Water crisis could devastate lower-income economies with GDP losses up to 15% by 2050

The global water crisis is accelerating at an alarming rate, and by 2050, low-income nations may face devastating financial consequences, with GDP losses projected to reach as high as 15%.

This stark figure, nearly double the global average GDP loss of 8%, was highlighted in a new report released on October 16, 2024, by the Global Commission on the Economics of Water.

The report points to a combination of poor economic policies, unsustainable land use, and persistent mismanagement of water resources—further exacerbated by climate change—as key drivers of the crisis.

For the first time in human history, industrial and agricultural activities are significantly disrupting the natural water cycle.

This imbalance, according to the Commission, threatens both human welfare and global economic stability.

The report calls for an overhaul of current water management systems, advocating for a new economic approach to water governance.

It emphasizes that water should be treated as a global common good, rather than a privately owned resource.

“The new economics of water must recognize that the global water cycle needs collective management, where action across borders and cultures is necessary to fix the problem,” said Henk Ovink, Executive Director of the Global Commission on the Economics of Water.

Water's Essential Role in Human Life

The Commission also outlined the critical role water plays in sustaining human life, suggesting that 4,000 liters per person per day is needed for a dignified life—far more than the 50 to 100 liters typically required for basic health and hygiene.

As water becomes scarcer, global food security and overall human development are increasingly at risk.

Despite these grim prospects, the report sees the crisis as an opportunity to reshape how the world values and manages water resources.

The Commission differentiates between ‘green water,’ which is stored in soils and plants, and ‘blue water,’ found in surface and groundwater supplies. It stresses that green water is crucial for generating rainfall, mitigating climate change, and ensuring economic stability.

Addressing these challenges requires a major shift in global water governance, urging governments and organizations worldwide to take collective action to protect and restore green water resources.

A Five-Mission Plan

The Commission proposes a five-point strategy to tackle the crisis. These missions include transforming food production systems, protecting natural ecosystems, developing a circular water economy, fostering innovation, and ensuring access to clean water for all.

One of the key goals under the food systems mission is to enhance water efficiency in agriculture by reducing water usage by a third while simultaneously increasing crop yields. Additionally, the report suggests shifting 50% of global cropland to regenerative agricultural practices by 2050, up from the current 15%.

Restoring 30% of degraded forests and inland water systems is also a critical target, as this would help regenerate green water flows and improve soil moisture retention. The Commission underlined the importance of green water conservation, particularly given the growing risks posed by climate change.

“Reliable green water supplies are integral to consistent rainfall patterns, which are essential for economies and livelihoods. Green water also plays a key role in carbon sequestration, helping mitigate climate change,” the report noted.

A Circular Water Economy

As urban populations continue to grow and water resources become more strained, one of the report’s missions emphasizes the importance of a circular water economy. It estimates that around 8% of the world’s freshwater could be recovered annually through wastewater recycling.

Global Water Pact for the Future

In order to ensure a just and sustainable future for water resources, the Commission calls for the establishment of a Global Water Pact. This global governance initiative would focus on securing innovative funding mechanisms, such as "Just Water Partnerships," and improving the global water data infrastructure to support coordinated, mission-driven efforts.

“We need to rethink water governance, considering its links to climate change and biodiversity, and employ every economic tool available to us,” said Tharman Shanmugaratnam, President of Singapore and Co-chair of the Commission.

With the world falling behind on achieving the United Nations’ Sustainable Development Goals (SDGs), the report warns that water scarcity now threatens nearly all of these global objectives. Immediate, concerted action is needed to prevent further damage to both human populations and the natural world.