Water: necessary for life and forgotten for investment
By Oscar Tejada
After a few weeks of heavy rains practically without interruption that have affected the entire Iberian Peninsula, we should reflect on how to manage a good of such importance for life on the planet as water. Let us remember that the United Nations defines water as a human right that must be sufficient, safe, acceptable, affordable and accessible. In a world where extreme weather events (droughts, fires or floods) are occurring with increasing frequency, causing major disruptions to water resources, water cycle management should become a priority for all nations. This is even more important in emerging countries, since various organizations such as the World Bank and the United Nations have concluded that the impact of extreme weather events in emerging countries is between 10 and 30 times greater than in developed countries.
Returning to the situation created by the torrential rains of the last few weeks, many millions of people in the world could qualify it as ridiculous (floods in some regions and drought in others), since in 2025 more than 25% of the world’s population will not have daily access to running water, i.e. more than two billion people will not have a tap in their homes, and worse still, more than 40% of the population will not have access to basic sanitation services (a bathroom). Moreover, this problem is being aggravated by a double factor common to emerging countries: on the one hand, demographic growth is taking place, and on the other, the population is moving from the countryside to large cities, which are not prepared to provide minimum services to the population due to their limited capacity to invest in basic infrastructures.
In order to solve water-related problems, especially in emerging countries, it would be essential to develop the necessary infrastructure for water storage, distribution, recovery and treatment, and to achieve this, investments exceeding one trillion dollars per year would be necessary until 2030, when it is estimated that the basic needs of the population would be met. To be more specific, according to the OECD, the World Bank and the United Nations, in order to address all water challenges, minimum investments in the amount of $6.9 trillion would be necessary until 2030 to ensure that the infrastructure developed is compatible with the goals of the Paris agreement and the UN SDGs. The main obstacle to achieving the target is the lack of investment capacity, with less than one-third of the minimum investment required currently being made.
The picture is further complicated for the most vulnerable regions by the fact that in addition to their own needs, developed countries urgently need to modernize their own water infrastructure. The common feature in the United States and Europe is that they have very old water infrastructure, which has been underinvested and poorly maintained in recent decades, but the situation is beginning to change and many governments are starting to include among their priorities the renewal of existing infrastructure. A representative sample of this need for modernization is that between 25% and 30% of the volume of water managed in developed countries disappears throughout the various phases of the cycle, from the initial accumulation to the end user, a consequence among other things of the degradation of some materials and the obsolescence of others such as pipes or valves. The reality of the sector makes even more striking the fact that the water infrastructure sector receives less than 1% of the total investments related to climate resilience, being even more remarkable the data revealed by the World Bank, and is that since 2009 and until 2020, of the amount budgeted by developed governments for water-related projects, 28% of the total was not executed.
The direct consequence of this need to renovate infrastructure in developed countries is that they will compete for the capital available in the market (limited resource) for financing similar projects, but with the advantage of an economic and regulatory environment that provides greater security to the investor. This is why all those investors who are not only looking for an economic return on their capital, but who are committed to helping create a future opportunity for people living in particularly disadvantaged regions, should participate in these projects.
But what is more important, and why infrastructure investments in emerging countries should be highlighted, is that infrastructure investment projects related to water and sanitation generate an average return of four euros for each euro invested, without taking into account the environmental and social benefits they produce. The health of the population is significantly improved (children who do not have access to running water suffer 37% more diarrheal infections), productivity is increased, an educational and gender equality opportunity is created (many girls do not go to school to walk for hours a day to carry water to their homes), employment and quality of life in the community are improved. In addition, from another economic perspective, it would also significantly reduce the annual losses that are estimated to be between 3 and 6 billion dollars as a result of direct health expenses and income that are not generated by the lack of quality water.