Issues Monitor: Potable Water Water-stressed countries’ struggle for economic development

Issues Monitor: Potable Water

Access to safe and potable water is fundamental to sustaining health and achieving economic development. With rapid population growth, border disputes, inadequate management of water resources, and the effects of climate change, water scarcity is a key issue, which can lead to food vulnerabilities and conflicts over resources. Political will, public and private investment, international cooperation and more effective and efficient water management systems can help combat this issue.

Timothy Stiles

One Americas ESG Lead and Partner

KPMG in the U.S.


Water Scarcity: A major hindrance to economic growth

During the past century, water use has more than doubled the rate of population growth due to an increased level of agriculture, energy and industrial production. In comparison, the natural replenishment rate of water resources remained much lower. As a result, continuous water use is leading to depletion of groundwater levels, further intensifying the issue of water scarcity.

Of all uses, access to safe drinking water has been a major challenge for all countries, particularly developing ones. Lack of access compels people to rely on water from dirty ponds or polluted rivers, leading to an increase in waterborne diseases and death.

In most developing and underdeveloped countries, lack of access to safe water directly results in a greater workload for women, as it is women that are assigned the responsibility for collecting water, which takes considerable time.

Fresh water scarcity is likely to affect the prospect of sustainable global growth, particularly if women and children are amongst those that are most negatively affected. By 2050, in a “business-as-usual” scenario, 52 percent of the global population (4.8 billion people), 49 percent of global grain production and 45 percent of the global gross domestic product (GDP) are likely to be at risk due to water stress. This, in turn, is likely to influence investment decisions and affect the competitiveness of certain regions.

 “In fact all MDGs – from goals related to eradicating poverty to achieving educational milestones to improving health and well-being of women and children – are influenced by water scarcity and are all inextricably linked with achieving success in water-scarcity related goals. Water security is therefore critical to global development. “

-Trevor Davies,

Partner, KPMG in the US

Ensuring Sustainable Water Supply: Major challenges

In the next decade, water shortage is likely to be the world’s most critical problem.

Climate change is expected to increasingly affect available water resources for agriculture and irrigation. Over the past few decades, the global temperature has been rising and experts estimate that many of the planet’s glaciers could disappear by the middle of the 21st century. This is likely to impact more than 2 billion people who rely on this water.

As the global population grows, so does the demand for food and water. According to the Food and Agricultural Organization (FAO) an estimated 80 percent of global water scarcity challenges can be attributed to population growth and the need for economic development. By 2025, consumption growth is likely to result in the demand for water surpassing its supply by 56 percent, while 1.8 billion people are expected to live in water-scarce areas.

The quality of potable water remains a major concern even while close to 87 percent of the global population has access to drinking water. In developing countries, 70 percent of industrial waste is dumped untreated into water bodies.

Making Water Accessible to All: International collaboration and good governance

The private sector, governments and international donors — along with contributions from local programs — can help overcome water scarcity.

To make water accessible to all, it is necessary to consider it as both a “public good” and an “economic good”. Treating water as a “public good” helps ensure that governments focus on equal distribution of the resource among its people; while treating it as an "economic good” can promote more efficient allocation and conservation.

The private sector plays an important role in the planning, development and management of water resources, which can include “greenfield” projects, concessions, leases, operation and management contracts, and outsourcing.  Private participation may also help generate financial resources, introduce corporate management, and improve service efficiency and accountability.

Ensuring equal access to water resources depends largely on good governance. To address any funding gaps in developing countries — particularly to expand, upgrade and maintain water infrastructure — multilaterals and state funding agencies are promoting the empowerment of local governments. To achieve this, these agencies are focusing on empowering local communities within a national framework, with proper decentralization, capacity development and adequate financing.

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