Access To Safe Drinking Water

Access to Safe Drinking Water
and Its Impact on Global

Economic Growth
A Study for HaloSource, Inc.
by Josephine Fogden
with the assistance of Geoffrey Wood,
Professor of Economics, the Cass Business School, London
Access to Safe Drinking Water
and Its Impact on Global
Economic Growth
A Study for HaloSource, Inc.
by Josephine Fogden
with the assistance of Geoffrey Wood,
Professor of Economics, the Cass Business School, London
HaloSource, Inc.
1631 220th St. SE, Suite 100, Bothell, WA 98021, USA
© 2009 by HaloSource, Inc. All rights reserved. Published 2009.
No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or by any
means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of
HaloSource, Inc.
HaloSource, HaloPure, HaloPure BR, HaloShield, SeaKlear and StormKlear are registered trademarks of
HaloSource, Inc.
Foreword by John Kaestle, CEO, HaloSource
Over the last 30 years, following the 1977 UN Conference on Water at Mar del Plata, in Argentina,
there has been a concerted effort by a range of international bodies to improve global access to safe
drinking water.
It has become increasingly clear over that period that access not only is a matter of survival, but also has
profound social and economic impact. This study seeks to develop a better understanding of that impact,
a subject of great importance to HaloSource because we develop technologies to provide safe, clean,
affordable drinking water to the home, particularly in developing economies.
There are good reasons to believe that point of use purification has a major contribution to make in
the effective delivery of usable drinking water. Large-scale, capital-intensive clean water projects are
expensive, particularly in areas where population density is low. And because purified water is highly
susceptible to subsequent contamination while in storage or transfer, such projects are not always as
effective as planned. Comparatively, point of use purification is cheap, simple and practical.
Despite efforts made since 1977, it is concerning that the rate of improvement in access to safe drinking
water is now falling. Our research suggests that this trend will continue and that access might even start
to decline in 2010. Within the next 50 years it’s possible that the level of access will be lower than at the
time of the Mar del Plata conference.
The economic impact and social implications of such a failure are enormous. Global economic growth
could be affected by 2050, with the emerging economies hit hardest.
We at HaloSource are pleased to have been involved in this research project, which we hope will make
a contribution to a greater understanding of the value and impact of access to safe drinking water. The
research has been completed by Josephine Fogden and its methodology reviewed, commented on and
endorsed by Geoffrey Wood, Professor of Economics at the Cass Business School, London. We thank
both of them for their work on this important subject.
John Kaestle
October 2009
iii
Access to Safe Drinking Water and Its
Impact on Global Economic Growth
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. What is meant by “access to safe drinking water”? . . . . . . . . . . . . . . . . . 7
5. The extent of the drinking water crisis . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5.1 Drinking water from 1970 to 2006
5.2 The future of access to safe drinking water
5.3 Why access to safe drinking water is expected to be in decline
6. The impact of access to safe drinking water . . . . . . . . . . . . . . . . . . . . . 19

6.1 The health effects of unsafe drinking water
6.2 The impact of unsafe drinking water on education
6.3 The costs of a lack of safe drinking water
7. Will drinking water drought stall economic growth by 2050? . . . . . . 23

7.1 When is growth most likely to be affected?
7.2 How is growth expected to be affected?
8. What can be done? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

8.1 Conserving water
8.2 Increasing supply
8.3 Increasing investment in the water sector
9. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Appendixes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Selected bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
v
1. Introduction
Despite a concentrated international effort, significant investment and widespread educational

campaigns, access to safe drinking water appears to be in decline. HaloSource, a leading global clean
water and antimicrobial technology company, set out to examine the possible reasons for this decline and
the potential impact it may have on global economic growth.
The paper answers the following questions:
How serious is the problem?
> When will access to safe drinking water decline and to what extent?
> Why will access to safe drinking water decline?
How does access to safe drinking water affect economic growth?
> When might the world economy suffer from a decline in access to safe drinking water?
> How can the possible negative economic consequences from a fall in access to safe drinking
water be averted?
1
2. Executive summary
This study was undertaken by HaloSource to contribute to the debate about the impact of the
availability of safe drinking water on global economic growth.
The key findings are:
The rate of improvement in access to safe drinking water has long been in decline; the
percentage of the world population with access to safe drinking water rose by 11.1% between
1970 and 1975 but grew by only 2.4% between 2000 and 2006.
Access to safe drinking water could start to decline as early as 2010. Within the next half-
century, access to safe drinking water may fall below the level of 1977, when the international
community launched its first attempt to increase access to safe drinking water.1
The lack of access to safe drinking water is likely to impinge upon economic growth by 2050,
if not earlier.
The emerging economies are expected to be the first to suffer from a decline in access to safe
drinking water.
Because the emerging economies are an important engine for world economic growth,
the impact on those economies’ performance is likely to have wider implications for the
global economy.
Industry, governments and supranational agencies have an important role to play in conserving
and increasing the supply of potential safe drinking water.
Water purification at the point of use is expected to make a major contribution in increasing
access to safe drinking water around the world.
1 The First World Water Conference was held in 1977 at Mar del Plata, Argentina.
3
3. Methodolog y
Data for access to safe drinking water, as measured by the percentage of the population with access to
safe drinking water and gross domestic product (GDP) per capita growth rates, were collected for 1970
to the present day from international sources. Statistical methods were used to calculate mathematical
models tracking the improvement in access to safe drinking water from 1970 to 2006 and its relation to
economic growth. The methodology of this analysis has been reviewed, commented on and endorsed by
Geoffrey Wood, Professor of Economics of the Cass Business School in London.
This report uses data provided by the international sources listed in table 1, dating back to 1970. In some
cases data were collected by the sources on an irregular basis. This study used the most recent data as of
the date of publication.
Table 1:: Sources used in the study2
Variable What it measures Source Publication date(s)2
Access to safe % population within World Health Organization 1970, 1975, 1980, 1985,
drinking water 1 kilometer of an (WHO) 2006
“improved water source”
United Nations (UN) 1990, 1995, 2000, 2004
Development Indicators
Economic growth % change in GDP per UN statistics database 1970, 1975, 1980, 1985,
capita at Purchasing 1990, 1995, 2000, 2004,
Power Parity3 2006
2 Data are collected on an irregular basis throughout the world. The data used are the most recent as of the date of publication.
3 The Purchasing Power Parity uses the long-run equilibrium exchange rate of two currencies to equalize their purchasing power.
5
4. What is meant by “access to safe drinking water”?
Safe drinking water is drawn from freshwater sources, which represent only 2.5% of the 1.4 billion cubic
kilometers of water covering the earth.4 Less than 1% of this fresh water is safe to drink without prior
treatment.5 Safe drinking water can also be obtained from salt water through desalination.
There are no universal definitions of “safe drinking water” and “access.” As a result, this report will
use the definitions of the international organizations that have provided the data.
Monitoring organizations, under the supervision of the Joint Monitoring Programme ( JMP),6 define
“safe drinking water” as water from an “improved water source,” which includes household connections,
public standpipes, boreholes, protected dug wells, protected springs and rainwater collections.7
The volume of water required to meet basic needs is estimated at 20 liters per day.8 International
monitoring organizations therefore define “access” as the availability of at least 20 liters per person per
day from an “improved” source within 1 kilometer of the user’s dwelling.9
4 Global Freshwater Resources website, http://www.gipsymoth.org/WaterFresh.asp.

5 Ibid.
6 The JMP was established by the World Health Organization (WHO) and the United Nations Children’s Fund (UNICEF) to report on the
status of water supply and sanitation around the world and help countries monitor this sector.
7 Joint Monitoring Programme, MDG Assessment Report 2008, http://www.wssinfo.org/en/40_MDG2008.html.
8 Ibid.
9 Ibid.
7
5. The extent of the drinking water crisis
5.1 Drinking water from 1970 to 2006

Over the past three decades there has been a concerted international effort to increase access to safe
drinking water, including:
Five World Water Forums
Three global targets10 to increase access to safe drinking water
$3 billion11 per annum of aid spent on the water sector in addition to $1.5 billion in noncon-
cessionary lending, mainly by the World Bank, and contributions from national governments12
The increase in access to safe drinking water around the world between 1970 and 2006 is seen in figure 1.
Figure 1:: Average global access to safe drinking water, 1970–200613
120
100
Access to safe drinking water (% population)
80
60
40
20
0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
y = -0.0289x2 + 116.05x – 116460
Year
Figure 1 shows that:
From 1970 to 2006, the percentage of the world’s population with access to safe drinking water
increased from 45% to 85%.14
10 Targets set out by the UN’s World Water Assessment Programme (WWAP) supported by government and nongovernment organizations
worldwide.
11 Dollar amounts are cited in U.S. dollars throughout this paper.
12 “Water, a Shared Responsbility,” the 2nd United Nations World Water Development Report, UNESCO website, 2006, http://unesdoc.
unesco.org/images/0014/001454/145405E.pdf.
13 The curve was calculated by Excel using nonlinear regression techniques applied to data for access to safe drinking water for 151 countries,
listed in appendix 1.
14 The global average of the percentage of the population with access to safe drinking water for 151 countries, listed in appendix 1, as
surveyed by WHO.
9
The rate at which access to safe drinking water is growing is already in decline. Between 1970
and 1975, the percentage of the world’s population with access to safe drinking water increased
by 11.1%. This is compared to a 2.4% rise between 2000 and 2006.15
In 2008, more than 1 billion people around the world lacked access to safe drinking water16 and, barring
significant intervention, that number is likely to increase.
5.2 The future of access to safe drinking water

