Spreading the Water Wealth: Introduction and Key Messages

Introduction and Key Messages

Meeting the basic water, food and energy needs of the world’s poorest people, and generating the economic growth needed to lift them out of poverty, can only happen if investments in water infrastructure are redirected to affordable, decentralized and environmentally sustainable technologies. Yet this approach is being largely ignored by international financial institutions and governments, and the large–dam lobby is now aggressively supporting a resurgence of investment in water mega–projects. This report argues that the needs of the poor must be put front and center in water infrastructure strategies, and rebuts the main arguments for the mega–project approach. The report’s three key messages can be summarized as follows:

1. The widespread implementation of small–scale infrastructure for delivering water and energy services is a prerequisite to achieving the Millennium Development Goals (MDGs).

Affordable technologies that can raise the yields of small farmers are essential for increasing food production, poverty alleviation, and economic growth in the poorest countries. Small farmers, most of who live on rain–fed lands, make up the great majority of the world’s extremely poor people. Raising their yields requires water management strategies such as rainwater harvesting, affordable drip irrigation and pump technologies, and farming techniques that reduce water needs while increasing yields.

Large water infrastructure can only serve geographically limited areas for reasons including cost, water availability, and topography. Small–scale technologies, by contrast, can be applied anywhere across the world’s croplands.

Reaching the MDGs by bringing 100 million small farming families out of extreme poverty through low–cost water technologies would cost approximately $20 billion over ten years – less than a tenth of developing countries’ investment in large dams from 1990–2000. The estimated economic benefit is $300–600 billion.

Low–cost community–based technologies are essential to meeting the MDG of halving the number of people without access to safe water and basic sanitation. Using small–scale technologies to meet this Goal would provide estimated benefits of $400–500 billion at a cost of $80–100 billion.

2. Poverty in developing countries is not due to low levels of water storage capacity in large reservoirs, nor to under–exploitation of their potential for large hydropower.

The World Bank has repeatedly argued in recent years that countries are poor because they have low levels of capacity to store water in large reservoirs. Yet per capita large reservoir storage capacity is by no means a reliable predictor of poverty. Zambia and Zimbabwe both have a greater per capita large reservoir capacity than the United States. Ghana has a per capita large reservoir capacity three times higher than Australia.

The ability to store water for when it is most needed is vital. And climate change is making the ability to store water even more important. However, water stored in small reservoirs, in groundwater, and in wetlands generally provides much greater economic benefits – and benefits that are much more likely to reach the poorest – than that in large reservoirs.

While countries generally get richer as they increase their use of modern energy, the trend goes the other way for dependency on hydroelectricity. Of the world’s 40 richest countries, only one is more than 90% hydro–dependent; of the world’s 40 poorest, 15 are more than 90% hydro–dependent. Numerous hydro–dependent countries have suffered drought–induced blackouts and energy rationing in recent years. Energy security means these countries should diversify power generation away from hydropower, rather than deepening their dependency. Changes in rainfall patterns due to global warming make this especially critical.

Meeting the MDGs also requires reducing the economic and health costs of energy use among the poorest. Increasing access to modern cooking fuels and expanding the use of improved cookstoves are one energy priority. Another is for a massive expansion of electricity into rural areas. It is cheapest and quickest to electrify these areas with decentralized and sustainable systems such as geothermal, small hydro, modern biomass turbines, cogeneration and wind power. Cost–effective mechanical energy for crop processing and other purposes can be provided directly by small wind or water turbines, or through biofuels or diesel motors. The decentralized nature of these technologies means that they reduce the need to build expensive transmission lines. They also create many more jobs than conventional centralized power systems.

Providing access to electricity for all urban dwellers is first and foremost a question of requiring utilities to extend connections to the areas where poor people live. Because poor people cannot afford to use much electricity, the increased demand from investments in connecting slum areas to grids will not create a huge demand for extra supply.

3. A resurgence of major "multipurpose" hydropower and water diversion projects will have unacceptable environmental and social impacts and will divert funds away from investments that would significantly reduce poverty.

The World Bank and the big–dam industry are trying to resuscitate 1950s–style multipurpose water and energy mega–projects. Yet these schemes have repeatedly failed to produce their supposed benefits. Multipurpose projects frequently cost more than estimated in feasibility studies, produce less electricity, irrigate less land, displace more people, cause more environmental damage and exacerbate rather than reduce flood damage.

Large multipurpose projects tend to be the most environmentally and socially disruptive water infrastructure projects. They flood the largest areas, displace the most people and cause the most damage to downstream ecosystems and communities.