Water Security brochure [3]_Layout 1 27/08/2013 17:05 Page 15 Water security for better lives A SUMMARY FOR POLICYMAKERS Water Security brochure [3]_Layout 1 27/08/2013 17:04 Page ii “Water security is about learning to live with an acceptable level of water risk.” Did the Ancient Egyptians have it right? Thirteen centuries ago, the “Nilometer” measured the level of Nile to predict acceptability of flood risks along the river: moderate inundation was synonymous with productive farming, while too little flood water would cause famine and too much would be equally disastrous, washing away the infrastructure built on the floodplain. Water Security brochure [3]_Layout 1 27/08/2013 17:04 Page 1 Water security for better lives A SUMMARY FOR POLICYMAKERS What is water security? 2 Why do we need it? 3 Taking steps to address water risks 4 Market-based instruments for managing water risks 7 Policy coherence for water security 10 About OECD The Organisation for Economic Co‐operation and Development (OECD) is a multi‐disciplinary inter governmental organisation, tracing its roots back to the post‐World War II Marshall Plan. Today, it comprises 34 member countries that are committed to democratic government and the market economy and the European Commission, with the major emerging economies increasingly engaged directly in the work. The OECD provides a unique forum and the analytical capacity to assist governments to compare and exchange policy experiences, and to identify and promote good practices through policy decisions and recommendations. This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. © OECD September 2013 OECD freely authorises the use of this material for non-commercial purposes. All requests for commercial uses of this material or for translation rights should be submitted to [email protected]. OECD WATER SECURITY FOR BETTER LIVES . 1 Water Security brochure [3]_Layout 1 27/08/2013 17:04 Page 2 1What is water security? The OECD report, Water Security for Better Lives, increasing diversions to reduce the risk of proposes a fundamental shift in our approach water shortage can increase the risk of to tackling water security, applicable to both undermining the resilience of freshwater OECD and non-OECD countries. systems. Evaluating the impact on water risks of policy interventions (or lack thereof) Achieving water security objectives means requires weighing such “risk-risk trade-offs”. maintaining acceptable levels for four water risks: Water management, at its core, is about reducing or avoiding water risks and about l Risk of shortage (including droughts): lack distribution of the water risks that remain – of sufficient water to meet demand (in both that is, who bears the risk. Policy responses to the short- and long-run) for beneficial uses managing water risks can also transfer risks to by all water users (households, businesses others or defer them into the future. As and the environment) explained above, policy intervention may l Risk of inadequate quality: lack of water of increase other water risks. Current policies suitable quality for a particular purpose or often fail to recognize these unintended use effects (“externalities”) and to address these trade-offs between water risks. l Risk of excess (including floods): overflow of the normal confines of a water system A risk-based approach addresses water (natural or built), or the destructive security first and foremost by determining accumulation of water over areas that are acceptable levels of each of the four key not normally submerged water risks in terms of their likelihood and l Risk of undermining the resilience of the potential consequences (economic, freshwater systems: exceeding the coping environmental, social), and balancing this capacity of the surface and groundwater against the expected benefits of improving bodies and their interactions (the “system”); water security. This will help to ensure that possibly crossing tipping points, and causing the level of water risk implied by different irreversible damage to the system’s policy actions reflects societal values and hydraulic and biological functions. that responses are proportional to the magnitude of the risk. A risk-based approach All four risks must be assessed in an also allows the identification of areas of high integrated way as interventions to reduce one risk where policy action should be given risk can increase other risks. For instance, priority. What is risk? Risk describes the likelihood and consequence of an at the intersection of hazard, exposure and uncertain event of which the probability of vulnerability. The reduction of any one of the three occurrence can be reliably estimated. Indeed risk is factors to zero consequently would eliminate the risk. Hazard Risk Vulnerability Exposure 2 . OECD WHAT IS WATER SECURITY Water Security brochure [3]_Layout 1 27/08/2013 17:04 Page 3 2Why do we need it? The