Based on current trends, predictions for future levels of access to safe drinking water have been
calculated by regression analysis, using the restricted data available and assuming an unchanging
relationship between variables. The results are seen in figure 2.
Figure 2:: Projection of global access to safe drinking water
120
100
80
60
40
20
0
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
y = -0.0289x2 + 116.05x - 116460
Year
Figure 2 shows that:
The global average of access to safe drinking water could decline as early as 2010.
Within the next half-century, access to safe drinking water may fall below the level of 1977,
when the international community launched its first attempt to increase access to safe drinking
water.17
15 Percentages were calculated to one decimal place from the average percentages of populations with access to safe drinking water, as stated
by WHO.
16 ±;EXIV4YVM½GEXMSR(S[RXLI2ERSXYFIW²I7GMIRGI2I[W7ITXIQFIVLXXTIWGMIRGIRI[WGSQEVXMGPIW[EXIV
TYVM½GEXMSRHS[RRERSXYFIW
17 The First World Water Conference was held in 1977 at Mar del Plata, Argentina.
10
The analysis reflects a declining rate of increase, which, if continued, is expected to turn into
absolute decline.
Some regions are expected to suffer from a decline in access to safe drinking water earlier than others.
Data provided by international monitoring organizations have been split into three groups, representing
the developed world, the emerging markets and the developing world.18 The average percentages of the
population in each group with access to safe drinking water have been calculated for the years 1970 to
2006. Those data have been used to calculate predictions for future levels of access in each economic
region. The results are seen in figures 3, 4 and 5.19
Figure 3:: Access to safe drinking water in the developed world
120
100
Average percentage of the population with
access to safe drinking water (%)
80
60
40
20
0
1985 1990 1995 2000 2005 2010 2015 2020
y = -0.0289x2 + 116.05x - 116460
Year
Figure 3 shows that access for the developed world began to decline before 2005. The data points
represent the regionally grouped averages of the 29 developed economies identified in appendix 2.
The shape of the line of best fit reflects a declining rate of increase, which, if continued, is expected to
turn into absolute decline.
18 See appendix 2 for the list of countries.

19 8LIGYVZIWSJFIWX½XETTPMIHXSXLIKVETLW[IVIGEPGYPEXIHF])\GIPYWMRKRSRPMRIEVVIKVIWWMSRXIGLRMUYIW
11
Figure 4::
90 Access to safe drinking water in the emerging economies
80
70
60
50
40
30
20
10
0
1960 1970 1980 1990 2000 2010 2020
y = -0.0289x2 + 116.05x - 116460
Year
Figure 4 demonstrates that access to safe drinking water began to decline in the emerging economies as
early as 2000. The data points represent the regionally grouped averages of the 107 emerging economies
identified in appendix 2.
Figure 5:: Access to safe drinking water in the developing world
60
50
40
30
20
10
0
1960 1970 1980 1990 2000 2010 2020 2030 2040
y = -0.0289x2 + 116.05x - 116460
Year
12
Using regression analysis on the best available data, figure 5 shows that access to safe drinking water
is expected to decline in the developing world by 2015. Please note that the data points represent the
regionally grouped averages of the 15 developing economies identified in appendix 2.
These results are summarized in table 2.
Table 2:: When access to safe drinking water is likely to start to decline (by economic region)20
Region Estimated year of decline20
Developed economies 2005
Emerging markets 2000
Developing world 2015
Access to safe drinking water has already begun to decline in the developed and emerging worlds. The
developing world is expected to follow before long.
5.3 Why access to safe drinking water is expected to be in decline
5.3.1 Demand for potential drinking water is outpacing supply

Rising demand
Water use has been growing at more than twice the rate of population growth in the last century.21
Research suggests that the world population could peak at 9 billion by 2070.22 This level of population
growth will result in increased demand for potential drinking water from agricultural, industrial and
domestic sectors of the economy.
20 8LIHEXIKMZIRVITVIWIRXWXLIRI\X½ZI]IEVTSMRX
21 “Water,” Climate Institute, http://www.climate.org/topics/water.html.
22 Emma Young, “Global Population to Peak in 2070,” New Scientist, 2 August 2001, http://technology.newscientist.com/article/dn1108.
13
Figure 6:: Global water consumption by sector (%)23
8%
23%
Agriculture
Industry
Domestic
69%
Demand from agriculture
Agriculture is the biggest consumer of fresh water. It takes 3 cubic meters of water to produce just 1
kilogram of rice.24 Irrigation is extremely water intensive, leading to withdrawals of 2,000 to 2,555 cubic
kilometers of fresh water per year. Irrigation is also inefficient; only 35–50% of water actually reaches
the crops.25 Land devoted to agricultural use has increased by 12% since the 1960s,26 and the total area
under irrigation has tripled.27 By 2025, water consumption by the agricultural sector is expected to rise
by a factor of 1.2.28
Demand from industry

In high-income countries, industry accounts for up to 59% of total water use.29 In terms of value added
per liter used, the industrial sector is 60 times more productive than the agricultural sector.30 Some
industrial processes are extremely water intensive. For example, 1,500 liters of water are required to
produce 1 kilogram of aluminum.31 In spite of new, less water-intensive processes, the annual volume of
water used by industry is expected to rise to 1,170 cubic kilometers per year by 2025, which represents
21% of freshwater withdrawals.32
23 “Facts and Figures: Water Use” in the International Year of Freshwater 2003 website, December 12, 2002, http://www.unesco.org/water/
iyfw2/water_use.shtml.
24 Ibid.
25 “Irrigation,” Peopleandplanet.net, 26 March 2008, http://www.peopleandplanet.net/doc.php?id=626.
27 “Irrigation,” Peopleandplanet.net, 26 March 2008, http://www.peopleandplanet.net/doc.php?id=626.
28 Global Freshwater Resources website, http://www.gipsymoth.org/WaterFresh.asp.
30 Global Issues website, http://www.globalissues.org/.
31 Ibid.
14
Demand from the domestic sector

It is estimated that the average person in developed countries uses 200–800 liters per day, compared
to 60–150 liters per day in developing nations. Some 100,000 people enter the middle class each day
in India alone,33,34 enjoying ever more water-intensive lifestyles. As a result, demand from the domestic
sector looks set to rise further.
Declining supplies
Supplies of potential drinking water sources are in decline largely due to climate change, which
is expected to account for 20% of the global increase in water scarcity35 this century.36 The
Intergovernmental Panel on Climate Change (IPCC) estimates that the average global surface
temperature will rise by another 1.8˚C to 4˚C this century. Glaciers such as those in the Himalayas are
already in retreat,37 and underground aquifers are running dry.
Rapidly rising demand and falling supplies of fresh water are leaving ever more nations to face chronic
water shortages. By 2025, 1.8 billion people are expected to be living in countries or regions with
absolute water scarcity, and two-thirds of the world population could be under stress conditions.38
5.3.2 The deteriorating quality of drinking water sources

Rising levels of biological and chemical pollution mean that the quality of drinking water is deteriorating.
“Microbial pollution” is the term given to water contaminated with biological pathogens such as bacteria,
viruses and protozoa. These may enter drinking water through fecal contamination or may grow in the
water itself. Drinking water can also become contaminated by chemical pollutants, which can enter the
water from agricultural, industrial and household sources.
Industrial pollutants enter the water system either through the disposal of industrial waste into sewerage
systems or by filtering through into the groundwater from a landfill or incineration site. The destruction
of a chemical store in Basel, Switzerland, in 1986, for example, released 32 different chemicals into
European waters.39
The widespread use of intensive agricultural practices also poses a great risk to the cleanliness of
drinking water. The amount of pesticides used in agriculture has increased 26 times over the last 50
years.40 As a result there are now up to 5 million acute pesticide poisonings a year, which can result in
cancer, developmental disorders, birth defects and immunological or neurological diseases.41
33 McKinsey Global Institute, by Diana Farrell and Eric Beinhocker, 19 May 2007 “Next Big Spenders: India’s Middle Class.” http://www.
mckinsey.com/mgi/mginews/bigspenders.asp
34 “Troubled Waters,” Development Alternatives website, http://www.devalt.org/water/WaterinIndia/issues.htm.
35 “Water scarcity” refers to an inadequate supply of water to satisfy demand..
36 “Water Scarcity and Global Warming,” Time for Change website, http://www.timeforchange.org/water-scarcity-and-global-warming.
37 David Cyranoski, “Climate Change: The Long Range Forecast,” Nature 438 (2005): 275–76.
38 “Did You Know...? Facts and Figures about Water Scarcity,” UNESCO, http://www.unesco.org/water/news/newsletter/180.shtml#know.
39 Dr. Rosalind Stanwell Smith, “Industrial Pollution,” Water Sanitation and Health unit of the World Health Organization, 2002, http://www.
who.int/water_sanitation_health/industrypollution/en/index1.html.
40 “Pollution,” BBC website, http://www.bbc.co.uk/nature/programmes/tv/state_planet/pollution.shtml.
41 “Pesticides and Chemical Pollution,” Peopleandplanet.net, 29 September 2007, http://www.peopleandplanet.net/doc.php?id=109.
15
Modern warfare is another source of chemical pollution. In the aftermath of the Balkan War, for
example, the World Wildlife Fund found that drinking water supplies contained high levels of chemical
contaminants in places hit by the North Atlantic Treaty Organization (NATO) bombs.42
Internationally, there is a growing commitment to reducing water pollution through international and
national agreements, public-private partnerships and improved surveillance of its health effects.43
5.3.3 Cultural constraints

Cultural factors play an important part in the allocation of drinking water in many parts of the world.
In South Asia, caste is often an important factor in determining access. In Andhra Pradesh, India, for
example, low-caste women cannot draw water from wells in high-caste villages. Similarly, ethnic divisions
in much of Latin America restrict certain communities’ access to potable water. In Bolivia, the average rate
of access to piped water is 49% for indigenous speakers, compared to 80% for nonindigenous speakers.44
5.3.4 The rising cost of safe drinking water

