Making Water a Part of Economic Development: The Economic Benefits of Improved Water Management and Services

Report Published: November 2005

This report articulates the close link between water and the economy and makes the case that investing in water management and sanitation services is absolutely essential for the eradication of poverty and for enabling sustained economic growth. The report also brings to the forefront direct and indirect costs related to inaction, the costs of action and cost-benefit comparisons.

KEY LESSONS LEARNED

  • Improved water supply and sanitation and improved water resources management boost countries’ economic growth and contributes greatly to poverty eradication.
  • The economic benefits of improved water supply and – in particular – sanitation far outweigh the investment costs, surprisingly good news for Northern and Southern decision makers who often view investments as mere costs.
  • National economies are more resilient to rainfall variability, and economic growth is boosted when water storage capacity is improved.
  • Investing in water is good business – improved water resources management and improved water supply and sanitation contributes significantly to increased production and productivity within economic sectors.
  • The overall public and private investment needs for improved water supply and sanitation and improved water resources management are considerable. However, at the country level, meeting such investment challenges is highly feasible and within reach of most nations.

Summary

Better access to clean water, sanitation services and water management creates tremendous opportunity for the poor and is a progressive strategy for economic growth. This report articulates the close link between water and the economy and makes the case that investing in water management and services is absolutely essential for the eradication of poverty and is a necessary condition for enabling sustained economic growth.

The poor gain directly from improved access to basic water and sanitation services through improved health, averted health care costs and time saved. Good management of water resources brings more certainty and efficiency in productivity across economic sectors and contributes to the health of the ecosystem.

Taken together, these interventions lead to immediate and long-term economic, social, and environmental benefits that make a difference to lives of billions of people.

This report was commissioned by the Governments of Norway and Sweden and prepared by the Stockholm International Water Institute in collaboration with the World Health Organization and the Norwegian Agency for Development Cooperation.