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Monday, November 23, 2009

Water News - New report shows water scarcity can be mitigated affordably and sustainably

Water News - New report shows water scarcity can be mitigated affordably and sustainably


Washington, D.C., November 23, 2009 — A new report released today by the 2030 Water Resources Group,Charting Our Water Future, shows that growing water scarcity can be mitigated affordably and sustainably. Byproviding greater clarity on the scale of the water challenge and the cost of the solutions, it offers a fact-basedtool to help stakeholders make informed investment decisions and guide policy discussions.

It finds that if noaction is taken, by 2030, projected population and economic growth will lead to global water demand that is40% in excess of current supply. In addition, this means that one-third of the world’s population would haveaccess to only half the water they need, living in water basins with a 50% deficit in supply.

In the foreword to the Charting Our Water Future, His Royal Highness the Prince of Orange, Chairman of theUnited Nations Secretary-General’s Advisory Board on Water and Sanitation, states that “the future water gapcan be closed. (…). If water is to be everyone’s business, then stakeholders will need to come together in waterscarcecountries to make some difficult trade-offs on the road to water resource security. (…) This report’scontribution is to create a common economic language which all stakeholders can use in participating in thatconversation.”
At the basis of the report lies an analysis conducted in four countries with drastically different water issues,which will collectively account for 40 percent of the world’s population, 30 percent of global GDP and 42 percentof projected water demand in 2030: China, India, South Africa and Brazil (Sao Paulo state). The report’smethodology identifies supply- and demand-side measures that could constitute a more cost effective approachto closing the water resource gap in each country and even achieve savings in some sectors.

Moreover, the report shows that if a balanced portfolio of demand- and supply-side measures is adopted ineach country, the projected water requirements in 2030 can be met at an estimated cost of $19 billion per yearfor these countries, or just under 0.06% of their combined forecast GDP for 2030. At a global level, the costwould amount to an estimated $50-60 billion. In contrast, if only traditional supply-side measures areimplemented, an additional capital expenditure of up to $200 billion per year globally would be required toclose the water gap. This is four times more than the balanced approach and more than double what is currentlyspent on water resource provision.

While the need for additional water is global, both the challenges and the solutions differ across geographiesgiven the drastic variations from basin to basin. This report offers a set of tools for decision-makers to designtailored programs to close the water gap. In India, for example, demand is driven largely by growth in theagricultural sector (80% of all water demand) as it tries to cope with a burgeoning population moving towards amiddle-class diet. The most cost-effective solutions identified for India are, therefore, dominated by agriculturalmeasures, both in irrigated and rain-fed crop production, which can collectively close 80% of the projected gapin 2030. On the other hand, in South Africa, agriculture is expected to account for only 47% of water demand in2030, while household and industrial demand will account for 53%. As a result, the most cost-effective solutionswill include some agricultural measures, but also a range of industrial efficiency measures, in mining forinstance, and common household measures, such as improved plumbing fixtures.

Across all regions studied, many of the most cost-effective measures identified, especially those that increaseefficiency and productivity of water use, can pay back their initial capital investment in three years or less.About the 2030 Water Resources Group. The Group was formed in 2008 to contribute new insights to thecritical issue of water scarcity. Members include McKinsey & Company, the International Finance Corporation(IFC, part of the World Bank Group), and a consortium of business partners: The Barilla Group, The Coca-ColaCompany, Nestlé SA, New Holland Agriculture, SABMiller plc, Standard Chartered and Syngenta AG.
For more information, and to see a copy of the report, please visit:www.mckinsey.com/water


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