Water prices are rising throughout the world. The price of water is largely determined by three factors:
Government intervention in the form of subsidies
Demand
Cost of supply
Declining government intervention

Traditionally, the price of water has been largely determined by government subsidies: it is estimated
that 40% of municipal suppliers do not charge enough to meet their basic costs.45
However, there is a trend toward formal water markets, in which the price of water is determined solely
by the laws of supply and demand. This is already the case in the United States and Australia. The price
of water in these markets is rising rapidly. In Australia, for example, the markets peaked at 75¢ per cubic
meter in December 2006, a tenfold rise year-on-year.46 This reflects the growing tension between supply
and demand and the effects of rising supply costs, discussed below.
42 Alex Kirby, “Danube Pollution Warning,” BBC News, 14 September 1999, http://news.bbc.co.uk/1/hi/sci/tech/446226.stm.
43 ±+YMHIPMRIWJSV(VMROMRK;EXIV5YEPMX]²XLMVHIHMXMSRMRGSVTSVEXMRK½VWXEHHIRHYQ;,3LXXT[[[[LSMRX[EXIVCWERMXEXMSRC
health/dwq/gdwq3rev/en/index.htm.
44 “Human Development Report 2006: Beyond Scarcity: Power, Poverty and the Global Water Crisis,” United Nations Development Pro-
gramme, 2006, http://hdr.undp.org/hdr2006/pdfs/report/HDR06-complete.pdf.
45 Edwin Clark II, “Water Prices Rising Worldwide,” Earth Policy Institute, 7 March 2007, http://www.earth-policy.org/Updates/2007/Update64.
htm.
46 Ibid.
16
Growing tension between supply and demand

Water prices are usually higher in regions where water is scarce. In Northern China, for example, farmers
in Hebei pay between 0.075 and 0.1 RMB (1¢ and 1.5¢) per cubic meter.47 By contrast, farmers in the
water-rich Southern province of Guangdong pay only 0.01 RMB (.015¢) per cubic meter. As demand
for potential safe drinking water increases and the total volume of available freshwater resources falls, the
price of drinking water is likely to increase.
Rising supply costs

Supply is also determined by the infrastructure costs involved in sourcing, cleaning and transporting
drinking water. These supply costs are rising for the following reasons:
The decline in freshwater resources means that water companies have to employ ever more
extreme measures to extract water.
The cost of energy is rising; the UK water industry consumes 3% of energy used in the UK.48
Aging infrastructure needs to be maintained and replaced. More than half the mains below
London are believed to be over 100 years old, and one-third are over 150 years old.49
As demand increases, the water infrastructure has to be extended to serve more consumers.
Between 2005 and 2010, 1 million more properties are expected to be connected to the water
system in the UK, necessitating 22,000 kilometers of new piping.
47 Erin Henry, “Water Scarcity in the North China Plain: Water Saving Irrigation and Its Implications for Water Conservation,” 8 July 2004,
http://forestry.msu.edu/China/New%20Folder/Erin.pdf.
48 7SYXLIVR;EXIV±'PMQEXI'LERKI)RIVK])J½GMIRG]²7SYXLIVR;EXIV7IVZMGIW0XH[IFWMXILXXT[[[WSYXLIVR[EXIVGSYO)RZMVSRQIRX
'PMQEXI'LERKIIRIVK]IJ½GMIRG]EWT
49 “Waterfacts: Water Resources,” Water UK website, March 2007, http://www.water.org.uk/home/resources-and-links/waterfacts/resources.
17
6. The impact of access to safe drinking water
Throughout the world there is a strong correlation between access to safe drinking water and economic
growth.50 That correlation may be explained in three ways:
Higher levels of access to safe drinking water are likely to increase the rate of economic growth
by improving the health and education of a population and minimizing the costs of unsafe
drinking water.
Economic growth and access to safe drinking water both depend on the same factors, such as
socioeconomic stability.
Economic growth results in higher levels of access to safe drinking water because governments
may increase spending on water infrastructure.
This report explores the ways in which access to safe drinking water and economic growth may be linked.
6.1 The health effects of unsafe drinking water

According to the World Bank, 88% of disease in the developing world is caused by unsafe drinking water.
Diseases from microbial pollution may be the result of the contamination of drinking water by:
Human or animal feces containing pathogenic bacteria and viruses that may cause cholera,
amoebic and bacillary dysentery and other diarrheal diseases.
Parasites, such as Dracunculus medinensis, in organisms living in the water.
Table 3:: Incidence rate and cause of diseases related to drinking water
Morbidity (incidence of
Disease disease/year in 1,000s) Relationship of disease to drinking water
Cholera 14051 Caused by the presence of the bacterium Vibrio cholerae in

drinking water
Diarrheal diseases 1,000,00052 Caused by a host of bacterial, viral and parasitic organisms in
contaminated drinking water
Dracunculiasis 10053 Caused by the presence of a Cyclops that has ingested the larvae of
the large nematode (roundworm) Dracunculus medinensis
Poliomyelitis 114,00054 Caused by the presence of the polio virus in water
51 52 53 54
50 See appendix 5.
51 See appendix 3.
52 Ibid.
53 Ibid.
54 Ibid.
19
Chemical pollution is also a frequent cause of disease. The health effects caused by chemical pollutants
often arise after many years and may even be intergenerational. The increased rate of cancer in China is,
for example, blamed on chemical pollution in its waters.55
Five million people, mostly children, die from diseases caused by poor-quality water supplies every year.56
This explains the strong correlation between access to safe drinking water and child mortality and life
expectancy rates.57
Water-related diseases are of particular concern in countries with high numbers of people with
HIV/AIDS.58 At the start of the Decade for Action,59 where he spoke about hope in the fight against
HIV/AIDS, Kofi Annan declared, “We shall not finally defeat the infectious diseases that plague the
developing world until we have also won the battle for basic health care, sanitation and safe drinking
water.”60
6.2 The impact of unsafe drinking water on education

The findings in “Effect of Water and Sanitation on Childhood Health in a Poor Peruvian Peri-Urban
Community,” as well as in the study “Early Childhood Diarrhea Predicts Impaired School Performance,”
suggest that improving education standards in much of the developing world is dependent upon access
to safe drinking water.61 Table 4 shows the correlation coefficients between access to safe drinking water
and the percentage of children reaching grade 5, as published by the UN. This is used as a measure of the
level of education in a nation, for regions of low, medium and high human development.62 The correlation
coefficients across these regions are greater than zero. This reveals that there is a strong link between high
levels of access to safe drinking water and high levels of education.
55 Joseph Kahn and Jim Yardley, “As China Roars, Pollution Reaches Deadly Extremes,” New York Times, 26 August 2007, http://www.nytimes.
com/2007/08/26/world/asia/26china.html.
56 “Water-Related Diseases,” Wildfowl & Wetlands Trust website, http://www.wwt.org.uk/text/686/water_related_diseases.html.
57 See appendix 3.
58 “Water, Sanitation and Hygiene: Common Water and Sanitation-Related Diseases,” UNICEF, 1 April 2005, http://www.unicef.org/wes/in-
dex_wes_related.html.
59 %XMXW½JX]IMKLXLWIWWMSRXLI92+IRIVEP%WWIQFP]EHSTXIHEHVEJXVIWSPYXMSRHIGPEVMRK¯XLI-RXIVREXMSREP(IGEHIJSV%GXMSR
Water for Life, to focus on water-related issues with particular emphasis on the role of women.
60 UN press release, 30 November 2001, http://www.un.org/News/Press/docs/2001/sgsm8055.doc.htm.
61 Dr. William Checkley, et al., “Effect of Water and Sanitation on Childhood Health in a Poor Peruvian Peri-Urban Community,” The Lancet
363, no. 9403 (10 January 2004): 112–118. Breyette Lorntz, et al., “Early Childhood Diarrhea Predicts Impaired School Performance,” The
Pediatric Infectious Disease Journal, VOL 25, Issue 6 (June 2006): 513–520.
62 8LI9RMXIH2EXMSRWGPEWWM½IWREXMSRWEGGSVHMRKXSXLIMVZEPYISRXLI,YQER(IZIPSTQIRX-RHI\8LMWMRHI\MWEQIEWYVISJHIZIPSTQIRX
incorporating life expectancy, knowledge and income.
20
Table 4:: Correlation between access to safe drinking water and level of education 63 64 65
Correlation of access to Regions of low Regions of medium Regions of high

safe drinking water63, 64 human development human development human development Global
Children reaching 0.3146 0.6614 0.3223 0.4328

grade 5 65
Table 4 shows that, in regions of low and medium development, there is a strong relationship between
access to safe drinking water and educational achievement, as measured by the number of children reach-
ing grade 5. In regions of greater development, access to safe drinking water is nearly universal and so
changes to this level are small and have little effect.
A decline in access to safe drinking water has a negative impact on education:
Illness related to drinking water and the time spent collecting water can, in some cases, prevent
children from attending school. In Tanzania, for example, school attendance levels are 12%
higher for girls who live within 15 minutes of a source than for girls who live an hour away.66 It
is estimated that a lack of safe drinking water costs 443 million school days a year throughout
the world.67
The children who do attend school are believed to have a reduced learning potential as a result
of parasitic infection, which, according to the 2006 Human Development Report, affects 150
million children throughout the world each year.68
6.3 The costs of a lack of safe drinking water

A lack of safe drinking water can create a heavy cost burden on nations’ economies, potentially
hindering growth.
The economic costs incurred by a lack of access to safe drinking water can be divided into the direct costs
of contracting disease, the indirect costs related to disease and the cost of time lost due to the lack of access.
6.3.1 Direct costs of contracting disease