cost of water insecurity to society There is concern that some segments of the illustrates the magnitude of the risks. Last population face greater risks because they year’s drought in the United States, for are more vulnerable (e.g. children), more example, nearly halved the contribution of exposed (living in areas at risk) and have the agricultural sector to US GDP over the more limited access to water resources and 3rd quarter. And the 2011 floods in Thailand services (e.g. poorer households). In slashed their 4th quarter GDP growth by a particular, microbial water pollution mostly staggering 12%, motivating the Thai Central hurts children. An estimated 1 800 children Bank to cut rates to aid the recovery in GDP under the age of five die every day from after the floods. diarrhoeal diseases linked to unsafe water supplies and poor sanitation and hygiene. The costs of policy inaction can be And groundwater shortage mostly affects considerable, not least because water the rural poor. In the family farming insecurity can have global impacts. This is systems of South Asia and Northern China, because local water risks may impact on for example, 1.2 billion poor farmers rely global commodity markets (e.g. a major primarily on groundwater for their daily drought in a food exporting country drives income (Shah, 2007). up food prices worldwide) and disrupt supply chains on a global scale (e.g. the 2011 There is also a concern that disparities in Thai floods led to the closure of water risks can increase income multinational electronics and vehicle disparities. Because they invest less in industries, with impacts cascading through water security and are often living in areas the global economy) (Grey and Garrick, 2012). at water risk (e.g. areas of poor water quality), lower income groups are more Not only are water risks directly affecting exposed to water insecurity and users (e.g. through the depletion of water potentially “pay” a higher share of the resources), they also can result in significant costs of policy inaction (e.g. health costs) additional use costs (e.g. increased than higher income groups. In addition, abstraction costs due to groundwater water insecurity can marginalize those subsidence). Moreover, there can be costs who lack access to capital (e.g. to invest in associated with damages to non-use values, well-deepening as a result of falling water such as the life-support function of water. tables). OECD WHY DO WE NEED IT? . 3 Water Security brochure [3]_Layout 1 27/08/2013 17:04 Page 4 3Taking steps to address water risks Water Security for Better Lives provides There is also more information available guidance on how to apply a risk-based on areas at risk of water deficit and, for approach to water security through a three- few pollutants (e.g. nitrates), on areas step process: “know the risks”, “target the vulnerable to water pollution. For risks” and “manage the risks”. example, France has delineated areas of chronic surface water or groundwater deficit (i.e. water supply insufficient to MANAGE meet demand). These areas are subject to cost efficiency more stringent abstraction licensing and higher abstraction charge. Pursuant to the EU Nitrates Directive, EU countries are from practice Feedback Feedback designating zones vulnerable to nitrates from practice TARGET pollution, with the aim of adopting acceptable level measures to effectively combat nitrates pollution in these zones. KNOW assessment Know the risks A significant obstacle to improving water security is often a lack of knowledge on water risks and their scale. In general, agreement on acceptable levels of water risks will be more likely if there is a common understanding of the problem at hand, its causes, and its impacts (over both the short- and long-terms), underpinned by But much more needs to be done to assess Zones of chronic water a robust risk assessment. In addition to all the uses and associated values of water deficit for surface water (left) and groundwater (right) in scientific and technical assessments of the resources and to ensure that those exposed France. risk, governments should also take into or vulnerable to risks have the knowledge to Source: Ministry of Ecology, account the risk perceptions of stakeholders. make informed choices about their own Sustainable Development and Energy, in Ben Maïd (2012). This promotes both transparency and welfare. accountability and can contribute to informed public debate about the acceptable It is important to anticipate and address all level of risk. The acceptance of a given potential risk drivers, including socio- instrument by stakeholders and their economic trends, natural phenomena and willingness to pay for risk management are inadequate water and water-related policies, strongly related to the degree of awareness even if they cannot necessarily be readily of the water risk the instrument seeks to quantified.