Growing competition for scarce water resources is a growing business risk, a major economic threat, and a challenge for the sustainability of communities and the ecosystems upon which they rely. It is an issue that has serious implications for the stability of countries in which businesses operate, and for industries whose value chains are exposed to water scarcity.

Charting our water future: Economic frameworks to inform decision-making shows that while meeting competing demands for water will be a considerable challenge, it is entirely possible to close the growing gap between water supply and demand. This report provides greater clarity on the scale of the water challenge and how it can be met in an affordable and sustainable manner.

The report offers case studies from four countries with drastically different water issues, which will collectively account for 40 percent of the world’s population, 30 percent of global GDP and 42 percent of projected water demand in 2030: China, India, South Africa and Brazil. The report’s methodology identifies supply- and demand-side measures that could constitute a more cost effective approach to closing the water gap and achieve savings in each country.

EXECUTIVE SUMMARY
1. Shining a light on water resource economics
2. Managing our way to scarcity: The challenge ahead
3. Toward solutions: An integrated economic approach to water resource management
4. Putting solutions into practice: New dialogue among stakeholders
5. Unlocking water sector transformation

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PREFACE
The world is increasingly turning its attention to the issue of water scarcity. Many countries face water scarcity as a fundamental challenge to their economic and social development; by 2030 over a third of the world population will be living in river basins that will have to cope with significant water stress, including many of the countries and regions that drive global economic growth.

Across the globe, policy makers, civil society and the business sector are increasingly becoming aware of the challenge facing global water resources, and the need to carefully manage these resources. Progress has been limited, however, and overall too slow. One missing piece has been the lack of a rigorous analytical framework to facilitate decision-making and investment into the sector, particularly on measures of efficiency and water productivity.

The report Charting Our Water Future was developed to take a first step in providing greater clarity on the scale, costs and tradeoffs of solutions to water scarcity. It is the result of a year-long collaboration involving IFC (a member of the World Bank Group), McKinsey & Company, The Coca-Cola Company, Barilla, New Holland Agriculture, Nestlé, SABMiller plc, Standard Chartered Bank and Syngenta AG, and has relied on the input of over 300 specialists and public sector practitioners as well as the consistent guidance of a group of expert advisors.

We hope this is a useful contribution that can advance solutions and elevate the debate for what is an issue of critical importance to all.

CONTENTS
Foreword iv
Preface vii
Executive Summary 2
1. Shining a light on water resource economics 4
2. Managing our way to scarcity: The challenge ahead 5
3. Toward solutions: An integrated economic approach to water resource management
4. Putting solutions into practice: New dialogue among stakeholders 14
5. Unlocking water sector transformation 20
Introduction 22
Chapter 1 // Shining a light on water resource economics 28
Water resource availability: Defining the challenge 30
The murky economics of water resources 34
Creating clarity, unlocking solutions 35
New economic tools for water resources 37
Chapter 2 // Managing our way to scarcity: The challenge ahead 38
Projected water requirements vs. existing water supply: Sizing a future gap 40
“Business as usual” approaches will not mobilize the required investments 46
The impacts of global trends at the local level 49
Chapter 3 // Toward solutions: An integrated economic approach to 66
water resource management
Approaches to close the supply-demand gap 68
The water cost curve: A decision tool for closing the gap between projected demand and existing supply
The cost curve in action: Toward solutions in the case study countries 73
Chapter 4 // Putting solutions into practice: New dialogue among stakeholders 86
Building scenarios to model the impact of economic choices on water demand 88
Tools for policymakers 92
Pathways for the private sector 101
The role of civil society 114
Chapter 5 // Unlocking water sector transformation 116
An integrated agenda for water sector transformation 118
Describing the end state: A fact-based approach 119
Market design and economic intervention 120
Institutional transformation 122
Mobilizing the private sector 122
Glossary and Abbreviations 126

About The 2030 Water Resources Group
The 2030 Water Resources Group was formed in 2008 to contribute new insights to the increasingly critical issue of water resource scarcity. The group aimed to create an integrated fact base on the potential technical levers and costs for reducing water scarcity, with the ultimate goal of advancing solutions-driven dialogue among stakeholders.

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