WATERScarcity, Excess, and theGeopolitics of Allocation

Globalization TrendLab 2016

Globalization TrendLab 2016

WATERScarcity, Excess, and theGeopolitics of Allocation

Based on a conference organized by the Joseph H. Lauder Institute of Management & International Studies at the University of Pennsylvania,

sponsored by Santander Universities, and distributed worldwidethrough the Knowledge@Wharton network.

© 2016 The Trustees of the University of Pennsylvania. All rights reserved.

Water | 1

Water is an essential resource whose use is increasingly coming under scrutiny as acute and chronicshortages proliferate around the world. Population growth, the rise of the global middle class, andurbanization are putting stress on existing water resources. Water security and geopolitical stability

are contingent on the effective resolution of both the global and the local tensions affecting the efficient andequitable use of this resource.

Water is normally considered to be a renewable resource, but its quality and distribution around the worldare the subject of innumerable debates, frictions, and conflicts. Most natural disasters, as many as 90 percent,are water related. Major refugee crises have erupted as a result of droughts or conflicts over water. TheOECD has estimated that by the year 2030 almost four billion people—nearly half of the world’s predictedpopulation—will live in areas with serious water shortages, mostly in Africa, Australia, East Asia, South Asia,and the Middle East.

Nearly 700 million people lack access to clean drinking water, and about 2.8 billion face water scarcityduring at least one month a year. The scarcity problem can be driven by physical/environmental oreconomic factors. Some parts of the world lack enough water to support present and future populationlevels, while in other areas, water scarcity is due to economic reasons such as lack of infrastructure ormismanagement of resources. Water pollution further limits supplies.

More than two-thirds of worldwide human-related water consumption is for agricultural purposes, whileindustrial usage accounts for 20 percent and households for the remaining 10 percent. Sustainability inagriculture thus poses the greatest challenge, and it involves not just the efficient use of water but also thejudicious use of soil, fertilizers, and other inputs. New irrigation techniques, genetically modified water-efficient crops, wastewater reuse, and to some extent desalination may increase water efficiency whilereducing soil pollution, but may never become the fix to our growing water needs, especially in inland areas.More importantly, behavioral change, especially in terms of dietary preferences (e.g., meat consumption),could make a big difference in terms of reducing water-to-calorie ratios.

Water is also essential for almost every source of energy. According to the United Nations, about 90 percentof all electric power generation is water-intensive. Water is needed to extract, wash, and sort raw materialsand fossil fuels; cool thermal power plants; cultivate biofuels; and power hydroelectric turbines. The risksaffecting the water-energy connection are manifold. Pollution of aquifers needed for human consumption or agricultural use due to mining or fracking operations is on the rise. Anthropogenically-driven climatechange will be a disruptive force, changing precipitation and evaporation rates on land, and more generallychanging the systemic interconnections among land, oceans, and the atmosphere. Policymaking andplanning needs to take into consideration the constraints and the risks inherent to increasing demand forboth water and energy.

Water issues also figure prominently on the global development agenda. According to the 2015 Update of the joint UNICEF and World Health Organization report, 9 percent of the world’s population lacks access to an improved drinking water source. The Sustainable Development Goal for the year 2030 is to “achieveuniversal and equitable access to safe and affordable drinking water for all.”

Executive Summary

2 | Water

A variety of technologies—from desalination to waste water reuse, and from information-driveninnovations to new market-based mechanisms—have the potential of improving efficiency and makingavailable new sources of water and opportunities. An especially important challenge is the diffusion ofknowledge and best practices around the world, especially in least developed countries.

The geopolitics of water has also emerged as a new field of study and concern. The Middle East, the Nile, theColorado River Basin, and the Tibetan Plateau are among the hotspots of geopolitical conflict over water.Sharing the world’s water wealth will require not only better management, infrastructure, and technologybut also delicate diplomacy, especially given the potential effects of climate change on the world’s hydrology.

Novel technology; new, better-managed, and lower-impact infrastructure; innovative market solutions;effective governance and institutional mechanisms; and education and behavioral change all must play a role in ensuring water sustainability over the long run. ■

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Introduction—The Worth of Water

When the well is dry, we learn the worth ofwater,” said Benjamin Franklin. We takewater for granted as essential to our way

of life. Water may be a renewable resource, but itsquality and distribution around the world are thesubject of innumerable debates, frictions, andconflicts. The changing geographical distributionof population growth, the process of urbanization,and the growth of the middle class of consumerswill fundamentally reshape the economics andpolitics of water, according to Lance Donny,Founder and CEO of OnFarm, a provider of farmmanagement data systems. Growing demand forfood, which requires huge amounts of water, willbe met in the future not so much by expanding theland used for cultivation but by productivityincreases. As Charles Vörösmarty, a professor andwater expert at the City University of New York,puts it, water is “the great integrator” that brings allof the great issues of our time together: economiccrises, poverty, sustainability, infrastructure, andthe role of the state.

Water and water management lie at the root oflarge-scale human civilization, especially in thewake of the agricultural and industrial revolutions.

Every major civilization, from Ancient Egypt andMesopotamia to the Indus Valley, Ancient China,and Ancient Rome developed water-managementinfrastructure and technologies to feed and sustainlarge concentrations of population. At the same time,most natural disasters, perhaps as much as 90percent, are water related (United Nations University2013). Major refugee crises have erupted as a resultof droughts or conflicts over water, as in Somalia in2011 or Sudan and Mali, both in 2012. In its 2011report, Towards Green Growth, the OECD estimatedthat by the year 2030 almost four billion people —nearly half of the world’s predicted population — will live in areas with serious water shortages, mostly in East Asia, South Asia, and the Middle East.

More than two-thirds of the earth’s surface iscovered with water, but 97.5% of that water is saltor brackish, and unsuitable for sustaining life.Linking suitable water sources to humanpopulations remains an enormous challenge. Theplanet contains about 35 million cubic kilometersof freshwater, or 2.5 percent of the total volume ofwater. Most of that freshwater, perhaps as much as70 percent, is also beyond the easy reach of humanpopulations—frozen water in ice sheets, glaciers,

Rengarajan Ramesh, Terry Anderson, Miriam Balaban and Charles J. Vörösmarty

4 | Water

permafrost, and permanent snow cover. About 30percent is groundwater, and less than 1 percent isin rivers, lakes, wetlands, and other reservoirs.Around 1.2 billion people lack access to cleandrinking water, and about 2.8 billion face waterscarcity during at least one month a year. Thescarcity problem can be driven by physical oreconomic reasons. Some parts of the world justlack enough water to support present and futurepopulation levels, while in other areas, especiallySub Saharan Africa and parts of South Asia, waterscarcity is due to lack of infrastructure,mismanagement of resources, or other economicfactors. In some of these regions, women andchildren spend up to five hours per day procuringwater for their families during droughts.

Roughly 70 percent of worldwide human-relatedwater consumption is for agricultural purposes.Industrial usage accounts for 20 percent, leavingthe remaining 10 percent for households.Sustainability in agriculture thus poses the greatestchallenge for water management, and it involvesnot just the efficient use of water but also thejudicious use of soil, fertilizers, and other inputs.Since only 11 percent of Earth’s surface is suitable

for agricultural use, and the indiscriminate use offertilizers, erosion, and global warming mightfurther reduce it, wise agricultural management isimportant not only for the present but also for thefuture. Consumers, governments, NGOs and theagricultural community itself need to continueencouraging long-term planning. Subsidized waterprices for agricultural use, which in some casesdiscourage conservation, pose another seriouschallenge. New irrigation techniques, geneticallymodified water-efficient crops, and desalinationmay expand the universe of opportunities. Moreimportantly, however, behavioral change, especiallyin terms of protein consumption, could make a bigdifference in terms of reducing water-to-calorieratios and reducing the pressure that agricultureexerts on water supplies. As consumers we need toalso recognize that we are the ultimate end users ofthe water that goes into agricultural production.

Water is also needed for almost every source ofenergy to be useful. According to the UnitedNations, about 90 percent of all electric powergeneration is water-intensive. Water is needed toextract, wash and sort raw materials and fossilfuels; cool thermal power plants; cultivate biofuels;and power hydroelectric turbines. The risksaffecting the water-energy connection are manifoldwhen energy needs and the preservation of watersupplies collide. Pollution of aquifers needed forhuman consumption or agricultural use due tomining or hydraulic fracturing (“fracking”)operations is on the increase. Climate change willbe a disruptive force as well. Policymaking andplanning need to take into consideration theconstraints and the risks inherent to increasingdemand for both water and energy. Thus, there is a“water-energy nexus,” as well as a “water-energy-food nexus,” according to Ralph Exton, ChiefMarketing Officer for GE Power, Water & ProcessTechnologies. Another angle is that of resilience ofwater systems, as in the wake of natural disasters.Meredith Giordano, Principal Researcher andAdvisor for Research Strategy and Management atthe International Water Management Institute,argues that solutions to water challenges can often

Meredith Giordano

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be found through linkages with other sectors, forexample by creating policy synergies betweenagriculture and energy sectors. For instance,hydroelectric power is compatible with usage ofthe water downstream for agricultural purposes.

Scarcity of water in different parts of the world and at various points in time continues to be a keychallenge for local communities and, in somecases, for entire cities or regions. Giordano notesthat water scarcity is a “complex issue” thatmanifests itself in different forms. “It is a functionof quantity, quality, distribution across time andspace, and access.” Simple measures of waterscarcity may not account for this complexity, so we need to be careful in how we interpret forpolicymaking; “it is very important toassess the underlying causes of waterscarcity and if it is a chronic or an acuteissue.” Dale Whittington, a watereconomist and professor at theUniversity of North Carolina at ChapelHill, further argues that individualacute crises, such as a drought inCalifornia or a monsoon in South EastAsia, if they coincide in time couldhave global repercussions. Nevertheless,argues Exton, experts today prefer toavoid the “doom and gloom” conceptof scarcity and frame the issue in termsof sustainability, “putting a morepositive spin on it, and bringing

technology and policy to bear” on possiblesolutions.

One specific controversy that stands at thebeginning of any discussion of water supply andaccess is whether one may accurately talk about“peak water” the same way that analysts haveassessed the implications of “peak oil”: the pointwhen the maximum rate of extraction ofpetroleum is reached, after which it is expected toenter terminal decline. Terry L. Anderson, SeniorFellow at PERC, argues that water is, after all, arenewable resource, and thus the concept of “peakwater” is not accurate. For Noam Lior, anEngineering Professor at Penn, and RengarajanRamesh, a partner at Wasserstein & Co., LP, bycontrast, it does make sense to think about peakwater because humanity could well be on its way to depleting all fresh water resources on the planet.They argue that water is a finite resource. “Water isthe most overused, abused, and underpricedresource in the world, and a large fraction of it isnot renewable or is returned undrinkable,” notesLior. “Governments are reluctant to intervene.Nobody wants to undertake a thorough costanalysis and to formulate policies based on it.”

Over time, much progress has been made in termsof preserving water resources. Since the 1960s

“Sharing the world’s water

wealth will require not only

better management,

infrastructure, and technology

but also delicate diplomacy.” – Miriam Balaban

Thayer Patterson, Peter Jaffé, Noam Lior and Irina Marinov

6 | Water

conservation efforts and new technologies havereduced consumption from 0.3-0.4 cubic metersper dollar of GDP to less than 0.1 in mostdeveloped countries. Developing and emergingeconomies have also reduced water use tocomparable levels (UNESCO 2009: 88, 99, 108,109, 111). Still, for major water crises to be avoidedin the next two decades, large-scale technological,policy, and behavioral changes will be needed.

Water issues also figure prominently on the globaldevelopment agenda. According to the UnitedNations’ Millennium Development Goals Reportof 2012, 780 million people, or 11 percent of theworld population, lack access to safe drinkingwater. Nearly half of them live in Sub SaharanAfrica. That is still a very large number, althoughback in 1990 some 24 percent of the population at the time were affected by this severe problem.Water scarcity, meaning the lack of sufficient waterduring at least one month a year, affects about 2.8billion people, or 40 percent of the population.

The geopolitics of water has emerged as a new fieldof study and concern. The Middle East, the Nile,and the Tibetan Plateau are among the newhotspots of geopolitical conflict over water.

Sharing the world’s water wealth will require notonly better management, infrastructure, andtechnology but also delicate diplomacy, arguesMiriam Balaban, Editor in Chief, Desalination andWater Treatment Journal, publisher of DesalinationDirectory, and Secretary General of the EuropeanDesalination Society. Global water diplomacy willbecome especially relevant in the context of thepotential effects of climate change on the world’shydrology. An especially thorny issue involvestransboundary water, i.e., water systems thatstraddle national borders. Two- thirds of theapproximately 275 major transboundarywatersheds in the world, involving 148 countries,are not covered by a treaty specifying how thewater is to be shared. There are also over 300aquifers located across two or more countries(United Nations University 2013). Furthermore,desalination technology can offer water ataffordable prices to neighbors with water scarcity.

Changes in the climate cycle will inevitably affectthe water cycle in unforeseen ways, exacerbatingepisodic droughts and floods. In addition to theserecurring challenges of water management, globalwarming poses new threats and will have severalimmediate effects. First, evaporation will increaseand divert water that would otherwise fill streams,rivers, and lakes. Second, changes in vegetation willalter rainwater patterns. Third, warming will makeglaciers recede, thus depriving streams and riversof their steady flow of water. Fourth, wateravailable for irrigation will become scarcer. Andfifth, sporadic heavy rainfall will stagnate inwarmer temperature, and provide mosquitoes withnew breeding areas, posing significant new publichealth challenges.

The concept of “water security” captures many ofthese old and new challenges. It is defined by theUnited Nations University Institute of Water,Environment & Health (2013: vi) as “the capacity of a population to safeguard sustainable access toadequate quantities of acceptable quality water forsustaining livelihoods, human well-being, andsocio-economic development, for ensuring

Ian Lyle

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protection against water-borne pollution and water-related disasters, and for preserving ecosystems in aclimate of peace and political stability.” The centralidea is that security, sustainability, economicdevelopment, and human well-being all depend ona reliable and safe supply of water. As such, watersecurity implies access to safe drinking water, theprotection of livelihoods, the preservation ofecosystems, the supply of sufficient water to supporteconomic activity, the reduction of pollution, andthe ability to cope with water-related hazards. Managing scarce water resources, argues Ian Lyle,Director of Federal Affairs for the National WaterResources Association, largely involves the three

Es: engineering, environmental impactmanagement, and economics. And then there ispolitics, with all the challenges that they bring. AsLyle notes: “In the Western United States, there isan old saying that whiskey is for drinking, andwater is for fighting. However, that dynamic isshifting in many areas as resources, both economicand environmental, become more limited. It is notuncommon to see agricultural and municipalwater providers, tribes and, in some cases,environmental groups working together to findsolutions to water supply challenges. That said,political challenges remain and need to be workedthrough continually.” ■

“Water is the most overused, abused, and underpriced resource

in the world, and a large fraction of it is not renewable or is

returned undrinkable. Governments are reluctant to intervene.” – Noam Lior

8 | Water

In addition to covering 71 percent of the Earth’ssurface, oceans play a central role in everything,from food production to cargo transportation

and from the water cycle to global climate patterns.The balance of systemic interconnections amongland, oceans, and the atmosphere is intricate anddelicate.

One major development putting stress on watersystems around the world is climate change.According to Princeton Engineering ProfessorPeter Jaffé, climate change has not yet produced alarge enough increase in average temperatures tohave an easily detectable effect on biogeochemicalcycles of nutrients, but it has exacerbated theimpact of extreme climate and weather patternsand events, (droughts and floods), which do have avery noticeable inter-annual effect on nutrienttransformations and fluxes of nutrients from soilsto rivers and then oceans, resulting in varyingdegrees of anoxia in water bodies such as theChesapeake Bay or the Gulf of Mexico. PennAssistant Professor Irina Marinov, anoceanographer and climate modeler, points out

that often it is the rate of change rather than thenet value in a climate variable that matters most:The rate of change of temperature we observetoday and the rate of temperature and CO2

increase projected for the next 100 years areunprecedented, many times more abrupt thanother well-known transitions in the climate record.The recent increases in temperature are due to theanthropogenic emissions of greenhouse gases, suchas carbon dioxide, methane, and nitrous oxide,with carbon dioxide having the most importantglobal role because of its abundance relative to theothers. Over the past million years, atmosphericCO2 concentrations have fluctuated on a 100,000-year pattern between 180 and 270 parts per million(ppm) from cold glacials to warm interglacials,respectively. We are currently in a warm, high CO2

interglacial period; and over the past 200 years theCO2 concentration has increased in response tohuman emissions from 270 to 400 ppm. AsMarinov notes, “we have changed the system more in 200 years than nature usually does in100,000-year cycles.”

The Systemic Interconnections amongOceans, Land, and the Atmosphere

Thayer Patterson, Peter Jaffé and Noam Lior

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One key limitation when it comes toeffective assessment and policymaking isour lack of a complete picture of theinteraction among land, oceans, andatmosphere, and the implications ofsustained disturbances such as globalwarming, argues Marinov. Oceans haveabsorbed as much as 90 percent of theadditional heat that human activity hasgenerated over the last 2,300 years. Thisbegs the question of how much absorptivecapacity oceans will continue to haveunder a warming climate. It is veryimportant to understand and model boththe heat and carbon cycles of exchangebetween oceans and the atmosphere, whichcould reinforce and accelerate patterns ofglobal warming. As Marinov notes, “as oceansbecome warmer, carbon in the ocean will becomeless soluble and more carbon will be released intothe atmosphere by the oceans.” This is an exampleof an ocean-driven positive feedback onatmospheric CO2 and climate warming issues.Another is ocean acidification, which in turn resultsin a decreasing capacity of the ocean to hold futurecarbon.

Small changes in climate in one part of the worldmay have major consequences in other parts, withimportant implications for the water cycle and theavailability of fresh water locally. In some of theirrecent research, Marinov and her group addressthese tight global climate interconnections. For

example, the rain belt between the Tropics, whichaccounts for most rainfall in the world, can beaffected by very small changes in ocean surfacetemperatures in specific areas, such as the WeddellSea, a small but climatically important sea in theSouthern Atlantic close to Antarctica. Temperatureoscillations or trends in the ocean surroundingAntarctica and generally in the SouthernHemisphere, which holds most of the world’s saltwater, can change the rainfall levels in the Sahelregion of Africa, for example. People andecosystems are being affected by drastic swings thatproduce either scarce or excess rainfall. Lior agreesthat oceans are increasingly under stress and areinterconnected with the rest of the climate system.

