The True Value of Clean Water: Beyond the Price Tag

Insufficient investment in water is a problem globally. In many high-income countries, water infrastructure is ageing and increasingly dysfunctional. In low- and middle-income countries, the infrastructure can be rudimentary or non-existent. Around 2bn people still lack access to safely managed drinking water, which is essential for their health and well-being. More than 1,000 children under five die every day from illnesses caused by unsafe water and sanitation. 

Recognising water, sanitation and hygiene (WASH) as a common objective is vital to achieving the UN’s Sustainable Development Goals (SDGs). Investment in safe-water resilience and sustainability leads to improved social and economic outcomes for communities with limited access to clean water. The Global Commission on the Economics of Water (GCEW), a research body convened by the government of the Netherlands, highlighted that investments in WASH must triple to ensure universal access to safely managed water. 

But how do you quantify the true impact of safe water? On the sidelines of the World Economic Forum meeting in Davos, Jonathan Birdwell, global head of policy and insights at Economist Impact, moderated a panel discussion on the importance of valuing clean water and the social and economic consequences of inaction. 

Some key insights from the conversation:

• The urgent need for a shift in how we value and manage water: The discussion highlighted that water is often taken for granted, despite the fact that its mismanagement constitutes a significant crisis. There was a clear call for a fundamental rethinking of the economics of water. A key part of this involves finding ways to properly price water and to manage it as a global common good. This is seen as crucial for achieving more efficient use, greater equity of access and environmental sustainability. The GCEW estimates that each year governments spend at least US$700bn on environmentally unsound and inefficient subsidies in agriculture and water and sanitation. The importance of targeted subsidies to ensure that those without sufficient income can also access water was also emphasised. The discussion also underscored the need for policy alignment across the water, climate, agriculture and energy sectors. The cost of inaction is huge.
• The critical role of the private sector and innovative finance: The speakers were clear that the water crisis cannot be solved by governments or local communities alone and that the private sector is essential. There is a significant financing gap in water infrastructure. Public-private partnerships and private-sector investment were strongly advocated. The discussion also highlighted the opportunity for using financial mechanisms to solve the crisis. Organisations like WaterEquity have demonstrated that it is possible to create the financial plumbing that connects capital markets with those who need water, enabling them to access loans for water solutions with high repayment rates. This approach also includes the measurement of social benefits alongside risk-adjusted financial returns.
• The interconnectedness of water with other social and economic factors like health, equity, child rights, etc.: The discussion made it clear that access to water is not just an infrastructural or economic issue, but one that is linked to human health, equity and child rights. A key concern was the unacceptable number of children under five who die daily from lack of access to water. There was a strong emphasis on the need to prioritise the social and health impacts of poor water access, especially in relation to children and women. The discussion also noted the interconnections between water security and food security, as well as underlining the way in which a lack of safe water in schools impacts negatively on girls' education.