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Investing in water for greener economy

Access to clean water and adequate sanitation services is critical to the future of each and every household. Water is clearly fundamental to food production and providing ecosystem services and vital for industrial production and energy generation.
Finding a way to use the world's water more efficiently and making it available to all at a reasonable cost, while leaving sufficient quantities to sustain the environment, are formidable challenges. In an increasing number of regions, affordable opportunities to access more water are limited. But progress has to be made to improve efficiency use and working within scientifically established and common practice limits. Direct benefits to society can be expected to flow both from increased investment in the water supply and sanitation sector, including investment in the conservation of ecosystems critical for water.  Research shows that by investing in green sectors, including the water sector, more jobs and greater prosperity can be created. Arguably, these opportunities are strongest in areas where people still do not have access to clean water and adequate sanitation services.  Early investment in the provision of these services appears to be a precondition for progress. Once made, the rate of progress will be faster and more sustainable, thus making transition to a green economy possible.  Arrangements that encourage the increased conservation and sustainable use of ecosystem services can be expected to improve prospects for a transition to a green economy.
Ecosystem services play a critical role in the production of many goods and in many of the services needed by the world's human population but pressure on them is increasing. By investing in arrangements that protect these services and, where appropriate, enhance them there is opportunity to ensure that the greatest advantage is taken of these services. Often the most effective way forward is to invest first in the development of supply and distribution infrastructure so that pressure is taken off the systems that supply ecosystem services.  Significant opportunities for improvement include the development of arrangements that pay people who provide and do the work necessary to maintain access to ecosystem services.
Another opportunity is the formal allocation of water rights to the environment. Where water resources have been over-allocated, there are significant opportunities to fund restoration at a reasonable cost before changes become irreversible.
The costs of achieving a transition will be much less if the increased investment is accompanied by improvements in governance arrangements, the reform of water policies and the development of partnerships with the private sector.
The opportunity to improve governance arrangements is one of the biggest opportunities to speed transition to a greener economy. In any area where there is water scarcity, it is critical that governance arrangements are put in place to prevent over-use and over development of the available water resource. Building administrative regimes that are respected and trusted by local communities and industry takes time; however, this is essential in ensuring a return on the investments suggested in this chapter. These new arrangements, among others, will need to be able to facilitate the transfer of water from one sector to another.  Individual decisions about how to use resources and where to invest are influenced by policy. From a green economy perspective, there are significant opportunities to reform policies in ways that can be expected to significantly reduce the size of the investment needed to facilitate progress. Phasing out subsidies that have a perverse effect on water use and adopting freer trading arrangements, brings direct benefits to many sectors. Other opportunities, such as the establishment of tradeable water entitlement and allocation systems, bring benefits initially to the water sector.
In green economies, there is a commitment to factoring social equity into the transition to arrangements, such as full cost accounting, that influence investment and decisions by people and industry. Ultimately, the question of how fast this transition should occur depends on a case-by-case assessment of the influence of the arrangement on the expected rate of progress. 
Where capacity exists, financial transfers and tax revenues collected from other sources can be used to fund the infrastructure necessary to provide households with access to services but, when this approach slows progress, tariffs should be raised to at least cover the full costs of service provision. Preference should go to the various pricing arrangements that enable most rapid progress.

(Source: United Nations Environment Programme)