Water crisis: private sector solutions for closing the resource gap

Updated - Wednesday 20 January 2010

The growing “water gap”, in which global water demand will be 40 per cent more than supply by 2030, can be closed by a combination of demand-side and supply-side measures, says a new report from the 2030 Water Resources Group [1]. Such a balanced approach would cost US$ 50-60 billion ( € 35-42 billion) a year, compared to US$ 200 billion (€ 140 billion) if only traditional supply-side measures like desalination were used.

The report presents case studies from four countries, each facing different water issues:

China – water pollution and increasing agricultural and industrial demand
India – increasing agricultural demand
South Africa – increasing household and industrial demand
Brazil, Sao Paulo state – water pollution, resulting from inadequate sanitation

For each of these regional water challenges the report identifies the most cost-effective solution using a “water-marginal cost curve”.

Some experts claim, however, that some of the proposed agricultural solutions like drip irrigation and water conservation subsidies often do not reduce water use. Others are critical of the report’s failure to address the controversial role of the bottled water industry.

The 2030 Water Resources Group includes McKinsey, International Finance Corporation (IFC) and several large businesses including Coca-Cola and Nestlé.

[1] Addams, L. ... [et al.] (2009). Charting our water future : economic frameworks to inform decision-making. 2030 Water Resources Group, McKinsey & Company. ix, 185 p. Download full report

Related news:

Water shortages: political upheaval and economic stagnation loom, UN report warns, Source Weekly, 06 May 2009
Water crisis: world heads for ‘water bankruptcy’ warns World Economic Forum report, Source Weekly, 18 Feb 2009

Related web site: McKinsey & Company - Climate Change Special Initiative - Water

Contact: 2030WaterResourcesGroup@mckinsey.com

Source: IFC, 23 Nov 2009 ; Matthew Berger, IPS, 23 Nov 2009 ; Andrea Hart, Circle of Blue, 02 Dec 2009