OECD WATER OUTLOOK TO 2050: MANAGING WATER RISKS & SEIZING GREEN GROWTH OPPORTUNITIES CNI Sustainability: Water Opportunities and Challenges for Development in Brazil Rio de Janeiro, 24 October 2013 Kathleen Dominique, Environmental Economist

Water demand to increase by 55% by Global water demand, baseline 2000 and 2050 Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE

3 Change in annual temperature from Human and economic costs of a changing climate: uncertain future for freshwater Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE

Number of people living in water-stressed river basins Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE

Water pollution from urban sewage to increase 3-fold 5 Nitrogen effluents from wastewater: baseline 1970 to 2050 Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE

Population lacking access to an improved water source or basic sanitation Source: OECD (2012), OECD Environmental Outlook to 2050; output from IMAGE

CityAverage Annual Losses (US$ mill) Average Annual Losses (% of GDP) 1Guangzhou % 2Miami % 3New York – Newark % 4New Orleans % 5Mumbai % 6Nagoya % 7Tampa – St Petersburg % 8Boston % 9Shenzen % 10Osaka - Kobe % Source: Stephane Hallegatte, Colin Green, Robert J. Nicholls and Jan Corfee-Morlot: Future flood losses in major coastal cities in nature climate change, 18 August Ranking of coastal cities at risk from future flood losses, 2005 Costs of global flood damage could rise from USD 6 billion to USD 1 trillion p.a. by 2050.

Water security risks

Drought in Brazil 2012 caused significant drop in production of food and raw materials and strained energy production. Government emergency credit fund of R$2.4 billion floods in Thailand slashed 4th quarter GDP growth by 12%. Costs of water insecurity

Know, target and manage risks The future is uncertain. The risk approach encourages thinking systematically about uncertainty. The level of assessment and governance should be proportional to the risk faced.

11 What is acceptable? Balance between economic, social and environmental consequences and the cost of improvement. For business community, help to secure social license to operate.

Improve incentives for managing risk – Robust water resource allocation (efficient, flexible, equitable risk sharing) – Remove environmentally-harmful subsidies (e.g. under pricing water, production- linked agricultural subsidies) – Water pricing, abstraction charges, pollution charges, insurance schemes Encourage green innovation – Change the economics: make pollution and wasteful production & consumption more expensive – Reduce barriers to uptake and diffusion of innovative water technologies and techniques 12 Policy action: managing water risks and seizing green growth opportunities

Source: OECD Environmental Data 13 Decoupling water use from growth OECD freshwater abstraction by major use and GDP (1990=100)

14 Water pricing - reducing demand Source: OECD (2011), Greening Household Behaviour: The Role of Public Policy % Ownership against fee structure

Improve information and data – Better knowing the risks, including perceptions Invest in infrastructure (grey and green) – Financing needs considerable: % of GDP over next 20 years in OECD countries Developing countries: USD 54 billion to maintain systems, another USD 17 billion to meet MDGs (per year, estimates vary widely) – Sources: 3 Ts (tariffs, taxes, transfers) – Principles: beneficiary pays, polluter pays, equity and coherence – Combine grey and green to improve scalability and flexibility to adjust to change Making water reform happen – National Policy Dialogues 15 Policy action: managing water risks and seizing green growth opportunities

Muito Obrigada Contact: