While it is intuitively clear that economic growth is related to water security – understood here as both water availability and also exposure to water-related risks such as drought and floods – there has been very little empirical evidence of this relationship to date.

A new report prepared by a task force under the Global Water Partnership and the Organization for Economic Cooperation and Development begins to address this problem by plotting global datasets of national economic growth against indicators of water security. The results confirm the intuition that the two factors are closely linked.

Based on the analysis by Claudia Sadoff et al., one can determine which countries would benefit most from fewer droughts in terms of the impact on their economic growth rate. In Malawi, for example, a 50 percent reduction in the so-called “drought effect” led to a 20 percent higher per capita GDP at the end of the simulation. In the case of Brazil, the reduced drought effect led to GDP per capita that was seven percent higher.

Climate Change: More Than Hotter Temperatures

A unique aspect of the research undertaken in Securing Water, Sustaining Growth is the implication for climate change research: water and water-related hazards have a statistically significant effect on economic growth, one that historically has been at least as important as, and likely more important than, temperature effects.

In estimating the economic impacts of climate change, many studies focus on how changes in temperature, and sometimes precipitation, will affect economic activity. What is new here is that runoff is included as an indicator, as well as specific flood and drought indicators, to measure water security, not just precipitation and temperature.

For the complete article, please see the New Security Beat.