International UN-Water Conference. Water in the Green Economy in Practice: Towards Rio+20. 3-5 October 2011

The Green Economy and... Gérard Bonnis

Gérard Bonnis"If we do not act now, more than 40% of the world population will live in river basins subject to severe water stress by 2050, according to our projections."

Gérard Bonnis
Senior Policy Analyst, Environment Directorate of the Organisation for Economic Co-operation and Development (OECD)

Why is 'water in the green economy' an important theme for the OECD?
Last year, a green growth strategy was adopted by the governing body of OECD, which is formed by the finance and economy ministers of the 34 OECD countries. Green growth means fostering economic growth and development while ensuring that natural assets continue to provide the resources and ecosystem services on which our well-being relies. It must catalyse investment and innovation which will underpin sustained growth and give rise to new economic opportunities. What it means for water? The lack of sufficient quantities of adequate quality water can significantly hinder growth. At the same time, water can be an engine for growth: improved water management can generate huge benefits for health, agriculture, and industrial production. It can better protect ecosystems and the watershed services they provide, which can deliver cost savings, for instance, in terms of flood management, drought mitigation, or reducing water treatment requirements.

What are your expectations for the conference in Zaragoza?
I will come to Zaragoza with representatives from Australia, Israel and South Africa. The first two countries are OECD members. Since 2007 the OECD has been strengthening co-operation with South Africa through a process of enhanced engagement. In Zaragoza I expect these three countries to tell us about policy approaches to drive water security as an engine for growth. For example implement water trading with a view to allocate water to the highest economic use (we should get interesting insights from Australia's experience with the Murray Darling basin); spend public money to expand infrastructure in areas in need (South Africa sees a lot of gains from inter-catchment transfers); and/or reduce demand through water pricing (last year tariffs in the domestic sector were raised by 40% in Israel, partly to recover the cost of the recently built large-scale seawater desalination facilities).

Which change should be brought about to realize a green economy?
The most essential change would be generating political leadership and political will. In particular, we need to have a strong agreement between the environment and finance ministries. This could foster political leadership and make a difference within countries. Every country requires a specific approach; there is no one-size-fits all strategy when it comes to green growth.

What are the most persistent barriers in this process?
Harnessing water for greener growth requires a shift in policy emphasis. Efficiency gains remain essential, but more attention should be paid to securing access and allocation issues. Efficiency gains remain crucial. They can be promoted through standards or economic instruments. Well-designed water tariffs promote efficient use of water; they can promote environmental sustainability, social fairness and financial sustainability as well; under-pricing water creates a drag on growth and imposes environmental costs. Reliability of the resource is essential for green growth strategies. This requires investing in storage capacities, including ecosystems (such as wetlands and floodplains) and environment-friendly engineered reservoirs. This also requires tapping alternative sources of water (e.g. reusing treated wastewater for non potable uses). From a green growth perspective, water should be allocated where it adds most value. This may trigger reallocation between water users (e.g. between farmers and cities), a difficult policy challenge.

Which economic incentives can contribute to the green economy?
Economic instruments in managing water yield a number of benefits. They can i) avoid costly investments and make the case for low-cost, non technical measures (e.g. ecosystem services to secure water or protect against floods), ii) generate revenues to fund water management functions and water-related infrastructures, iii) align incentives and strengthen policy coherence across the board (water, energy, food, land use), and iv) provide information on the costs of status quo, the benefits of reform, and the distribution of these costs and benefits. Green growth also calls for a reform of water-harmful subsidies, such as energy subsidies for pumping water, under-pricing of water, or production-based agricultural subsidies, and fisheries subsidies. This can save public money, spur innovation, and help allocate water where it adds more value.

What message would you like to deliver for the Rio+20 conference?
Lack of sufficient quantities or adequate quality water is a constraint on growth. If we do not act now, more than 40% of the world population will live in river basins subject to severe water stress by 2050, according to our projections. If we do not act now, in the absence of new policy approaches to drive water security, the value of water is going to increase, reflecting increasing water scarcity, measuring the strength of competing demands for the available supply.