Growth is a thirsty business

20th May 2016 By: Terence Creamer - Creamer Media Editor

Growth is a thirsty business

There are many issues currently confronting South Africa. However, two of the biggest are, undoubtedly, the effects of the worst drought in decades and the country’s weak growth performance. Both are deepening the so-called triple scourge of poverty, unemployment and inequality.

A newly released World Bank report shows just how intertwined these two issues are. It goes so far as to warn that some regions of the world, including parts of Africa, could see their growth rates decline by as much as 6% by 2050 as a result of water-related losses, with water scarcity also expected to be exacerbated by the effects of climate change.

Titled ‘High and Dry: Climate Change, Water and the Economy’, the report says the combined effects of growing populations, rising incomes, and expanding cities will see demand for water rising exponentially, while supply becomes more erratic and uncertain.

“Economic growth is a surprisingly thirsty business,” the authors warn, cautioning that diminishing water supplies can translate into slower growth. “Some regions could see their growth rates decline by as much as 6% of gross domestic product by 2050 as a result of water- related losses in agriculture, health, income, and property – sending them into sustained negative growth.”

A separate International Monetary Fund (IMF) report focusing on sub-Saharan Africa’s 2016 growth prospects indicates that the drought currently affecting southern and eastern Africa will potentially threaten food security for about 40-million to 50-million people.

“The drought, linked to the ongoing El Niño pattern, is affecting countries through two channels: reducing agricultural output and, in some cases, hampering hydroelectric power generation. As a result, growth is projected to slow sharply in Ethiopia, Malawi and Zambia, and food inflation is accelerating almost everywhere in the subregion,” the IMF outlines.

In its longer-term assessment, the World Bank notes that, by 2050, the number of urban dwellers is projected to grow by 2.5-billion people, with nearly 90% of the increase in Asia and Africa. “Without adequate urban planning, regulation and development capacity, cities often expand through informal settlement into flood-prone areas, where dwellers are deprived of municipal water, sanitation, and flood protection.”

Unless action is taken soon, water will become scarce in regions where it is currently abundant, such as Central Africa and East Asia. In addition, scarcity will worsen in regions where water is already in short supply, such as the Middle East and the Sahel, in Africa.

Three overarching policy priorities are outlined in the report, including the optimisation of water use through better planning and incentives; expanding water supply and availability; and reducing the impact of extremes, variability and uncertainty.

“The future will be thirsty and uncertain,” the report states, stressing, however, that, with the right reforms, governments can help ensure that people and ecosystems are not left vulnerable to the consequences of a world subject to more severe water- related shocks and adverse rainfall trends.

The question for South Africa is whether it is indeed pursuing such policies and interventions.