The cost of the treatment of water-related diseases is a heavy burden on families throughout the
developing world. Many nations have a roughly static incidence rate of three episodes of diarrhea every
63 8LI4IEVWSR4VSHYGX1SQIRX'SVVIPEXMSRGSIJ½GMIRXWLS[WXLIHIKVIISJGSVVIPEXMSRFIX[IIRX[SZEVMEFPIW%ZEPYISJTSWMXMZIVIT-
resents perfect positive correlation, 0 equates to no correlation and negative 1 indicates positive negative correlation. Thus, the closer the
value is to positive or negative 1, the stronger the correlation.
64 WHO 2006.
65 World Development Indicators Database 2004.
67 Ibid.
68 Ibid.
21
year; in these nations, a child could suffer from a water-related disease every four months. In a family
of four young children, the parents would be likely to have a child with a potentially fatal disease once a
month.69 At these rates, even the cheapest drugs, such as oral rehydration therapy, become expensive.70
6.3.2 Indirect costs related to the disease

The cost burden of ill health on the economy is twofold:
Lost economic contribution of the sick or prematurely deceased
Lower productivity resulting from sick and less educated workers
The indirect costs may accrue from lost work and lower productivity of those afflicted in addition to
those who care for the afflicted.
6.3.3 Costs related to time spent on water collection

In many parts of the world, collecting safe drinking water is extremely time-consuming. It is, for
example, estimated that the average time each household in India spends on water collection every day
is 56 minutes.71 This is time that could be spent on economic activity. A study conducted by the Self
Employed Women’s Association (SEWA) in India found that reducing water collection by one hour a
day would enable a woman to earn up to $100 more a year, depending on her enterprise.72
69 Olivier Fontaine, Paul Garner and M. K. Bahn, “Oral Rehydration Therapy: The Simple Solution for Saving Lives,” BMJ 334 (2007): supplement
1, http://www.bmj.com/cgi/content/full/334/suppl_1/s14.
70 Ibid.
72 Ibid.
22
7. Will drinking water drought stall economic
growth by 2050?
7.1 When is growth most likely to be affected?

Using historical data for GDP per capita growth rates and levels of access to safe drinking water
throughout the world, one can examine in greater depth the impact of a likely fall in access to safe
drinking water on future per capita growth.
Figure 7 shows access to safe drinking water relative to gross domestic product per capita growth for all
nations for the years 1970 to 2006.73
Each data point shows the percentage of the population with access to safe drinking water and
the GDP per capita growth rate for a nation in any given year.
The line of best fit 74 shows the predicted level of global GDP per capita growth at each level of
access to safe drinking water.
Figure 7:: Global access to safe drinking water relative to average global GDP per capita growth
120
100
Access to safe drinking water
80
(% population)
73.4%
60
40
20
0
–40 –20 0 20 40 60 80 100 120
y = -0.0289x2 + 116.05x - 116460
Average GDP per capita growth (%)
Figure 7 shows that GDP per capita growth is expected to be 0% when only 73.4% of the world
population has access to safe drinking water.
73 See appendix 1 for the list of countries.

74 8LIPMRISJFIWX½X[EWGEPGYPEXIHF])\GIPYWMRKPMRIEVVIKVIWWMSRXIGLRMUYIW
23
7. Will drinking water drought stall economic growth by 2050?
Figure 8 shows predictions for the percentage of the world population with access to safe drinking water.
It reveals that the level of access corresponding to negligible growth is expected to be reached by 2050 at
the latest.
Figure 8:: Projection of global access to safe drinking water

120
100
80
60
40
20
0
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
y = -0.0289x2 + 116.05x - 116460
Year
Using the averages for the percentage of the population with access to safe drinking water in the
developed, emerging and developing economies, one can estimate when a lack of access to safe drinking
water is likely to affect growth in each economic region.
In figures 9, 10 and 11, the regional average of the percentage of the population with access to safe
drinking water is plotted against the average GDP growth rate of each region for the years 1970 to 2006.
These figures reveal the average percentage of the population with access to safe drinking water that cor-
responds to zero growth, other factors being equal, for each region.
24
Figure 9:: Access to safe drinking water relative to GDP per capita growth for the developed world
120

access to safe drinking water (%) 100
80
60
52.4%
40
20
0
–1 0 1 2 3 4 5 6
y = -0.0289x2 + 116.05x - 116460
GDP per capita growth rate (%)
Growth is predicted to stall when less than 52.4% of the developed world has access to safe drinking
water. Please note that the data points represent the regionally grouped averages of the 29 developed
economies as listed in appendix 2.
Figure 10:: Access to safe drinking water relative to GDP per capita growth for the emerging economies
90
80
70
60
50
40
39.6%
30
20
10
0
–1 0 1 2 3 4 5 6 7
y = -0.0289x2 + 116.05x - 116460
Growth is expected to suffer when less than 39.6% of the emerging markets have access to safe drinking
water. Please note that the data points represent the regionally grouped averages of the 107 emerging
25
Figure 11:: Access to safe drinking water relative to GDP per capita growth for the developing world
60
50
40
30
21.3% 20
10
0
–1 0 1 2 3 4 5 6 7
y = -0.0289x2 + 116.05x - 116460
Growth is likely to be affected when less than 21.3% of the developing world has access to safe drinking
water. Please note that the data points represent the regionally grouped averages of the 15 developing
The results of the above figures are summarized in table 5.
Table 5:: Level of access that corresponds to 0% GDP per capita growth
% population with access

Region to safe drinking water
Developed world 52.4
Emerging markets 39.6
Developing world 21.3
Figures 12, 13 and 14 show predictions for future levels of access to safe drinking water in the developed
world, emerging markets and developing world. They reveal the year when the lack of access to safe
drinking water is expected to coincide with negligible growth.
26
Figure 12:: Predictions for future levels of access to safe drinking water for the developed world
120
100
80
60
52.4%
40
20
0
1985 1990 1995 2000 2005 2010 2015 2020
y = -0.0289x2 + 116.05x - 116460
Year
In the developed world, the level of access to safe drinking water corresponding to zero growth is
expected to be reached by 2015. Please note that the data points represent the regionally grouped
averages of the 29 developed economies as listed in appendix 2.
Figure 13:: Predictions for future levels of access to safe drinking water for the emerging economies
90
80
70
60
50
40
39.6%
30
20
10
0
1960 1970 1980 1990 2000 2010 2020
y = -0.0289x2 + 116.05x - 116460
Year
In the emerging markets, the level of access to safe drinking water corresponding to zero growth is
averages of the 107 emerging economies as listed in appendix 2.
27
Figure 14:: Predictions for future levels of access to safe drinking water for the developing world
60
50
40
30
21.3% 20
10
0
1960 1970 1980 1990 2000 2010 2020 2030 2040
y = -0.0289x2 + 116.05x - 116460
Year
In the developing world, the level of access to safe drinking water corresponding to zero growth is
averages of the 15 developing economies as listed in appendix 2.
The results are summarized in table 6.
Table 6:: When a lack of access to safe drinking water is expected to impinge upon growth

2015

2015

2035
The models suggest that these are the dates at which GDP growth is expected to fall to 0%. At this point,
significant efforts will have to be employed to increase access to safe drinking water. By 2050, the world is
expected to be suffering from a water-induced growth crisis. This is likely to affect the economies of the
emerging and the developed world first before reaching the developing economies.
7.2 How is growth expected to be affected?
7.2.1 The emerging markets

The emerging markets are likely to be the first economies to suffer from a fall in access to safe drinking
water. These economies include the BRIC economies of Brazil, Russia, India and China, which analysts
have predicted will become the largest economies by 2050.75
75 Dominic Wilson and Roopa Purushothaman, “Dreaming with BRICs: The Path to 2050,” Global Economics paper 99, the Goldman Sachs
Group, 1 October 2003, http://www2.goldmansachs.com/ideas/brics/book/99-dreaming.pdf.
28
Case studies of China and India in appendix 6 demonstrate how a lack of access to safe drinking water
might prevent the emerging economies from sustaining the record growth rates predicted by analysts.
Instead of high growth and prosperity, these regions may see:
Rising labor costs fueled by a rise in drinking water prices.
Lower productivity; the higher incidence of disease may lower productivity in the short run
and undermine expenditures on education in the long run.
Greater investment risk; a lack of safe drinking water could ignite ethnic and regional tensions.
Furthermore, the evidence suggests that the worst-affected regions could be the most economically active
areas of the emerging markets, such as Northern China and Tirupur, the Indian “Knitwear capital.” 76
7.2.2 The developed world

The focus of our world economy is already shifting toward the emerging nations.77 According to
Goldman Sachs, the BRIC economies contributed to 30% of global growth in the last five years. Yet their
economies are by no means isolated. Since predictions of their future growth were first suggested, the
BRIC economies have received a flood of investments from the developed world, and today they are the
destination for over 15% of the world’s foreign direct investment.78 Furthermore, their share of global
trade has doubled since 2001 to 15%.79 Not only are the economies of the developed world therefore
heavily invested in the emerging markets, but the domestic industries of those nations also rely heavily
on their expanding import/export markets. A case study of California80 demonstrates how the impact of
the decline in access to safe drinking water in the developed world could be compounded by the decline
of the emerging economies. Growth in the developed world may therefore also suffer from:
The loss of export markets in the emerging and developing world.
Decline in travel and tourism.
Rising labor costs in agriculture and industry.
Lower productivity due to an increased health burden.
76 Nina Brooks, “Impending Water Crisis in China,” Arlington Institute website, http://www.arlingtoninstitute.org/wbp/global-water-crisis/457#.
77 Dominic Wilson and Roopa Purushothaman, “Dreaming with BRICs: The Path to 2050,” Global Economics paper 99, the Goldman Sachs
Group, 1 October 2003, http://www2.goldmansachs.com/ideas/brics/book/99-dreaming.pdf.
78 Dominic Wilson, Roopa Purushothaman, Jim O’Neill and Anna Stupnytska, “How Solid Are the BRICs?” Global Economics paper 134, the
+SPHQER7EGLW+VSYT(IGIQFIVLXXT[[[LIRPI]VIEHMRKEGYOLIRPI]QGRWJ½PIW+SPHQER7EGLW2I\X)PIZIRTHJ*-0)
GoldmanSachsNextEleven1205.pdf.
79 Ibid.
80 See appendix 6 for an in-depth study of drinking water in California.
29
7.2.3 The developing world