Another key issue involves nitrogen, a key nutrientfor all known forms of life. Jaffé observes thatnitrogen pollution is becoming a major issueaffecting watersheds. Industry and agriculture nowgenerate more nitrogen compounds than naturalprocesses. Of the 500 million tons of fertilizer usedevery year, nearly half ends up in watersheds. Oncethis nitrogen is flushed into surface waters, it willstimulate algae growth, depleting oxygen in thewater and thus making life harder or impossiblefor many creatures. This is especially critical inestuaries and the near shore environment.Furthermore, climate change will make fertilizeruse even more extensive as farmers seek to

Irina Marinov and Huijuan Wu

“As oceans become warmer,

carbon in the ocean will

become less soluble and

more carbon will be released

into the atmosphere.”– Irina Marinov

10 | Water

maintain or increase yields to feed a growingpopulation, thus intensifying nitrogenconcentrations.

There are other sources of environmental concern.Lior worries about the melting of the permafrostin the Northern hemisphere’s high latitudes, whichwould release huge amounts of methane into theatmosphere. Ramesh observes that deforestation

has implications not only for global warming butalso for the water cycle. Forests transfer largeamounts of water into the atmosphere throughplant transpiration, which in turn contributes tocloud formation and rainfall. As a result ofdeforestation, more water flows downriver and isdischarged into the sea. Deforestation in Brazil, forinstance, has slowed down, but only after forestclearings increased significantly over decades. Thedepletion of bushes and trees for charcoalproduction in developing countries alsocontributes to deforestation.

The interdependent implications of climatechange, nutrient pollution, and deforestation onglobal water security are significant. Furtherresearch is needed to assess not only the potentialmagnitude of these effects on water cycling and use at the local and global level but also, as Liorindicates, the extent to which policymaking has achance of making a relevant change for the better. ■

Forests transfer large amounts

of water into the atmosphere

through plant transpiration,

which in turn contributes to

cloud formation and rainfall.

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There is no doubt that investments ininfrastructure, and better management of the existing infrastructure, will be needed to

address the impact of climate change and naturaldisruptions to the water cycle and to meet theneeds of an expanding population and growingcities. According to McKinsey & Co., water is thethird most important and costly area forinfrastructure development to the year 2030, aftertransportation and energy. Among all areas ofinfrastructure, water happens to be the mostdifficult to tackle for a variety of technological,economic, and political reasons. Water is difficultor costly to store and to transport over largedistances. In the developed world, a variety ofgovernment agencies at national and local levelshave authority over water, creating a fragmentedpolicy and regulatory landscape. In developingcountries, infrastructure per se may not provide allthe answers given that culturally ingrained habitsand practices need to be addressed as well.

In developed countries, problems range from theaging water infrastructure to the changing climaticand economic demands. Lyle, who represents waterusers in the western United States, notes that morethan 60 percent of U.S. Bureau of Reclamation-

managed dams are over 50 yearsold and a sizeable portion ofReclamation infrastructure is morethan a century old. Similarly, morethan 50 percent of the damsoperated by the U.S. Army Corpsof Engineers have reached orexceeded the 50-year service livesin their initial designs Moreover,Reclamation infrastructure waslargely designed to spur economicdevelopment through irrigatedagriculture. However, as the U.S.has grown, many of these projectsare now being used to supplyurban areas and support theseeconomies. Lyle also notes that

maintaining this infrastructure is importantbecause it continues to provide water thatproduces 60 percent of U.S. vegetable productionand more than 25 percent of U.S. fruit and nutproduction.

Another important issue is the lack ofcomprehensive planning. Vörösmarty observesthat projects within the global water sector areworth 700 or 800 billion dollars annually, and maymore than double by 2020. Most projects aim toremedy problems with water supply, such as theoveruse or contamination of water in the world’smajor watersheds. Infrastructure investment inremediation is the pandemic response to waterchallenges, which create arguably local-scalesolutions but create broader-scale and more long-lived impacts on the environment. This approachis in lieu of problem-prevention strategies andsolutions that will provide for long-termsustainability.

Massive projects that deal only with individualissues can have multiple long-term consequences,some of them unexpected and unintended.Kimberley Thomas, a postdoctoral geographer at

Water and Infrastructure

Miriam Balaban and Charles Vörösmarty

12 | Water

the University of Pennsylvania, has studied theimpact of large engineering projects originallyintended to protect farmers from flooding inBangladesh, for example, and has noted the verynegative long-term effects on hydrological systemsand ultimately agricultural yields of buildingpolders and other similar infrastructure. Many ofthese projects cost tens if not hundreds of millionsof dollars, generally funded by multilateral agenciessuch as the World Bank or USAID, but end upcreating new difficulties. Thomas especially notesthe effort to construct massive embankments in thename of flood control, which also eliminated thetraditional spreading of sediment that previousfloods would have brought, leading to dislocationof traditional agricultural and social patterns.

Huijuan Wu, a Research Fellow at the Institute ofWater Policy of the National University ofSingapore, advocates comprehensive river basinmanagement to address water issues at the locallevel, citing the example of China’s management ofthe Yellow River. China’s development of a systemof permits that can be shared and traded among

regional authorities has helped manage thatmassive river basin, which sustains 10% of China’spopulation and 50% of its agriculture. Wuproposes that collecting extensive data to conductsustainability assessments is needed to formulatepolicy, design regulatory frameworks, and makepolitical decisions, using a battery of indicators toassess water management and to track progressover time. As part of her EnvironmentalPerformance Index, Wu includes metrics onenvironmental flow, water quality, river channelcapacity, sediment transport, biodiversity, andland use. She has also developed a SocialWellbeing Index measuring flood risk, droughtrisk, water consumption, water access, wastewaterdischarge, water allocation, and public health.Finally, she recommends using an EconomicDevelopment Index to track infrastructure,hydropower, water utilities, wastewater treatment,and institutional capacity.

Water security requires smart thinking, long-termplanning, and diversification in addition to largeinvestments, argues Wu. Singapore exemplifies thisapproach. The city-state imports water fromMalaysia, has invested in a comprehensive watercatchment infrastructure, NEWater (high-gradereclaimed water produced from treatedwastewater), and desalination. These multiplesources provide greater long-term security for acountry that would otherwise suffer from waterlimitations. Mauro Guillén, Director of the LauderInstitute, suggests that we might need to think interms of the “water matrix,” in the same way thatwe learned to use the concept of the “energymatrix,” starting in the 1970s, a change that helpedmany countries around the world develop morecoherent and effective energy policies. ■

“We might need to think in

terms of the ‘water matrix’ in

the same way that we learned

to use the concept of the

‘energy matrix.’”– Mauro Guillén

Water | 13

Technology can make many different kinds ofcontributions to water sustainability, byexpanding the horizons for efficient use and

even by making alternate sources of wateravailable. Information technology also promises torevolutionize the field.

One exciting frontier is desalination, arguesBalaban. While desalination has become morecost-effective and established as a viable industryover the years, some experts argue that it can atbest have a marginal effect on the overall pictureand that it applies only to coastal areas.Nevertheless, much progress has been made. Forcenturies, desalination technology involvedvaporizing water in a boiler to collect andcondense it into distilled water. In the late 1950sthe multi-stage flash (MSF) desalination techniquewas developed in Scotland. It used the condensedheat in the vapor to heat more water, eventuallyenabling the production of up to 10 tons (or evenmore than 20 in some pilot plants) of distilledwater with one ton of steam. In the 1960s, reverseosmosis was pioneered in the U.S.by pumpingwater at high pressures through a membrane thatwould filter out most of the salt. Incrementalimprovements to reverse osmosis have made this

technology more energy-efficient than MSF. It isnow possible in many locations around the worldto desalt water through reverse osmosis at anenergy cost equivalent to the average cost ofbringing fresh water from a distant source. Bothrich and poor countries benefit from thistechnology, with over 300 million people presentlyrelying on desalinated water for their daily needs,mostly in the Middle East, North Africa, Spain, and Australia.

A true water matrix, however, needs to includewater reuse alongside new technologies for waterextraction and production. We need to “break withthe old linear cycle of water extraction anddischarge, especially the question of water reuse,”according to Exton. Ramesh agrees that water reuseholds great promise. In Israel, up to 80 percent ofwater is reused. Balaban thinks that the greatestconstraint is psychological, and Vörösmarty holdsthat people do not realize how much water reusealready occurs downstream in the world’s majorwatersheds. “Up to 80 percent of the world’ssewage returned to watersheds is untreated,” heasserts, and greater awareness of that alreadyexisting situation may help overcome publicresistance against official reuse, which would

Water and Technology

Ronald Granieri, Lance Donny, Dale Whittington and Stuart Woolf

explicitly embody purposeful treatment. Rameshargues further that one does not have to turnwastewater into drinking water, given that one may use it for many other ends. Agriculture can be an especially effective place to reuse partiallytreated wastewater.

It is clear that “instead of discharging it into oceansand rivers, you can treat it further so that it can bereused for things like agriculture, industry andeven drinking water,” argues Exton. “And by theway, it uses about half the energy of desalinationand it costs about half as much on average. So thatis really the thing to focus on as we search forsolutions.” There are many real and psychologicalobstacles to exploiting opportunities in wastewater.“If you ask me,” Exton notes, “those barriers arethings like concern about whether reused water issafe for things like agriculture and drinking water.It’s a lack of clear standards; so a lot of industriesdon’t know if they can treat wastewater and use itto do something like, for example, wash theirchickens in a poultry processing plant. They don’tknow because there aren’t clear standards in manycases telling them what is allowable.” The other bigproblem involves relative prices. “It’s often cheaperto take water from the ground or river or even a

potable municipal system,where it’s almost universallyunderpriced, than it is toimplement reusetechnologies.”

Equally impactful will betechnological improvementsthat make more efficient useof water. Perhaps the biggestpotential gains could be realized in agriculture,where up to 50 percent ofusage might be reducedthrough the development ofwater-efficient seeds and bydeploying drip irrigationmore effectively. A big

obstacle to efficiency increasesis the fact that most people, farmers, andmanufacturers pay only a fraction of the true costof the water they use. In part, this is because accessto water has been defined as a human right. It isclearly an institutionalized cultural assumption weall make, i.e., water is a given, until, as BenjaminFranklin once put it, the well dries up.

One way to make consumers at all levels moreaware of water usage is through the application of new monitoring technologies. Donny notes that deploying information technologies in theform of sensors, drones, satellites, and software can vastly improve efficiency in water use,especially in agriculture. The recent history ofagriculture is one of rapidly multiplying yields per acre. In Donny’s experience, technologicallysavvy farms in California can save up to 10 percentof irrigation water. Whittington concurs: efficiency in water usage is very dependent on the technologyused and on proper pricing, not just in agriculturebut also in all areas of water usage. Vörösmartyargues that ground-level data gathering, with aproven track record, could ultimately prove to bemore reliable, accurate, and dependable than moreexperimental satellite-based surveillance systems

14 | Water

Regina Abrami, Ralph Exton, Meredith Giordano and Ian Lyle

Water | 15

that are costly, prone to single-point failures (e.g., recent soil moisture radar failure aboard aNASA satellite), and need long-term commitmentsfrom governments to keep operational systemsflying. The advantages of synoptic-scalemonitoring afforded through remote sensing and the ground-truth securable from in situmonitoring mean that in reality some combinationof both approaches will be necessary.Measuring and mapping water resources around

the world at the local level is also much needed asan input to policymaking and business decisions.Andrew Maddocks, Communications Lead for the World Resources Institute’s Water Program,argues that developing tools and methodologiesto collect information on the quantity, quality,

and regulatory and reputation risks around theworld will also help develop a better overall view of what is needed to address global water security issues. ■

“Efficiency in water usage is very dependent on the technology used

and on proper pricing, not just in agriculture but also in all areas of

water usage.” – Dale Whittington

16 | Water

Markets, Prices, and Water

One issue at the heart of the debate overwater is the question of whether it can beconsidered an economic good. As

Whittington notes, in many parts of the worldsensible pricing of water for both irrigation andresidential use is resisted, on the grounds thatwater is something more than a traditionalcommodity. Catherine Brölmann, Board ofDirectors of Waterlex, Geneva, and AssociateProfessor of International Law at the University of Amsterdam, observes that the relatively recentconcept of water as a human right has carried withit significant practical, political, and even moralimplications. It has changed the legal discourse on water, which traditionally hinged on” sovereignrights of states” (in a transboundary context), and on “water rights” of individuals (in a nationalcontext). But, Brölmann argues, even if theemerging human right to water for all has made asignificant contribution to the various debates andmay help for example in the prioritization ofusages, the human rights approach is too one-dimensional to constitute a comprehensivenormative framework for the governance of waterresources. It will need to be combined with other

approaches to water. Related but much morewidely accepted is the idea that water supply is apublicly provided service As water becomes morechronically scarce in certain parts of the world,however, its character as a public service has comeunder criticism, leading in turn to more explicitinvocation of human rights, with significant ifsometimes unclear implications.

Even if one endorsed the idea of water as a“normal” commodity, creating an exchange marketfor it will also require mechanisms so that farmerscan trade in water, argues Terry Anderson, a SeniorFellow at Stanford’s Hoover Institution. StuartWoolf, President and CEO of Woolf Farming &Processing, agrees. In California some farmers havewater available to sell, and others need to buy. Thelatter are willing to pay, but they need to have astable and clearly identified market in which topursue such transactions. Donny and Woolf agreethat one cannot and should not induce farmers toabandon farming for trading in water, but theyshould still have the possibility of trading theirwater rights in order to maximize efficiencieswithin the overall agricultural economy. The

Catherine Brölmann and Eric Cooperström

Water | 17

challenges of creating a reasonably efficient marketfor water are huge, according to Anderson, but heis still optimistic that markets will play animportant role in the allocation of scarce water, asin some experiments of “water banks” in Colorado,which enable different users to agree on anexchange price when they attach very differentvalues to using it. Lior questiones whether markets,which are dominated by short-term financial dataand reactions and do not consider human equityand welfare (“no brains nor heart”), have, bythemselves the capability for long term planningfor sustainability.

Economists approach water scarcity in two ways,argues Anderson. One is in terms of costs andbenefits, and the other is in terms of institutionalanalysis, including markets and regulation. Fromthe latter perspective, most economists suggest that water should be priced according to theprinciples of marginal cost and full costrecovery, and thus assess users a price that isa combination of a fixed and a marginaltariff. In addition, it may be good practice tocharge a marginal rate that increases withvolume to encourage water conservation. Asof now there is no such uniform approach.As several participants pointed out, water is aheavily localized issue. National, regional,and local governments around the worldcharge water customers using very differentsystems for political, economic, andtechnical reasons. For instance, in somedeveloping economies it is simply impossibleto charge based on volume because metering

is not universal, and the administrative capacity tocollect the information and to use it for pricingpurposes is not available. In addition, manygovernments lack the capacity to enforceregulations and to collect payments, with waterbills routinely going unpaid. In many instances,water costs are billed to entire apartment buildingsor complexes and not to individual households. In some cases the market for water is distorted byenergy subsidies making groundwater extractionmore economical, as in India, where there arenearly 40 million wells providing two-thirds of the water used for irrigation and 85 percent of the drinking water.

There is also wide disagreement as to what full-cost recovery means. In most countries, it includesoperational and capital investment costs. TheEuropean Water Framework Directive of 2000 adds environmental costs to the calculation, anapproach that France has already implemented. In any event, governments cross-subsidizeagricultural use at the expense of industrial andresidential consumption, and they often subsidizelower-income households, although doing sorequires much more administrative effort thanoffering more general income support not tied tospecific goods or services.

Terry L. Anderson and Scott Moore

In some cases the market for

water is distorted by energy

subsidies making groundwater

extraction more economical.

18 | Water

A perfect model for pricing water may be toodifficult to calibrate or impractical to implementand enforce. At the end of the day, Lyle argues, theprice of water is “what people are willing to payand, as in real estate, location makes a difference.”In many parts of California, as well as in Las Vegas,users pay more for their water in escalating tiers ofvolume consumed. In any event, “without somekind of price corrections,” Exton argues, “we willcontinue to have problems with water scarcity.”

Moreover, “any attempt at water sustainability overthe long run must make good economic sense,” henotes. Otherwise, “the effort at sustainability willnot be itself sustainable.”

Pricing water more or less accurately, however, maynot be enough in developing countries. There aremany market failures that may need to beaddressed through government intervention orentrepreneurship, or both. Giordano mentions therole of entrepreneurs in South Asia and SubSaharan Africa offering pump rental services tofarmers who cannot afford to purchase pumps.Eric Cooperström, a Principal at the SkollFoundation, thinks that social entrepreneurs canhelp the world use water resources more efficientlyand improve the lives of the poor. Innovations inthis area range from the use of sensors and othertechnologies to providing new financial solutionsto facilitate investments so that access to safedrinking water and improved sanitation can beexpanded to the billions of people who lack it. ■

The price of water is “what

people are willing to pay and,

as in real estate, location makes

a difference.”– Ian Lyle

Water | 19

Education and Behavioral Change

As in the case of energy use, education andbehavioral change can make a greatdifference when it comes to promoting the

sustainable use of existing water resources. Extonargues that the fundamental problem is that “manypeople do not understand where the water comesfrom, how much it costs, and how the water cycleworks.” Although many people in developedcountries receive a bill for their water use, few ofthem take the time to understand how much theyactually consume and how they can be moreefficient, unless there is a shortage. Both Jaffé andLior believe that eliminating unnecessary waste isthe absolutely essential first step, which meansboth repairing aging and leaking infrastructureand developing regulatory practices to manage use and, if necessary, to punish misuse. Lior alsosuggests that educating children about theimportance of water and its use and conservationis most effective. For Wu, many water-relatedproblems in the world can be overcome throughsimple common sense, especially when it comes to conservation and efficient use.

For Vörösmarty the key is to create opportunitiesfor educational and behavioral change that lead toa better appreciation of the systemic character ofsustainability. In his view, school curricula do notyet help students understand all of theinterconnections and implications, and could domuch better. Ramesh notes that water is not yet ahot topic for most people, and hence it does nothave enough prominence in public discussions. Incountries such as Israel, where water is more of animmediate concern, policymaking and educationare much more proactive and effective in shapingpublic awareness. Ramesh further argues that theentire water sector has not produced the kinds ofreturns that would attract the best minds as well asavid investors, with the possible exception ofdesalination, which has also limited the economicand technological investments in new and moreeffective technologies.

