

The Aswan High Dam

Development Diplomacy & the World Bank

“Those were the two most important things … when I was at the Bank”Eugene BlackPresident of the World Bank (1942-62)

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10 countries: Burundi, D.R. Congo, Egypt, (Eritrea), Ethiopia, Kenya, Rwanda, Sudan, Tanzania, Uganda

300 m people (600m 2025)Extreme:

poverty: 4 of 10 poorestclimate variabilitylandscape vulnerability

Very limited infrastructure….

Yet major opportunities:

The Bankas facilitor: 1997-2003as partnership coordinatoras investor: 2004 ->

Nile Basin Initiative

27

Nile:“Cooperation replaces conflict”

28

3 Conclusions: Actions and Consequences

3. Without ‘riparian’ cooperation, water will increasingly breed conflict

Riparian cooperation can catalyze growth, economic integration & peace

1. The world’s water resources are under rapidly growing pressure

Solutions can be found – although costs will be high (‘economic scarcity’)

2. Without major water investments, many poor economies cannot grow

De-linking rain from the economy is a condition for growth, poverty eradication

29

Rivers are political systems….

• Management of rivers is political; management of international rivers is very political…

• Rivals… dwellers on opposite banks of a river

• The Chinese got it right long ago:

riverriver

++

++ dykedyke

==

Political Political orderorder

==

30