This year’s World Water Day 2021 captured commitments and thoughts associated with the Value of Water.
Following a year in which the pandemic has exacerbated the inequalities already present in society, the economic case for investment in water is even sharper. Sustainable investment and a focus on Corporate Social Responsibility (CSR) is growing rapidly to seize the opportunity offered by the value of water.
The conversation around the value of water is often dominated by the human costs associated with the gap between those who have a plentiful supply of clean, safe water and those who do not. Statistics detailing those who do not even have access to basic water and sanitation are well understood and often quoted by the WASH community. The World Water Day 2021 featured many of these statistics regarding the increasing scarcity of fresh water, the number of people forced to drink contaminated water and the impact of climate change on water resources. Lying beneath these important and essential human stories, there is a second layer of information that may actually help to drive investment from a purely financial perspective, whether that be via funding or finance. According to water.org, the financial gap required to achieve SDG 6 is $114bn per year, every year until 2030. At present 80% of countries report insufficient financing to meet current national WASH targets, often lower than the SDG 6 objectives. This seems like an insurmountable gap until two more factors are considered:
1. Failure to invest in the water sector will reduce global growth by up to 6% by 2050
2. For every $1 invested in water and sanitation, $4.30 is delivered in economic benefit to individuals and society.
3. Families at the bottom of the economic pyramid have a $12bn demand for finance to meet their water and sanitation needs.
Investment in water to avoid global growth contraction whilst boosting spending power of individuals and society seems like a solid economic win/win. The pandemic has shone a harsh light on the inequalities of access to safe water and sanitation over the last year. Compared to the coming impacts of climate change, we may look back at COVID-19 as a minor difficulty. Up to 700 million people will be displaced by water scarcity by 2030, and 450 million children are currently living in areas of very high or high water vulnerability. Yet source water protection can cost as little as $2 per person per year.
To prevent large scale migration, often to adjacent regions where water scarcity already exists, for such a low investment seems a great human return but there is an associated financial payback. Investment in water infrastructure of $1 per square metre for informal settlements increases land value by $3 – 11 per square metre. For a relatively small cost, communities likely to be displaced by climate change can be better protected with solid economic results. The good news is that the financial sector is beginning to turn towards the opportunities offered by sustainable investment and impact investment.
$30tn worth of assets were controlled by sustainable investment funds at the start of 2018, a 34% increase over two years. The pre-pandemic forecast was to reach $50tn by 2028. There is a significant shift towards CSR-focused investment by institutional, corporate and private investors. We at Aquatabs are intensely focused on playing our part, whether it be delivering sustainable water purification systems for schools, hospitals and small communities or supporting social enterprises engaged in improving access to WASH services in developing economies.