The evidence suggests that the economies of the developing world will be the last to suffer from a lack of
access to safe drinking water. However, they continue to depend on the developed world and increasingly
rely on the emerging economies for aid and assistance in increasing access to safe drinking water and
attaining other development goals, which foster economic growth. A growth crisis in the developed and
emerging economies could therefore reduce access to safe drinking water and cause growth to slow much
sooner than expected. For example, Uganda, whose drinking water sector is the subject of a case study in
appendix 6, would be expected to suffer from:
Loss of export markets in the emerging and developed world.
Lower productivity.
Rising labor costs.
30
8. What can be done?
This section looks at possible solutions to declining access to safe drinking water. It examines the
expected volume of water saved, the anticipated cost and the practicality of the method.
8.1 Conserving water
8.1.1 Reducing leakage

Method
For long-term success, water infrastructure typically requires a “full fix.” In the short-term, however, local
repairs or sleeves can minimize leakage from pipes.81
Volume of water saved

It is estimated that replacing aging pipes in the United States can reduce leaks of treated water from
10–20% to as little as 2%.82
Cost
The cost of replacing aging water pipes in the United States over the next two decades is estimated at
$1 trillion.83
Practicality
This is most applicable to urban areas with large water infrastructure systems.
8.1.2 Recycling water

Method
“Recycling water” refers to the purification of waste water on a large scale for direct or indirect potable
uses, whereby the treated water is released to another water body, such as a reservoir, before reuse.84

The volume of fresh water is extended, so this is a sustainable option.
Cost
It is expensive, as shown by the $481 million plant that opened in Orange County, California, in 2008.85
81 Michael McNamara, et al. “Clean Technology Primer,” Jefferies CleanTech Review 3, no. 2 (2008).
82 Ibid.
83 M. Tullmin, “Costs Related to Water and Water Infrastructure,” Corrosion-Club.com website, http://www.corrosion-club.com/watercosts.htm.
84 4IXIV6SKIVW±*EGMRKXLI*VIWL[EXIV'VMWMW²7GMIRXM½G%QIVMGER%YKYWX
85 Randal C. Archibold. “From Sewage, Added Water for Drinking,” New York Times, 27 November 2007, http://www.nytimes.
com/2007/11/27/us/27conserve.html?ex=1353906000&en=58e0e5919db461b5&ei=5124&partner=permalink&exprod=permalink.
31
Practicality
There are environmental benefits:86
Water recycling eliminates the need to divert water from sensitive ecosystems.
It reduces pollution as waste water is no longer disposed of without treatment.
It extends available freshwater supplies.
8.1.3 Water pricing87

Method
Increase the price of water to reduce demand and offset the real cost of providing it.

Wastage of water is minimized, and investment in infrastructure is encouraged.
Cost
There is a cost benefit to the government, which no longer has to subsidize the water sector.
Practicality
The introduction of water pricing must not harm the poor. One solution that has been proposed is to
use a block-rate pricing system that charges more for higher levels of consumption.
8.1.4 Improving irrigation methods88

Method
Eradicate water leaks in the lining of water channels.
Store water in underground aquifers during the nongrowing season to be released on demand
in the growing season.

A 10% drop in irrigation water would save more than is used by all consumers.89
Cost
There are large cost savings involved. In Kenya, for example, there is an estimated $20 return on each
$15 spent on a bucket drip irrigation kit.90
86 ±;EXIV6IG]GPMRKERH6IYWI8LI)RZMVSRQIRXEP&IRI½XW²97)RZMVSRQIRXEP4VSXIGXMSR%KIRG][IFWMXILXXT[[[ITEKSZVIKMSR
water/recycling/.
87 Edwin Clark II, “Water Prices Rising Worldwide,” Earth Policy Institute, 7 March 2007, http://www.earth-policy.org/Updates/2007/Update64.
htm.
88 4IXIV6SKIVW±*EGMRKXLI*VIWL[EXIV'VMWMW²7GMIRXM½G%QIVMGER%YKYWX
89 Ibid.
90 “Improving Irrigation Technology,” Pakissan.com website, http://www.pakissan.com/english/newtech/improving.irrigation.technology.shtml.
32
Practicality
It eliminates the need for large surface reservoirs, which are inefficient, particularly in the hot,
dry areas most severely affected by the water crisis.
As the area of land under irrigation is extended, improving irrigation methods will become
ever more important in conserving water.
8.1.5 Virtual water trade91

Method
Countries with low supplies of fresh water are encouraged to import food and other water-intensive
agricultural products. In this way, remaining freshwater reserves can be devoted to increasing the supply
of drinking water.

It is estimated that global free trade could increase the total volume of virtual water traded
internationally to more than 1.7 trillion cubic meters from its present level of 800 billion cubic meters.
Cost
The costs involved in restructuring entire economies cannot be quantified.
Practicality
The nations in question would lose their self-sufficiency.
8.1.6 Drought-resistant crops

Method
Drought-resistant crops are not widely used currently. For long-term success, these genetically modified
plants need to be widely accepted as a food source, particularly in LEDCs (less economically developed
countries). It will take four to five years of field testing and clearing regulatory hurdles before the
drought-resistant plants can be sold.92

Drought-resistant crops can grow with a third of the normal water requirement.93
91 Ibid.
92 “Drought Resistant GM Crops Ready ‘in 4 Years,’ ” Checkbiotech.org website, 8 October 2008, http://greenbio.checkbiotech.org/news/
drought_resistant_gm_crops_ready_four_years.
93 “Crops for a Drought,” Times Online, 27 November 2007, http://www.timesonline.co.uk/tol/news/uk/article2951028.ece.
33
Cost
Although specific cost studies on drought-resistant crops have not taken place, an example of the type of
cost that could be avoided through the use of drought-resistant crops can been seen in Australia,
where the unreliability of rain and the inability of the crops to survive through drought have cost the
government more than AUS $3 billion ($2.5 billion) in relief since 2001.94
Practicality
The use of drought-resistant crops is most applicable to poverty-stricken areas prone to drought, such
as Somalia and Zimbabwe. Drought-resistant crops could greatly reduce the number of people dying of
starvation by providing reliable crops that would have a higher resistance to drought conditions.
8.2 Increasing supply

Conserving water alone will not be enough to meet projected demand. New technology that makes
unsafe drinking water safe to drink must also be used to increase supply. Such technology can be adopted
on a large scale and at a household level.
8.2.1 Desalination
Method
The most frequent method of desalination is through the use of reverse osmosis, in which a semipermeable
membrane separates salt from the water. Numerous countries have adopted this technology to solve their
water problems.
Volume of water produced

According to the International Desalination Association, 13,080 desalination plants worldwide produce
more than 12 billion gallons (54.5 billion liters) of water a day.95
Cost
Desalination is extremely energy intensive, and the water produced is very expensive due to the cost of
moving large volumes of desalinated water across land. As a result, desalination requires heavy subsidies.
Practicality
The large amounts of brine that are produced and then disposed of may have a significant
environmental impact.
94 John Dale Dunn, MD, PhD, “Australia Will Promote Drought-Resistant Crops,” the Heartland Institute, 1 March 2008, http://www.heartland.
org/publications/environment%20climate/article/22793/Australia_Will_Promote_DroughtResistant_Crops.html.
95 Kathryn Kranhold, “Water, Water Everywhere....” Wall Street Journal, 17 January 2008, Wall Street Journal Online http://online.wsj.com/
article/SB120053698876396483.html?mod=googlenews_wsj.
34
8.2.2 Water purification at the point of use

Large-scale initiatives to purify drinking water are not always suitable solutions for two reasons:
Contamination may occur after purification and before consumption—i.e., “on its way” to the
end user. This is a widespread and significant occurrence in the developing world.96
The cost of large-scale initiatives is hard to justify in areas of low population density.
Due to the expense associated with centralized water treatment, approaches for decentralized and
household water treatment technologies are practical and desired in both the developed and developing
world. There are many different types of household water treatment technologies, but the efficacy of
those technologies is often undermined by a lack of sanitation in water storage methods.
Furthermore, regardless of the achievement of the desired water quality, emergencies, engineering delays
and periodic treatment failures occur. Point-of-use (POU) technology can provide effective controls;
however, choosing the right POU treatment technology is largely dependent on the contaminants to be
removed and regional resources for treatment.
Globally, nitrates, arsenic and fluoride are the chemical contaminants of greatest concern and can be
challenging to remove. Sometimes, chemical contaminants are detectable by the consumer because of an
unacceptable taste, odor or appearance, whereas the presence of harmful or even deadly microbial agents
can easily go unnoticed.97
Technologies that purify water at the point of use overcome those hurdles. The examples of water treat-
ment presented in table 7 reveal their ability to purify water rapidly at a low cost anywhere in the world.
96 Jim Wright, Stephen Gundry and Ronan Conroy, “Household Drinking Water in Developing Countries,” Tropical Medicine and International
Health 9, no. 1 (January 2004): 106–117.
97 (V/IPP]6I]RSPHW±;,3´W9THEXIH+YMHIPMRIWJSV(VMROMRK;EXIV5YEPMX]²;EXIV'SRHMXMSRMRK
4YVM½GEXMSR1EKE^MRIRS.ERYEV]
2009), http://www.wcponline.com/pdf/0901On_Tap.pdf.
35
Table 7:: Methods of water purification at the point of use
Type of water treatment Material Cost Filtered Purified Health benefit
Mechanical (disposable Cloth/paper/plastic $

cartridge)
Biological Ceramic/sand $$
Chemical Alum/chitosan/resin $$$
Adsorption Carbon block/zeolite $$
Bacteriostatic Silver $$$
Heat Boil/distill $/$$
Irradiation UV (solar/electric) $/$$
Oxidation Bleach/iodine/ozone $$$$
HaloPure technology Contact biocide $
8.3 Increasing investment in the water sector

