Water crisis could cost the Middle East 6% of GDP by 2025

11 December 2020 Consultancy-me.com
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Lack of adequate water management could cost the Middle East up to 6% of its GDP by 2050, according to a new Oliver Wyman report. The region is engaged in active efforts to avoid this scenario.

Oliver Wyman analysed a range of data sources – World Bank and OECD included – to understand water management practices around the world. Complementing the data were interviews with water industry experts and stakeholders, giving a rounded and current picture.

The backdrop: an imminent global water crisis that could be devastating for life and the economy. By 2050, half of the world’s population will likely be living with stressed water systems, not accounting for population growth, urbanisation, pollution and waste – all while climate disruptions are causing droughts in some parts of the world and floods in others.

Global water crisis

With its arid weather conditions, the Middle East is set to take the brunt of global water scarcity. According to Oliver Wyman, water-related challenges threaten agriculture, health and income in the region, and could add up to 6% hit to the Middle East GDP in coming decades. 

Speaking to Trade Arabia, Oliver Wyman partner and Head of its Water and Energy practices Bruno Sousa explained how the region is taking note of the crisis. “With water resources becoming increasingly scarce globally, the Middle East region is addressing the critical issues with governments increasingly adopting new strategies for balancing their scarce water resources and growing demand for fresh water.”

“This has led some countries in the Middle East to turn to options such as desalination and treatment and reuse of wastewater.” Desalination is the process of extracting minerals from salt water to produce fresh water. With low rainfall levels, the process offers up a viable and sustainable alternative water source for the Middle East.

Global water desalination capacity by power source

Indeed, Saudi Arabia is currently the largest desalination market in the world, accounting for 15% of the global desalination capacity with a daily fresh water output of 4 million cubic metres. Just last month, the Saudi government privatised water transmission infrastructure in the country, looking to future-proof this much-needed water source. 

Other markets in the region also have expansive desalination practices. The researchers point out that three of the top five cities for solar-powered desalination are based in the Middle East, displaying a clever use of available resources. Water might be scare in the region, but sunshine is in abundance.

While desalination has been the process of choice for Saudi Arabia, Israel and UAE have gone a different route – treating and reusing wastewater. In Israel, a staggering 85% of the treated sewage is reused, putting it second in the world behind only Singapore – where the proportion is 100%. The UAE is third globally, with just over half of all wastewater being reused.

Share of treated sewage effluent reused in selected markets,

Out of sheer necessity, markets in the Middle East appear to be leading the charge for global water management, with a number of treatment and conservation tactics in place. Efforts are also underway globally. UN Sustainable Development Goal number 6 (SDG 6) has to do with ensuring sustainable availability of clean water, and many countries have laid down detailed strategies to this end.

The way forward 

That being said, there is a long way to go before the worst of the water crisis is mitigated. As it stands, around $35 billion is invested every year towards meeting SDG 6 targets. According to Oliver Wyman, if the targets are actually to be met by the 2030 deadline, annual investments need reach between $75 billion and $165 billion.

Water management is complex

And this is just the financial side of things. Once the funds are in place, there are myriad institutional and technological enablers required for water management, calling for proactive collaboration between governments, experts, businesses and innovators.

After all, water management spreads across a complex web of supply, transmission networks, treatment plants, homes, industries and fields. All hands must be on deck to ensure safe, clean and abundant water resources for everyone on the planet, and for generations to come.