Investing in water could reduce poverty and improve health

Investments in water and sanitation can be an engine for accelerated economic growth, sustainable development, improved health and reduced poverty a report out this week has found.

The report, Making Water a part of economic development: The economic benefits of improved water management, shows how investments in the water sector can generate economic benefits that considerably outweigh costs.

For example, it finds that poor countries with access to improved water and sanitation services have enjoyed annual average growth of 3.7% of GDP, compared to 0.1% for those without adequate investment.

Most importantly, it stresses that the cost of such investments are well within the reach of most countries and that economic benefits, ranging from US$3 to US$34 per dollar invested, would be gained in the health, agricultural and industrial sectors if the Millennium Development Goals on water and sanitation were achieved.

In some cases the return could be up to US$60 per dollar invested.

In addition the investment would also accelerate economic growth. For example, it is estimated that improved water storage capacity in Kenya, making the country less susceptible to changes in rainfall, could boost the country’s GDP annual growth rate to 6% – the amount needed to start reducing poverty effectively – from its current 2.4% annual growth rate.

Yet, the annual per capita costs of making such investments is small: an estimated US$4 – 7 in Bangladesh, Cambodia, Ghana, Tanzania and Uganda, for example.

“The world water and sanitation crisis is, in reality, an opportunity from a social and economic perspective,” said Anders Berntell, Executive Director of the Stockholm International Water Institute (SIWI), who published the report. “Yes, solving it would be expensive. But, it would save far more than it costs, it would unlock huge potential, and it would transform countless lives.”

The report establishes a poverty-focused investment priority list:

  • Improve access to safe water supply and basic sanitation and hygiene, including household water management as these investments have the highest economic returns;
  • Protect the integrity of aquatic and water-related terrestrial ecosystems; and
  • Invest in water-resource management including, where feasible, hydraulic infrastructures such as dams, irrigation schemes and flood control works.

    The report was released in New York at the UN in conjunction with the 13th Meeting of the Commission on Sustainable Development.

    By David Hopkins

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