Investment in the water sector is key to the adoption of the above technologies to increase the provision
of access to safe drinking water. The responsibility for this investment relies on:
The international community, including bilateral and multilateral aid
National governments
Private utility companies
Other governmental and nongovernmental organizations
Funds that provide capital for research and development and the adoption of new technologies
8.3.1 The international community

The international community finances the water sector through grants or microfinance loans.
36
Grants
The water sector receives, on average, $3 billion per annum in grants, in addition to $1.5 billion of
nonconcessionary lending, mainly by the World Bank, and contributions from national governments.
Further analysis of this aid reveals two points of concern:
The value of the aid devoted to the water sector is in decline: excluding aid sent to Iraq, the real
value of aid supplied to the water sector is lower than in 1996.98
Water aid is given less priority by the international community: overseas development aid
(ODA) for water as a percentage of total ODA has fallen from 8.7% in 1996 to 6.5% in 2002.
There are signs of an increase in aid supplied in the form of grants from multilateral organizations,
such as the World Bank’s International Development Organization (IDA) and the European Union.
Experience shows that such multilateral grants are better targeted to those most in need.99
Microfinance
The adoption of microfinance in the water sector, which provides communities with loans to cover the
cost of water projects, is a fairly recent development. This works on the assumption that people with low
incomes are willing to pay toward water systems if they are able to. These schemes have two advantages:
This is an alternative to having to apply and wait for a grant.
The approach is scalable as the loan repayments from an initial investment can be lent to others
in need.
Nonmonetary intervention in the water sector

The international community also has an important role in:
Raising awareness of the consequences of declining access to safe drinking water.
Laying down guidelines to preserve freshwater sources.
Encouraging and providing incentives for water conservation.
8.3.2 National governments100

Government intervention in the water sector is justified on three grounds:
Safe drinking water is considered a merit good as it has public as well as private benefits.
98 ±3J½GMEP(IZIPSTQIRX%WWMWXERGIXSXLI;EXIV7IGXSV²*MRERGMRK;EXIVJSV%PP[IFWMXILXXT[[[½RERGMRK[EXIVJSVEPPSVKMRHI\TLT#MH!
751&L=ht...38.121%2Frobots.txt%3F%3F%2F.
99 Ibid.
100 David Le Blanc, “A Framework for Analyzing Tariffs and Subsidies in Water Provision to Urban Households in Developing Countries,” United
Nations Division for Sustainable Development, February 2007, http://www.un.org/esa/sustdev/publications/water_tariffs.pdf.
37
Economies of scale in the water sector favor bulk provision of the resource.
The provision of safe drinking water is extremely capital intensive. As a result, the required
investment is beyond the means of individual households and prevents utility companies from
carrying the additional cost of water subsidies.
National intervention in the financing of the water sector frequently takes the form of subsidies. Water
subsidies lower the price of water relative to other consumption goods, which should in theory increase
uptake and ultimately the consumption of safe drinking water. Subsidies in the water sector may take the
form of direct or indirect subsidies.
In indirect subsidies, the government subsidizes utility companies for losses incurred from below-cost
tariffs. For example, under the increasing block tariff (IBT), consumers using less than a threshold
quantity of water pay a discounted price.
Direct subsidies are paid directly to consumers to cover the costs involved in securing access to safe
drinking water. For example, direct consumption subsidies are paid directly to eligible households to
cover their water bills.
8.3.3 The private sector

In many countries such as the UK the water sector has been deregulated. In this case, private utility
companies are also responsible for financing investment in the water sector.
It is estimated that private utility companies in England and Wales will have invested £88 billion ($144
billion) in the water sector from 1980 to 2010. These investments are necessary to increase the quantity
of water supplied, ensure environmental sustainability and improve the quality of drinking water:
Between 2005 and 2010, 1 million more properties are due to be connected to the water
system, necessitating 22,000 kilometers of new piping.
Investment is needed to alleviate the flooding of sewers.
The quality of drinking water is of a high standard throughout the UK, with over 99.5% of
water reaching national standards.
8.3.4 Other national organizations

In nations with a deregulated water sector, other governmental and nongovernmental organizations play
an important role in ensuring efficiency in the financing of the water sector. In the UK, these include
regulators such as OfWat (in England and Wales), Utility Regulator for Northern Ireland (in Northern
Ireland) and the Water Industry Commission for Scotland (in Scotland). Consumer organizations such
38
as the Waterwatchdog and the Consumer Commission for Water (CCWater) in England and Wales also
keep a check on prices.
8.3.5 Investment in water funds

Water funds, which invest in individual cleantech companies, are becoming increasingly popular among
institutional investors:
t *O "RVB3FTPVSDFT'VOE UIFmSTUXBUFSGVOEUPCFMJTUFEPOUIF-POEPO4UPDL

Exchange, raised $100 million.
t 5PUBMJOWFTUNFOUJOTVDIGVOETXBTFYQFDUFEUPSJTFUPCFUXFFOCJMMJPOBOE
billion in 2008.101
101 Michael McNamara, et al. “Clean Technology Primer,” Jefferies CleanTech Review 3, no. 2 (2008).
39
9. Conclusion
Economic growth seems to be dependent on high levels of access to safe drinking water.
Access to safe drinking water is already beginning to decline in the emerging markets due to growing
demand for supplies of an increasingly scarce resource.
Furthermore, the quality of drinking water is in decline in many parts of the world, and increasing
socioeconomic barriers, such as rising water prices, mean that fewer people have access to safe
drinking water.
This decline in access to safe drinking water is expected to result in:
A higher disease burden
Lower education levels
Lower worker productivity
Higher labor costs
Slower economic growth
Research suggests that the economies of the fastest-growing regions in the world, such as Northern
China and other emerging markets, are likely to be the first to suffer as a result of a fall in access to safe
drinking water. Globalization and interdependence among the world’s economies mean that a growth
crisis in one such region could have a subsequent effect on the developed world.
Possible measures to avert the crisis include increasing the investment in the conservation and supply of
safe drinking water throughout the world and improving the management of these resources through
greater cooperation on international and local levels.
In summary, failing to prevent a fall in access to safe drinking water in economically productive areas
on which the developed world is becoming increasingly dependent, such as Northern China and the
other emerging economies, has the potential to have a significant impact on the outlook for economic
growth worldwide.
41
Appendixes
Appendix 1: Countries used in the analysis of global trends in access to safe

drinking water from 1970 to 2006
Albania Germany Papua New Guinea
Algeria Ghana Peru
Angola Greece Philippines
Antigua and Barbuda Grenada Poland
Armenia Guinea-Bissau Portugal
Australia Guyana Qatar
Austria Haiti Romania
Azerbaijan Honduras Russian Federation
Bahamas Hong Kong, China Rwanda
Bahrain Hungary Saint Kitts and Nevis
Barbados Iceland Saint Lucia
Belarus India Saint Vincent and the Grenadines
Belgium Ireland Samoa
Benin Israel Saudi Arabia
Bhutan Italy Senegal
Bosnia and Herzegovina Jamaica Seychelles
Brazil Japan Sierra Leone
Brunei Darussalam Jordan Singapore
Bulgaria Kazakhstan Slovakia
Burkina Faso Kenya Slovenia
Cambodia Korea Solomon Islands
Cameroon Kuwait South Africa
Canada Kyrgyzstan Spain
Cape Verde Lao People’s Democratic Republic Sri Lanka
Central African Republic Latvia Sudan
Chad Lebanon Suriname
Chile Lesotho Sweden
China Libyan Arab Jamahiriya Switzerland
Colombia Lithuania Syrian Arab Republic
Comoros Luxembourg Tajikistan
Congo Macedonia (FYROM) Tanzania
Costa Rica Madagascar Thailand
Côte d’Ivoire Malaysia Timor-Leste
Croatia Maldives Togo
Cuba Mali Tonga
Cyprus Malta Trinidad and Tobago
Czech Republic Mauritania Tunisia
Denmark Mauritius Turkey
Dominica Mexico Turkmenistan
Egypt Moldova Ukraine
El Salvador Mongolia United Arab Emirates
Equatorial Guinea Morocco United Kingdom
Eritrea Namibia United States
Estonia Netherlands Uruguay
Ethiopia New Zealand Uzbekistan
Finland Niger Venezuela
France Nigeria Vietnam
Gabon Norway Zambia
Gambia Occupied Palestinian Territories Zimbabwe
Georgia Pakistan
Panama
43
Appendixes
Appendix 2: Country classifications
Developed
Australia Hong Kong, China Norway
Austria Iceland Portugal
Belgium Ireland Singapore
Canada Israel Slovenia
Cyprus Italy Spain
Denmark Japan Sweden
Finland Korea Switzerland
France Luxembourg United Kingdom
Germany Netherlands United States
Greece New Zealand
Developing
Angola Guinea-Bissau
Benin Mali
Burkina Faso Niger
Central African Republic Rwanda
Chad Sierra Leone
Congo Tanzania
Côte d’Ivoire Zambia
Ethiopia
Emerging
Albania Grenada Philippines
Algeria Guyana Poland
Antigua and Barbuda Haiti Qatar
Armenia Honduras Romania
Azerbaijan Hungary Russian Federation
Bahamas India Saint Kitts and Nevis
Bahrain Jamaica Saint Lucia
Barbados Jordan Saint Vincent and the Grenadines
Belarus Kazakhstan Samoa
Bhutan Kenya Saudi Arabia
Bosnia and Herzegovina Kuwait Senegal
Brazil Kyrgyzstan Seychelles
Brunei Darussalam Lao People’s Democratic Republic Slovakia
Bulgaria Latvia Solomon Islands
Cambodia Lebanon South Africa
Cameroon Lesotho Sri Lanka
Cape Verde Libyan Arab Jamahiriya Sudan
Chile Lithuania Suriname
China Macedonia (FYROM) Syrian Arab Republic
Colombia Madagascar Tajikistan
Comoros Malaysia Thailand
Congo Maldives Timor-Leste
Costa Rica Malta Togo
Croatia Mauritania Tonga
Cuba Mauritius Trinidad and Tobago
Czech Republic Mexico Tunisia
Dominica Moldova Turkey
Egypt Mongolia Turkmenistan
El Salvador Morocco Ukraine
Equatorial Guinea Namibia United Arab Emirates
Eritrea Nigeria Uruguay
Estonia Occupied Palestinian Territories Uzbekistan
44
Appendixes
Gabon Pakistan Venezuela

