Exploring the Links Between Water and Economic Growth

HSBC commissioned this report, as they launched their five-year HSBC Water Programme initiative, to study the connections between water and economic growth in the three focus areas of the initiative--expanding access to safe water and sanitation services, improving water resource management, and raising awareness of the implications of water scarcity. For each topic, the report presents an outline of transmission channels to economic growth, gives quantitative estimates of the returns to investment (citing recent studies as well as original estimates), and discusses the future outlook.

• Reaching Millennium Developmnet Goal (MDG) targets for water and sanitation could mean a gain in 2015 of: 919 million productive days due to fewer cases of diarrhea, 29.5 billion hours due to convenience, and 78 million school days. Tweet
• Achieving universal access to safe drinking water and sanitation could result in gains of over 15% of annual GDP for low-income countries like the DRC, Liberia, and Nicaragua. Universal access in the BRIC countries (Brazil, Russia, India, China) could amount to more than $125 billion (1% of their joint 2010 GDP). Tweet
• The capital investments needed from 2010 to 2015 to reach the water and sanitation MDG are estimated at $140 billion with "low cost technologies" (boreholes, septic tanks) versus $300 billion with more advanced facilities (up to piped connections). * Cost-benefit ratios for achieving MDG goals range from 1.8 in Middle East / North Africa (MENA) countries to 14.9 in Latin America. Tweet
• The world's ten most populated river basins generated almost 10% of global GDP in 2010, forecasted to rise to almost 25% by 2050. This suggests the magnitude of importance of water resource management in these eco-systems. Tweet
• Water Resource Management contributes to increased productivity in activities such as agriculture, mining, manufacturing, tourism, recreation, transport, and fisheries. Tweet
• Maintaining the natural wetlands in the Zambezi Basin could save $45 million on future water purification and treatment. Similarly, control on water hyacinth in Southern Benin is estimated to have increased local income by $30.5 million per annum. Tweet
• Modeling of the water trading regime in the Murray Darling Basin suggests that this system resulted in 2% higher regional GDP annually. Tweet
• Water scarcity could be significant or severe in seven of the ten most populated river basins by 2050, assuming no improvement in water efficiency or WRM and growth of blue water footprint in line with population. In a scenario with 'business-as-usual' water productivity and 'medium' GDP growth, 50% of the population is predicted to live in regions at risk due to water stress by 2050. Tweet
• The increase in water demand over the next 40 years will come mostly from manufacturing, electricity, and domestic use. Tweet