Water scarcity could cost countries, Countries facing water scarcity may see their GDPs decline by as much as 10%, according to a recent World Bank report.
The good news? Seventy-five countries-including South Africa-would need to invest just 2% of their GDP to achieve sustainable water management. The economic benefits far outweigh the capital costs. Every dollar invested in water access and sanitation yields an average return of six times that amount. Without better water management policies, the World Bank warns that regional GDP losses could reach 2-10% by 2050.
South Africa’s Water Crisis
South Africa’s water crisis gained global attention during Cape Town’s near “Day Zero” event in 2018. Despite the severe risks and increased capital expenses, addressing the crisis could cost less than 2% of South Africa’s GDP by 2030. More than half of these costs would go toward providing drinking water and sanitation, while addressing scarcity accounts for about 20% of the total.
Professor Charlotte du Toit, CEO of economic modeling at the Bureau of Market Research at Unisa, stated that any 1% decrease in water quality and usability in South Africa could result in:
- The loss of 200,000 jobs
- A 5.7% drop in disposable income per capita
- A 5% increase (R18.1 billion) in government spending
Additional macroeconomic effects include:
- A 28% rise in the government debt-to-GDP ratio
- A R16 billion drop in household spending
- A 1% decrease in GDP growth rate
- A R9 billion (2.5%) drop in total fixed investment
“A decrease in water quality will have negative effects across individual economic sectors. Among our findings are that growth in the electricity, gas, and water sector will decrease by 2 percentage points, and as many as 14,000 jobs may be lost in the financial services sector,” Professor du Toit said.
Sectors at Risk
The following sectors face significant declines in output due to water scarcity:
- Agriculture
- Mining
- Manufacturing
- Power
- Tourism
- Financial services
- Transport and communication
- Community and social services
The Solution
We believe there’s an urgent need to supplement current water resources from alternative sources, most notably seawater desalination
Speak to our talented and passionate team about all your water needs. We can help you build a sustainable business and maintain impeccable service delivery.