Gambia Panama Vietnam
Georgia Papua New Guinea Zimbabwe
Ghana Peru
Appendix 3: The correlation between access to safe drinking water and

indicators of health
Correlation of access
to safe drinking water Regions of low Regions of medium Regions of high
(WHO 2006) with... human development human development human development Global
Under 5 mortality –0.3354 –0.6449 –0.5703 –0.5169

(per 1,000) live births
(UN 2005)
(percentage)
Life expectancy at 0.1298 0.537635 0.3001 0.322515

birth (UN 2000–05)
(percentage)
Appendix 4: The importance of access to safe drinking water to the role

of women
The provision of access to safe drinking water is crucial to breaking down the gender divide throughout
the world.
A lack of access to safe drinking water imposes an enormous burden on women in particular. In Ghana,
for example, it is estimated that each woman spends 700 hours a year fetching water.102 As the role of
collecting water and looking after ill children falls to women, the time required to gather water prevents
more girls than boys from attending school, thereby reinforcing gender inequalities in opportunity.
Correlation of access to safe drinking Regions of low Regions of medium

water (WHO 2006) with... human development human development
Female adult literacy rate 0.089707 0.445381

(percentage aged 15 and older (UN
1995–2005)
Male adult literacy rate (percentage 0.033352 0.431296

aged 15 and older (UN 1995–2005)
The health of women without access to safe drinking water is also more at risk than that of their male
counterparts. In addition to the dangers of drinking unsafe drinking water, these women may suffer as
a result of carrying loads of up to 50 pounds (equivalent of 23 kilograms) on the head, hip or back as
they fetch water.103 Another risk for many women and girls is the threat of sexual attack as they leave the
village in search of water.104
102 “Gender Aspects of Water and Sanitation,” WaterAid website, http://www.wateraid.org/documents/plugin_documents/microsoft_word__

gender_aspects.pdf.
103 Yifat Susskind, “Why Water Rights Are Women’s Rights,” AlterNet website, 5 August 2008, http://www.alternet.org/water/93903/why_
water_rights_are_women%27s_rights/.
104 Ibid.
45
Appendixes
The above examples highlight the importance of access to safe drinking water for improving health and
education as well as increasing gender equality. It is thus vital in the human development of a nation.
Appendix 5: The correlation between access to safe drinking water and GDP
per capita growth rates

0.616828 0.014343 0.676017 0.645268

The positive values reveal that high levels of access to safe drinking water equate to high levels of GDP
per capita growth. This is most likely to be a case of bivariate correlation, whereby the causation runs in
both directions—i.e., an improvement in access to safe drinking water increases GDP per capita growth,
and higher GDP per capita growth increases levels of access to safe drinking water.105
Appendix 6: Case studies in the political ramifications of access to safe

drinking water
Case study: China
In a recent poll of 4 million people by the All-China Environmental Federation (ACEF), 96% of those
surveyed believed that China was already experiencing a water shortage crisis.106
China is indeed facing immense problems in balancing supply with demand, and this situation looks set
to worsen in the coming years due to falling supplies of freshwater resources, widespread wastage of the
resource and rising demand for drinking water.
The supply of water available is decreasing due to climate change:
An MSNBC report published in 2006 revealed that the glaciers in the Qinghai-Tibetan
Plateau are shrinking at a rate of 7% a year, which is already affecting the availability of water in
the dry season.107
Over the past 15 years the lakes in the Yangtze River region have decreased by 10.64% and the
Ministry of Water Resources has reported a drop of 10% in the water level of the Yellow River,
Huai River and Hai River basins.108
105 This can be tested by the Granger or Sims method.
106 “Drinking Water Worry Tops Chinese Environmental Concerns,” Water Quality and Health Council, 8 August 2005, http://www.
waterandhealth.org/news_center/in_news080805.php3.
108 Ibid.
46
Appendixes
The problem is compounded by the extraordinary pace of desertification in the north of the
country, where the desert is expanding at a rate of 950 square miles (the equivalent of 2,460
square kilometers) a year.109
Wastage of water in the agricultural sector, which accounts for 69% of China’s water use, is putting a
further strain on resources:110
95% of Chinese farms use gravity flow irrigation systems—which have an efficiency rate of
only 35–60%111 —to grow water-intensive crops such as rice and wheat. It is estimated that
8.5% of the world’s water is wasted in this way.112
Consequently water is being extracted from groundwater and surface water sources faster than
it can be replenished by precipitation. In the Hai River, the extraction rate is as high as 90%,
which is far above the 30% needed to conserve the resource.113
In the face of rapidly diminishing freshwater resources, demand looks likely to increase at record levels:
It is estimated that by 2030 there will be 1.5 billion people in China, and per capita water
resources could fall to 1,750 cubic meters, barely above the 1,700 cubic meters measurement
that defines a water-scarce nation.114
The Chinese authorities are beginning to make some progress to conserve the nation’s water supplies.
In 2004, Beijing announced that it would veto water-intensive industries and reward those firms using
water-saving technology.115
The quality of China’s drinking water is also cause for concern:
According to the State Environmental Protection Agency, 70% of China’s rivers and lakes are
polluted and 90% of groundwater is too polluted to drink.
According to research by the World Bank, 60,000 people die prematurely each year from the
effects of this polluted water.116
The Chinese government has been slow to respond to this rising pollution. In fact, investment in
environmental protection is still only 1.3% of China’s GDP.117
109 Ibid.
110 Ibid.
113 Ibid.
115 “Dry Beijing to Shun Water-Intensive Industry,” U.S. Water News Online, March 2004, http://www.uswaternews.com/archives/
arcglobal/4dryxbeij3.html.
116±'LMRE³&YVMIH7QSK(IEXL*MRHMRK´²&&'2I[W.YP]LXXTRI[WFFGGSYOLMEWMETEGM½GWXQ
117 “Drinking Water Worry Tops Chinese Environmental Concerns,” Water Quality and Health Council, 8 August 2005, http://www.
waterandhealth.org/news_center/in_news080805.php3.
47
Appendixes
However, pressure from the international community is beginning to take effect.118 In 2007, the Asia
Development Bank launched plans to help China develop a pollution management scheme. That effort
has already led to the adoption of stricter laws governing water pollution.119
Similarly, China is beginning to take action to increase the provision of safe drinking water.
China invested 22.3 billion yuan ($3.27 billion) from 2001 to 2005 to provide 67 million people with
safe water.120
China plans to overcome its water crisis with two large-scale projects:
The Three Gorges Dam, 2.4 kilometers wide and 183 meters high, is due to be completed in
2009. It is being hailed by the government as the solution to China’s water problems. However,
environmentalists claim that the water behind the dam in a 644-kilometer-long reservoir is
already heavily polluted.121
A second project, first proposed by Mao Zedong in 1952, is the North-South Water Diversion
Project. Due to be completed in 2050, it will eventually divert 44.8 billion cubic meters of
water from the south to the water-scarce northern region of the country.122
The effects of a lack of safe drinking water will be felt most acutely in the north of the country, which has
just 7% of water supplies. This is the heartland of the Chinese economy, responsible for 40–45% of GDP.123
The decline in drinking water will most likely raise labor costs as workers demand pay raises in response
to rising water prices.
There will be an increased incidence of disease as people are forced to drink increasingly polluted water for
want of fresh water. The diseases contracted will not be limited to the microbial diseases such as diarrhea,
which can be treated at a not-insignificant cost, but also illnesses brought on by chemical pollution.124
Cancer has already become China’s biggest killer thanks to chemical pollution. Furthermore, a lack of
pure drinking water could trigger an outbreak of avian flu because the virus, which enters the drinking
water through the feces of water birds, can survive in surface water for months.125 The higher disease
burden in these economically active areas will greatly reduce the quality of human capital: in the short
run, sick workers will be less productive, while in the long run, the level of education among the general
population will decline.
118 “Clean, Safe Drinking Water for All Chinese Rural Residents by 2015,” China.org.cn, 5 September 2006, http://www.china.org.cn/
english/2006/Sep/180067.htm.
119 M. E. Tusneem, “Managing Water Resources in China,” Asia Development Bank website, 18 March 2003, http://www.adb.org/documents/
speeches/2003/ms2003013.asp.
120 “Clean, Safe Drinking Water for All Chinese Rural Residents by 2015,” China.org.cn, 5 September 2006, http://www.china.org.cn/
english/2006/Sep/180067.htm.
122 Ibid.
123 John McAlister, “China’s Water Crisis,” Deutsche Bank special report, March 2005.
124 Xie Chuanjiao, “Pollution Makes Cancer the Top Killer,” China Daily, 21 May 2007, http://www.chinadaily.net/china/2007-05/21/
content_876476.htm.
125±%ZMER-R¾YIR^EERH4YFPMG;EXIV7]WXIQW².YRI%PEWOE(ITEVXQIRXSJ)RZMVSRQIRXEP'SRWIVZEXMSRLXXT[[[TERHIQMG¾Y
alaska.gov/PDFs/drinking%20water.pdf.
48
Appendixes
Those problems will be compounded by conflict on a local and regional scale. A 2005 chemical spill
revealed water’s potential to ignite conflict. As the price of water doubled within hours, people began
migrating and fights for water broke out.126 In 2005, the disturbance was limited to a single province, but
it is a microcosm of what could soon occur on a national scale. Such regional tension would increase the
risk of investing in China.
A rise in labor costs and risk along with an expected decline in human capital means that, in the short
term, production will decline and growth will slow. In the long term, businesses will be forced to relocate
and investment in the affected regions also will fall.
Case study: India

