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Despite global investment, access to drinking water on decline

: Despite a concentrated international effort, significant investment and widespread educational campaigns, access to safe drinking water appears to be in decline.

The percentage of the world population with access to safe drinking water rose by 11.1 per cent between 1970 and 1975 but grew by only 2.4 per cent between 2000 and 2006, a study commissioned by HaloSource, Inc, the US-based global clean water and antimicrobial technology company, said.

Access to safe drinking water could start to decline as early as 2010. Within the next half-century, access to safe drinking water may fall below the level of 1977, when the international community launched its first attempt to increase access to safe drinking water.

The lack of access to safe drinking water is likely to impinge upon economic growth by 2050, if not earlier. The emerging economies are expected to be the first to suffer from a decline in access to safe drinking water, the study titled 'Access to safe drinking water and its impact on global economic growth', undertaken in 2009 for HaloSource by Josephine Fogden with the assistance of Geoffrey Wood, Professor of Economics, the Cass Business School, London, stated.

Because the emerging economies are an important engine for world economic growth, the impact on those economies’ performance is likely to have wider implications for the global economy.

Industry, governments and supranational agencies have an important role to play in conserving and increasing the supply of potential safe drinking water.

Water purification at the point of use is expected to make a major contribution in increasing access to safe drinking water around the world.

How is growth expected to be affected?

The emerging markets

The emerging markets are likely to be the first economies to suffer from a fall in access to safe drinking water. These economies include the BRIC economies of Brazil, Russia, India and China, which analysts have predicted will become the largest economies by 2050.

Case studies of China and India demonstrate how a lack of access to safe drinking water might prevent the emerging economies from sustaining the record growth rates predicted by analysts.

Instead of high growth and prosperity, these regions may see:

- Rising labor costs fueled by a rise in drinking water prices.

- Lower productivity; the higher incidence of disease may lower productivity in the short run and undermine expenditures on education in the long run.

- Greater investment risk; a lack of safe drinking water could ignite ethnic and regional tensions.

Furthermore, the evidence suggests that the worst-affected regions could be the most economically active areas of the emerging markets, such as Northern China and Tirupur, the Indian “Knitwear capital.”

The developed world

The focus of our world economy is already shifting toward the emerging nations.

According to Goldman Sachs, the BRIC economies contributed to 30 per cent of global growth in the last five years. Yet their economies are by no means isolated.

Since predictions of their future growth were first suggested, the BRIC economies have received a flood of investments from the developed world, and today they are the destination for over 15 per cent of the world’s foreign direct investment.

Furthermore, their share of global trade has doubled since 2001 to 15 per cent. Not only are the economies of the developed world therefore heavily invested in the emerging markets, but the domestic industries of those nations also rely heavily on their expanding import/export markets.

A case study of California demonstrates how the impact of the decline in access to safe drinking water in the developed world could be compounded by the decline of the emerging economies. Growth in the developed world may therefore also suffer from:

The loss of export markets in the emerging and developing world.

Decline in travel and tourism.

Rising labor costs in agriculture and industry.

Lower productivity due to an increased health burden.

The developing world

The evidence suggests that the economies of the developing world will be the last to suffer from a lack of access to safe drinking water.

However, they continue to depend on the developed world and increasingly rely on the emerging economies for aid and assistance in increasing access to safe drinking water and attaining other development goals, which foster economic growth.

A growth crisis in the developed and emerging economies could therefore reduce access to safe drinking water and cause growth to slow much sooner than expected.

For example, Uganda, whose drinking water sector is the subject of a case study, would be expected to suffer from:

Loss of export markets in the emerging and developed world.

Lower productivity.

Rising labor costs.

Economic growth seems to be dependent on high levels of access to safe drinking water.

Access to safe drinking water is already beginning to decline in the emerging markets due to growing demand for supplies of an increasingly scarce resource.

Furthermore, the quality of drinking water is in decline in many parts of the world, and increasing socioeconomic barriers, such as rising water prices, mean that fewer people have access to safe drinking water.

This decline in access to safe drinking water is expected to result in:

A higher disease burden

Lower education levels

Lower worker productivity

Higher labor costs

Slower economic growth

Research suggests that the economies of the fastest-growing regions in the world, such as Northern China and other emerging markets, are likely to be the first to suffer as a result of a fall in access to safe drinking water. Globalization and interdependence among the world’s economies mean that a growth crisis in one such region could have a subsequent effect on the developed world.

Possible measures to avert the crisis include increasing the investment in the conservation and supply of safe drinking water throughout the world and improving the management of these resources through greater cooperation on international and local levels.

In summary, failing to prevent a fall in access to safe drinking water in economically productive areas on which the developed world is becoming increasingly dependent, such as Northern China and the other emerging economies, has the potential to have a significant impact on the outlook for economic growth worldwide.

(Image & study source: HaloSource)

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