TULSA, Oklahoma — The Global Commission on the Economics of Water began its journey in May 2022 in Davos at a World Economic Forum meeting. The commission aims to address issues relating to water scarcity through a variety of methods including a mix of public and private sector collaborations as well as setting a global price for the cost of water. Reuters reports that the commission will “study the value of the world’s water” and “offer advice on water management worldwide.”
What is Global Water Pricing?
Johan Rockstrom, one of the co-chairs of The Global Commission on the Economics of Water, argues that “For centuries we’ve been able to consider freshwater a free resource” and that this has led to our mishandling of freshwater in the modern era, Reuters reports. A global price for freshwater could enable governments to regulate irresponsible or wasteful corporate or private practices.
Placing a price tag on excessive water use could potentially regulate irresponsible usage while simultaneously funding solutions. This strategy also has a history of implementation, with the existence of carbon markets that function along similar ethics, where a price is attributed to corporate pollution. Also, water markets have long been established “in Australia’s Murray–Darling Basin, where authorities operate a cap-and-trade system” as well as “in a handful of irrigation districts in western U.S. states,” TIME reports.
Costs of Inaction
While a global water price may seem costly to businesses that are reliant on excessive uses of water, a 2016 World Bank report claims that “Water scarcity could cost some countries up to 6% of their annual gross domestic product by 2050,” Reuters reports.
Inaction on global water scarcity could also perpetuate food crises. At the Davos press conference, Rockstrom claimed, “Food crisis is really at the center of our discussions… When India has to close its borders’ exports of wheat when we see the food crisis in Kenya …these are water-scarcity and heat-related impacts.” Evidently, enormous costs exist in association with either ignoring or addressing water scarcity.
The Role of Private and Public Sectors
At the same press conference, co-chair and professor, Mariana Mazzucato claimed that to achieve the aims of the Global Commission on the Economics of Water, we must have an intersectoral view of water and the role of government. Mazzucato clarifies that inaction could not only affect many industries but also call upon assistance, such as the construction and nutrition industries.
Mazzucato also claims that the role of government must be seen as a “market co-creator and as a market-shaper in this system”, delineating a difference between “market-fixing” and “market-shaping.” She also explains that the goals of such a project will require “…huge amounts of collaboration, huge amounts of co-investment and finance.”
Aside from global water pricing and private sector solutions, other strategies considered by The Global Commission on the Economics of Water include “economic incentives to protect a healthy water cycle” such as “offering a country like Brazil payments if it protects the Amazon rainforest, whose trees generate large amounts of South America’s rainfall through evapotranspiration,” according to TIME. Another example of these economic incentives includes “paying landowners who protect forests that help trigger rainfall.”
The Global Commission on the Economics of Water plans to release its first report at the 2023 U.N. Water Conference and to “inform the launch of a “Pact for Voluntary Commitments.” This is especially significant, as co-chair Tharman Shanmugaratnam relays, “It’s the first U.N. water conference in 46 years.” This two-year project will aim to “deliver an action agenda to spur change globally, among governments, local authorities, industry, finance, multilateral institutions and non-state actors,” according to the press release.
– Braden Hampton