Brittany Montgomery, a researcher at MIT’s UrbanStudies and Planning Department, notes thateducation does not necessarily result in behavioral

Ronald Granieri, Lance Donny and Dale Whittington

20 | Water

change, and efforts to improve awareness ofhouseholds’ water quality through in situ testinghave been unsuccessful. Exton mentions that truebehavioral change occurs only when socialstructures and habits are taken into consideration.In many parts of rural Sub Saharan Africa, forexample, women spend hours going to wells toobtain water, and they view this activity as animportant part of their social lives because theymeet people along the way. Any improvements in water deliverability to such communities willhave to take those kinds of social situations intoaccount. In general, all participants agreed that it is important to understand the social and culturalunderpinnings of people’s habits in water use ifregulators or officials at any level—governmentalor non-governmental—hope to interveneeffectively.

In some cases, unintended consequences ofincentive schemes must also be addressed.Giordano uses the example of a program in Indiato encourage the use of solar-power irrigationpumps as a way to promote renewable greenenergy. The danger is that, given the availability ofsolar power, the farmers end up extracting morewater than they need. A solution to this problem isto enable the farmers to sell the surplus solarpower to the grid so they do not use it to pumpwater they do not really need.

Another area ripe for behavioral change involvesfood consumption. Water is traded around theworld embedded in food. The virtual water tradeaccounts for about 15 percent of total humanwater consumption, with the major exportingcountries being the U.S., Canada, and Australia.Giordano argues that people’s awareness of foodwaste and the implications for waterconservation should play a more important rolein efforts at water sustainability. Lyle suggeststhat efficient water use could be used in themarketing of a product, allowing consumers tomake educated choices, as many already do, whenpurchasing fair trade, organic, or eco-friendlyproducts. Use of product labels to inform peopleas to the amount of water needed to produce thefood they consume could provide valuableinformation. For instance, producing a pound ofbeef requires about 1,600 gallons of water. As inother cases, greater collection, presentation, andawareness of data can help shape future decisionsabout water usage. ■

Andrew Maddocks

Water | 21

Local and Global Governance

Good and effective governance is essential toachieving water security at the global,national, and local levels. It includes the

soft infrastructure of institutions, regulations, anddecision-making mechanisms to manage existingand future water resources. For Vörösmarty,governance—from the global to local level— isperhaps the biggest challenge of all regardingwater. Governance mechanisms are sorely neededto arbitrate conflicts between upstream anddownstream users, the management ofglobalization-incurred problems on local watersystems, and the inevitable disputes that are sure toarise among different water users.

In contrast to Vörösmarty, Exton argues thatsolutions to water problems are generally local innature. “The problem is that new technology getsadopted and diffuses slowly. Incentives help swayminds and it also helps develop and improvetechnologies over time with a reduced cost overtime.” In Texas, Ramesh notes, water is managed ata very local level, and quite effectively, and should

be studied by other agencies for possibly adoptionor adaptation. Lyle agrees that local governmentsand state governments must play a lead role inwater management. This is especially important asmanagement relates to water rights in the U.S.,where a water right is a property right. He alsonotes the Texas model may be hard to transplantelsewhere because of institutional and regulatorylegacies. In addition, even in California growers arenot equally systematic when it comes to managingtheir water usage. Woolf attributes this to theinstitutional effect of senior versus junior rights.For instance, he notes that some growers continueto use flood irrigation, which is much less efficientthan drip irrigation, taking advantage of theirindividual access to water without regard to thebroader system. Any form of regulation, even atthe local level, will have to develop policies thatmore effectively link the individual user tocommunity standards and requirements.

As in any field of infrastructure, public-privatepartnerships (PPPs) may be a useful instrument

Scott Moore and Kimberley Thomas

22 | Water

for promoting investments. Lyle, however, notesthat, at least in the case of water, PPPs facechallenges because private investors and publicutilities have very different time horizons andexpected rates of return. However, Lyle also notedthat water infrastructure could work well forinvestors looking for secure long-term investments.He also indicated that the PPP model couldbecome more attractive to water suppliers asinfrastructure needs increase.

Different actors are involved in improvinggovernance to very different extents. Lior andWhittington argue that planning on the part ofpolicymakers is often poor and typically driven bycrises and political interest group pressures. Woolfthinks that governments are not good at adoptinga long-term perspective, and farmers are alwayslooking to minimize risks when it comes tosecuring water. Vörösmarty faults universities fornot paying enough attention to treating the studyof water problems, and their solutions, moreholistically.

At the global level, effective governance is needednot only for the purposes of policy coordinationwhen the issue affects a multiplicity of countries,but also to diffuse best practices. In Mexico, forinstance, many farmers lack meters, have littlesense of the costs, and receive subsidized energy.Woolf suggests that this problem can be addressedonly through the diffusion of knowledge and

perhaps also by the willingness of farmers indeveloped countries to work more actively to sharetheir knowledge and experiences.

Another important aspect is the role oftransnational social movements and networks.Scott Moore, a political scientist at the World BankGroup’s Global Water Practice, argues that it isimportant to “ensure that their energy andcreativity translate into constructive actions at the local level,” where most water issues manifestthemselves, in addition to rallying support for thecause of sustainability at the cross-border level.“There is no equilibrium answer to that question”of the ideal balance between expert planning andlocal needs, Moore admits, but the goal should becoming up with a framework that is participatory.

Brölmann notes that the category “transactionalnetworks” is used to refer to a large diversity ofactors, including non-governmental organizations,foundations, multinational firms, governments,and multilateral agencies. Although these have as a common trait their being non-state actorsoperating across boundaries, the involvement ofeach of these actors does not necessarily unfold in the same way. For Moore, these networks areessential to the diffusion of knowledge and bestpractices, and they are also important when itcomes to overcoming inaction by governments,helping to place important issues on the globalagenda. ■

“At the global level, effective governance is needed not only for the

purposes of policy coordination when the issue affects a multiplicity

of countries, but also to diffuse best practices.” – Stuart Woolf

Water | 23

An Agenda for Research, Policyand Business

In light of the debates and controversies, theopportunities and the pitfalls, concerning theroles of technology, education, markets,

governance, and other institutions when it comesto meeting the world’s water needs and ensuringthe sustainability of water resources, there are anumber of potentially fruitful paths of action:

• Frame water challenges in terms of the “watermatrix,” comparing the costs and the benefits of different sources of water, diversifying ourexposure to climate change and other types ofrisks, and improving the overall efficiency of the water sector and its ability to meet all ofhumanity’s needs in a sustainable way.

