1. The Global Water Challenge: Poverty, Growth & International Relations David Grey, Sr. Water Advisor Claudia Sadoff, Lead Economist The World Bank Global Issues Seminar Series January 25, 2006

2. A blue planet: ….but

3. The worlds water resources Glaciers, Snow & permafrost 1.725% Ground water 0.075% Lakes, swamps & rivers 0.025% Oceans 97.5% 3

4. 3 Messages: Global Water & the Future 2.Without major water investments, many poor economies cannot grow 3.Without riparian cooperation, water will increasingly breed conflict 1.The worlds water resources are under rapidly growing pressure 4

5. Growing water scarcity(1995-2075) SEI - Criticality index (Source: WaterGAP) 5

6. Per capita water availability 0 2 4 6 8 10 12 14 16 196019902025 Africa Asia MEast & NAfrica Thousand m 3 World 6

7. Water Resources Management Water supply & sanitation Irrigation & drainage Energy Environ- mental services Infrastructure for management of floods and droughts, multipurpose storage, water quality and source protection Institutional framework Institutional framework Management instruments Political economy of water management Other uses including industry and navigation Water Resources – Many Uses, Many Users … 7

8. Physical, economic water scarcity..& freedom 8

9. 3 Messages: Global Water & the Future 3.Without riparian cooperation, water will increasingly breed conflict 2.Without major water investments, many poor economies cannot grow 1.The worlds water resources are under rapidly growing pressure 9

10. Climate Variability & Growth Risk of recurrent drought Natural legacy: extreme climate variability Kenya: variability & shock 10

11. Rainfall & GDP growth: Ethiopia 1982-2000 Rainfall & GDP growth: Zimbabwe 1978-1993 Economy-wide impacts 11

12. 38% decline in avg. projected GDP growth rate when historical levels of variability are assumed 40% decline in Ag GDP 34% decline in non-Ag GDP Baseline Scenario Ethiopia – Impacts of historical levels of variability on projected GDP growth/economic performance Hydrological variability slows growth rates 38% 12

13. Water storage in m3/cap 43 746 1,287 1,406 2,486 3,255 4,729 6,150 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Ethiopia South Africa Thailand Laos China Brazil Australia North America Water storage and the poverty trap Stable pop. & GDP, raising Ethiopias storage to South Africa (12% of USA) ~ 6 X GDP Or 5% of GDP for over 100 yrs 13

14. The electricity gap Hydropower potential tapped 14

15. The Water Supply & Sanitation Gap Africas MDG Challenge 15

16. Irrigation can lift rural poor out of poverty Income per capita Average income levels & irrigation intensity in India 16

17. FT, June 18, 2001: Rain in India… "Every one of my budgets was largely a gamble on rain. Finance Minister of Government of India 17

18. World Bank Water Sector Strategy & Infrastructure Action Plan: scaling up 18

19. Discussion 19

20. 3 Messages: Global Water & the Future 3.Without riparian cooperation, water will increasingly breed conflict 2.Without major water investments, many poor economies cannot grow 1.The worlds water resources are under rapidly growing pressure 20

21. 260 international basins: +/- tensions: longstanding, always, growing with demand Fierce competition for fresh water may well become a source of conflict & wars in the future. Kofi Annan, March 2001 21

22. Africas historical legacy: numerous international rivers 60+ international rivers many countries per basin many basins per country weak capacity 22

23. ...all cases can be rational. The choice among them will depend upon perceptions of their relative benefits. 12 Case 1 12 3 Case 2 12 3 Case 3 Country 1s preferred agenda Country 2s preferred agenda Cooperative agenda 3 Why would riparian states cooperate? - converging national agendas 23

24. Unilateral Action Coordination Communication and notification Information sharing Regional assessments Collaboration Identify, negotiate & implement sets of national investments that capture cooperative gains Adapt national plans to mitigate regional costs Adapt national plans to capture regional gains Joint Action Joint project assessment and design Joint ownership Joint institutions Joint investment Cooperation Continuum Dispute Integration A Cooperation Continuum 24

25. Benefits of Cooperation: changing perceptions The ChallengesThe Opportunities Limited water resour. management: degraded watersheds, wetlands, biodiversity, & water quality. Improved water quality, riverflow characteristics, soil conservation, biodiversity Type 1: Increasing Benefits To the river Sub-optimal water resources development Improved hydropower & agricultural production, flood- drought management, environmental conservation & water quality Type 2: Increasing Benefits From the river Tense (+/-) regional relations & political economy impacts Policy shift to cooperation & development, from dispute; from food & energy self-sufficiency to security; reduced conflict risk & military expenditure (+/-) Type 3: Reducing Costs Because of the river Regional fragmentation Integration of regional infrastructure, markets & trade Type 4: Increasing Benefits Beyond the the river 25

26. India Pakistan The Indus Eugene Black was asked about the most significant events during his presidency. He talked about his involvement in the Middle East, in connection with the Aswan Dam and the Suez Canal. " and I was also very much involved in India and Pakistan, the Indus River dispute. I was trying to get the Indian government and the Pakistani government together …. That took a very long time [1952 to 1960]. The Banks World, May 1988 The Aswan High Dam Development Diplomacy & the World Bank Those were the two most important things … when I was at the Bank Eugene Black President of the World Bank (1942-62) 26

27. 10 countries: Burundi, D.R. Congo, Egypt, (Eritrea), Ethiopia, Kenya, Rwanda, Sudan, Tanzania, Uganda 300 m people (600m 2025) Extreme: poverty: 4 of 10 poorest climate variability landscape vulnerability Very limited infrastructure…. Yet major opportunities: The Bank as facilitor: 1997-2003 as partnership coordinator as investor: 2004 -> Nile Basin Initiative 27

28. Nile:Cooperation replaces conflict 28

29. 3 Conclusions: Actions and Consequences 3.Without riparian cooperation, water will increasingly breed conflict Riparian cooperation can catalyze growth, economic integration & peace 1.The worlds water resources are under rapidly growing pressure Solutions can be found – although costs will be high (economic scarcity) 2.Without major water investments, many poor economies cannot grow De-linking rain from the economy is a condition for growth, poverty eradication 29

30. Rivers are political systems…. Management of rivers is political; management of international rivers is very political… Rivals… dwellers on opposite banks of a river The Chinese got it right long ago: river + +dyke = Political order = 30