Give water an economic value to enhance policymaking, says Arthur D. Little
While everyone recognises the immense value of water – not only for human survival but also as a driver of economic activity and national resilience – little is being done to quantify its economic value-added. A new perspective from Arthur D. Little argues that this must change, especially in water-scarce regions such as the Gulf Cooperation Council.
Water is scarce. Around the world, demand from growing populations and industries exceeds the available freshwater supply. Add to that challenges such as climate change, pollution, and poor water management – all of which reduce the amount of clean, usable water – and the case for valuing and nurturing this resource becomes clear.
In the Middle East, that reasoning holds even more weight. While the region is home to 6% of the global population, it possesses less than 1% of the world’s renewable water resources.
This imbalance means that governments, businesses, and individuals in the Middle East must make critical decisions about how water is used. Enter Arthur D. Little’s perspective, which argues exactly that – identifying numerous cases where water is, economically and holistically speaking, being spent on the wrong things.
Take an example from Jordan. There, agriculture consumes nearly 60% of the country’s water resources, yet analysis from Arthur D. Little shows that too much of this water is directed toward low-value, water-intensive crops such as alfalfa. By shifting agricultural production towards higher-value crops like cucumbers and strawberries, the same amount of water could generate significantly greater value.
“By assigning measurable value to water in this case, we found that a value-maximising shift in the crop portfolio could increase the average economic value of water nearly threefold, from JD 0.40 per cubic metre to JD 1.10,” said Nick Strange, Principal at Arthur D. Little.
Similar cases were uncovered across the Middle East, across sectors such as agriculture and manufacturing, as well as in other water-scarce regions such as South Africa.
Put a value to water
The key lesson? “Assigning measurable value to water enables leaders to make informed decisions that deliver the greatest benefit to both people and economies,” said Strange. “For Middle Eastern countries, adopting these methodologies can strengthen national resilience, foster innovation in alternative water sources such as desalination and reuse, and ensure that every cubic metre contributes to sustainable growth.”
With robust valuation in place, water management can become an integral part of national policymaking, he added. “By embedding it into decision-making, countries can align raw water tariffs with true resource costs, improve water efficiency in agriculture and industry, and prioritise conservation and infrastructure projects that deliver the highest long-term returns.”
“Embracing the economic value of water in this way can help guarantee lasting access to the freshwater needed to sustain industries, economies, and entire populations.”
A 2024 study from another consultancy found that nearly seven in ten consumers in the UAE believe that access to safe and clean water will become a pressing issue within the next five years.