• In particular, find a balance among water-qualitypreservation, conservation, efficient use, andreuse that will enable the world to sustain alarger population and an increase in overalleconomic activity and consumption.

• Develop the technological infrastructure togather, analyze, and diffuse information aboutthe quantity, quality, and risks associated withwater resources in specific locations around theworld.

• Continue to research and model the impact ofglobal climate change on the delicate balanceamong land, ocean, and atmospheric dynamics,and its implications for water resources.

• Generate more sustained interest among allmajor stakeholders to deal with water-relatedissues outside of emergency crisis situations, by providing a clear perspective on the futurerepercussions of not addressing bottlenecks andscarcities before they become more widespread,systemic, and irreversible.

• Educate the public as to the importance ofbehavioral change and the potential for reusingwater to address present and future needs, and to minimize the impact of disruptions stemmingfrom climate change.

• Help farmers in developing areas accessknowledge and basic technology to monitor and optimize water use.

• Design and experiment with innovative marketand pricing mechanisms, to more efficientlyallocate existing water resources.

• Engage users, policymakers, activists, investors,businesses, and universities in a constantdialogue about water challenges and solutions,thus raising global and local awareness.

• Expand investment in basic infrastructure toallow users to capture, manage, convey, and bestuse this limited resource. ■

24 | Water

Bureau of International Information Programs. 2011. Global Water Issues: A Compendium of Articles. Washington, DC: U.S. Department of State.

Dinar, Ariel, Victor Pochat, and Jose Albiac-Murillo eds. 2015. Water Pricing Experiences and Innovations. Cham, Switzerland: Springer International Publishing.

OECD. 2011. Towards Green Growth. Paris: Organization for Economic Cooperation andDevelopment.

Sydorovych, Olha and Ada Wossink. 2008. “The Meaning of Agricultural Sustainability: Evidencefrom a Conjoint Choice Survey.” Agricultural Systems 98: 10–20.

UNESCO. 2009. Water in a Changing World. Paris: United Nations Educational, Scientific andCultural Organization.

UNICEF and World Health Organization. 2015. Progress on Sanitation and Drinking Water – 2015Update and MDG Assessment. http://www.wssinfo.org/fileadmin/user_upload/resources/JMP-Update-report-2015_English.pdf

United Nations. 2003. Committee on Economic, Social and Cultural Rights (CESCR) GeneralComment No. 15: The Right to Water (Arts. 11 and 12 of the Covenant), 20 January 2003,E/C.12/2002/11. http://www.refworld.org/docid/4538838d11.html

United Nations. 2016. Global Issues: Water. New York: United Nations.http://www.un.org/en/globalissues/water/

United Nations. 2015. International Decade for Action: ‘Water for Life’ 2005-2015. New York: United Nations. http://www.un.org/waterforlifedecade/water_and_energy.shtml

United Nations University. 2013. Water Security & the Global Water Agenda: A UN-Water Analytical Brief. Hamilton, Ontario, Canada: United Nations University Institute for Water,Environment & Health.

Sources

Water | 25

Regina Abrami, The Lauder Institute, University of PennsylvaniaTerry L. Anderson, PERC and Hoover InstitutionMiriam Balaban, Desalination and Water TreatmentAlejandro Barragán-Ocaña, Autonomous University of State of Mexico,

University Center UAEM-Valle de ChalcoCatherine Brölmann, WaterLex (Geneva) and University of AmsterdamRafael Carmona, Universidad Anáhuac México NorteSemiramis Casas Velazquez, Universidad La Salle, ACEric Cooperström, Skoll FoundationRaymundo Diaz Robles, Monex Casa de Bolsa Frederick Dickinson, The Lauder Institute, University of PennsylvaniaLance Donny, OnFarm Systems, CaliforniaGeorgina Echaniz-Pellicer, Center for Environmental Law and Education, Mexico Ralph Erik Exton, GE Power Water & Process TechnologiesAnne Marie Frohnmayer, The Wharton School, University of PennsylvaniaMeredith Giordano, International Water Management InstituteRonald J. Granieri, The Lauder Institute, University of Pennsylvania Mauro F. Guillén, The Lauder Institute and Wharton School, University of PennsylvaniaPeter Jaffé, Princeton UniversityNoam Lior, University of Pennsylvania Changhao Liu, Beijing Institute of TechnologyYong Liu, Peking UniversityIan Lyle, National Water Resources Association Andrew Maddocks, World Resources InstituteIrina Marinov, University of Pennsylvania Andres Samuel Mendez Sobel, Universidad Anahuac OaxacaManuel Montenegro Fragoso, Universidad PanamericanaBrittany Montgomery, MIT, Department of Urban Studies and PlanningScott Moore,World Bank Group Global Water PracticeJulio Orantes, Universidad Michoacana de San Niclas de HidalgoXinglin Pan, Tsinghua University and University of PennsylvaniaThayer Patterson, Princeton University Heather Price, University of StirlingRengarajan Ramesh, RWLAlejandro Rivera, University Foundation for the Development of Public PoliticsLuis Santos, UAEMFrancisco Antonio Serrano, University Autonomous of Coahuila

Globalization TrendLab 2016 Participants

26 | Water

Kimberley Thomas, University of Pennsylvania Charles J. Vörösmarty, CUNYCarlos Wabi, Universidad Anahuac MayabDale Whittington, UNC and Lee Kwan Yew School, SingaporeStuart Woolf, Woolf Farming, CaliforniaHuijuan Wu, Lee Kwan Yew School of Public Policy, Singapore

Globalization TrendLab 2016 Participants

Water | 27

http://lauder.wharton.upenn.edu/conferences

• Global Risk: New Perspectives and Opportunities (2011)

• Sustainability: New Perspectives and Opportunities (2012)

• Poverty and Inequality: Persistent Challenges and New Solutions (2013)

• The Future of the State (2014)

• Overcoming the Infrastructure Gap (2015)

Download the white papers from past Global TrendLab Conferences:

WATER

Globalization TrendLab 2016

Water is an essential resource whose use is increasingly comingunder scrutiny as acute and chronic shortages proliferate aroundthe world. Population growth, the rise of the global middle class,and urbanization are putting stress on existing water resources.

Technology, infrastructure, markets, education, behavioralchange, and governance all need to play a role in ensuring

sustainability over the long run. Water security and geopoliticalstability are contingent on the effective resolution of both the

global and the local tensions affecting the efficient andequitable use of this resource.

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