“If we become rich or poor as a nation, it’s because of water.”127 These words of Sunita Narain from
the Centre for Science and Environment in Delhi get at the heart of the importance of water for India,
which, according to the World Bank, will face a severe water crisis within the next two decades.
Water pollution, primarily from untreated domestic, agricultural and industrial waste, is of growing
concern in India, where it is estimated that 1,600 lives are lost to waterborne diseases every single day:128
The domestic sector is responsible for the majority of India’s water pollution. Over half of the
3.6 million cubic meters of sewage produced by the city of New Delhi enters the water supply
every day.129
Following the recent expansion of agrochemical use in India, the groundwater contains
increasingly high levels of fertilizers and pesticides, several of which are considered extremely
hazardous by the World Health Organization. Furthermore, soil erosion and degradation due
to improper land practices have increased the total suspended solids, which renders the water
in question unsafe and useless.
The industrial sector still commands only 3% of annual water withdrawals in India.130 It is
estimated that industry generates 55,000 million cubic meters of waste water a day, including
68.5 million cubic meters dumped directly into rivers and streams.131
Like China, India is already suffering from a scarcity of water supplies:
t "DDPSEJOHUPUIF%FMIJ+BM#PBSE XBUFSUBCMFTJO*OEJBBSFGBMMJOHBUBSBUFPGNBZFBS
t ɩFHMBDJFSTPGUIF)JNBMBZBTBOEUIF5JCFUBO1MBUFBV XIJDIBDDPVOUGPSPGUIFXBUFSnPX-
ing in the Ganges, are retreating at a rate of 33 to 49 feet (equivalent to 10 to 15 meters) a year.132
127 Somini Sengupta, “Water Crisis Grows Worse as India Gets Richer,” International Herald Tribune, 28 September 2006, http://www.iht.com/
articles/2006/09/28/news/water.php.
128 http://www.water.org.
129 Nina Brooks, “Imminent Water Crisis in India,” Arlington Institute website, http://www.arlingtoninstitute.org/wbp/global-water-crisis/606.
130 Ibid.
49
Appendixes
The problem of diminishing freshwater supplies is compounded by human wastage of water:
Poor legal management of the resource and low prices encourage the overuse of water in the
domestic, agricultural and industrial sectors.
Aging infrastructure means that a large proportion of water in the system never reaches the
consumer. The Delhi Jal Board pumps 30 million cubic meters of water a day into its pipes, but
only 17 million cubic meters actually reach users, who obtain the rest of the water they need
from inefficient and expensive tankers sent in to solve the problem.133
Demand for increasingly scarce drinking water is likely to rise in the future. The Indian population is
predicted to overtake that of China by 2050, when it will peak at 1.6 billion.134 Everyday, 100,000 people
are entering the middle classes, thus adopting more water-intensive lifestyles. As a result, the overall
water demand is expected to increase from 552 billion cubic meters to 1,050 billion cubic meters by
2025, which will require the exploitation of all the available water resources in the country.135
The Indian water industry is also plagued by poor legal and financial management:
There is no law governing the use of groundwater in India. As a consequence, groundwater is

overexploited and polluted.
The water sector is also facing a major financing gap. It is estimated that Rs 200 billion ($4
billion) are needed just to maintain the existing infrastructure. However, in recent years annual
allocations have fallen far short of that amount, varying between Rs 90 billion and Rs 170
billion ($1.84 billion and $3.48 billion).136 Furthermore, these modest sums are frequently
mismanaged as no Indian state has an asset management plan.
Poor management has resulted in aging infrastructure. India has often been said to adopt a policy of
“build-neglect-rebuild.” The result is large-scale wastage of water in old and broken piping. In comparison
with other countries, India can store very little water: while China can store up to 1,000 cubic meters,
India can store only 200 cubic meters per capita.137 Large quantities of fresh water are therefore wasted.
India has not as yet found a solution to the impending water crisis. Various solutions have been
proposed, including:
Improving the financial and legal management of the water sector. The government has made
some progress on this front; the prime minister recently called for the establishment of a “TVA138
for the Brahmaputra” to combine water infrastructure with modern management approaches.
133 Ibid.
134 Ibid.
136 “Shoring Up Water Infrastructure,” World Bank website, http://go.worldbank.org/I7M6HR9BP0.
137 Ibid.
1388IRRIWWII:EPPI]%YXLSVMX]MWEJIHIVEPP]S[RIHGSVTSVEXMSRGVIEXIHMRXLI9RMXIH7XEXIWMRXSTVSZMHIREZMKEXMSR¾SSHGSRXVSP
electricity generation, fertilizer manufacturing and economic development in the Tennessee Valley.
50
Appendixes
Privatizing the water supply, but critics cite the poor track record of privatization in other
nations and fear a sharp rise in prices.
Funding large-scale projects, such as the $112 billion (Rs 5.48 trillion) Interlinking Rivers
Project, which aims to link all 37 rivers.139 However, a substantial budget deficit and a slowing
economy mean that such large-scale investments are unlikely to be undertaken in the short term.
The water crisis will hit in the heart of the Indian economy as growth in many of the most economically
active areas has been driven by water. In Tirupur, India’s “Knitwear capital,” for example, the garment
industry has grown at record rates aided by the availability of cheap water from the aquifers.140 However, as
water supplies are exhausted, this growth will decline due to falling human capital and higher wage costs.
Increasing levels of chemical pollution will have a long-term effect on the health of the population.
Increased incidence of disease will undermine investment in education, which has risen above Rs 200
billion ($4.09 billion) in recent years. As a result, a sharp decline in human capital is inevitable. The
consequences of this fall in human capital will be felt throughout the Indian economy: in agriculture,
lower human capital will delay the adoption of new technology, and in industry, a less healthy and less
educated workforce will become less productive.
At the same time, labor costs are likely to rise. This poses a risk to the Indian outsourcing industry,
which, as it represents 25% of the global outsourcing industry, is a key component in India’s recent
economic success. Indeed, global research shows that employee costs need to be 30–35% of total costs
to sustain the growth of outsourcing services. Labor costs in India already exceed this level. India is
therefore at risk of losing its competitive advantage in this sector if rising drinking water prices drive a
rise in wage costs.
In addition to this, poor legal management of water supplies will serve to increase regional tensions on
a national and international scale. There are no guidelines in place to govern the many interstate rivers
that drain 90% of India’s territory, which have already been the subject of high-profile interstate disputes,
to the extent that the minister of water resources has been known to refer to himself as the “minister of
water conflicts.”141
Tension also looks set to increase between India and its neighbors, most importantly Bangladesh and
Pakistan. India already has treaties governing the water shared with those nations (the Indus Waters
Treaty with Pakistan and the Ganga Treaty with Bangladesh), but it is questionable whether the treaties
will be adhered to when the water crisis materializes.
140 Ibid.
141 “India’s Water Economy: Bracing for a Turbulent Future,” World Bank website, http://www.worldbank.org.in/WBSITE/EXTERNAL/
COUNTRIES/SOUTHASIAEXT/INDIAEXTN/0,,contentMDK:20674796~pagePK:141137~piPK:141127~theSitePK:295584,00.html.
51
Appendixes
Case study: California

Californian drinking water is becoming increasingly polluted.
Californians are already beginning to feel the consequences of water shortages resulting from falling
supply in the face of rising demand.
Supply is falling rapidly due to climate change:
2007 was the driest year on record, and the Sierra Nevada snow pack, which supplies 90%
of the water used in Los Angeles and stores 35% of the state’s supply,142 was at its lowest on
record.
Climate forecasters at Stanford University and the University of California–Los Angeles

predict that by 2050 the Sierra Nevada snow pack will have shrunk by 35%.143
The Sacramento–San Joaquin Delta, part of the largest estuary on the West Coast, is of
particular concern. It is vital to the state’s water supply because melted snow from the Cascades
and the Sierra Nevada drains into the Sacramento River before flowing into the delta at its
northern edge. Pumps at the southern end of the delta then channel water to the Bay Area
and Southern California. Two-thirds of the state’s residents and millions of acres of farmland
are supplied with water from this source. Some 1,610 kilometers of manmade levees have
been constructed on the delta to control the terrain of the islands in it. However, the levees are
becoming ever more expensive to maintain as the landscape suffers from the effects of farming.
There is a further worry that this source of water could disappear altogether: if a flood or
earthquake causes the levees to fail, seawater would rush in, transforming the delta’s ecology
overnight and making its water useless to farms and residents to the south and west.
Demand is rising rapidly:
Per capita, U.S. citizens are the most profligate water users in the world.144
It is estimated that by 2050, the population of California will have tripled to 60 million.145
The key to averting a water crisis in California is increasing investment. It is 30 years since the last
investment was made in the state infrastructure, which was originally designed for a population of 20
million.146 California and Texas are the only states without a water management plan.
A fall in access to safe drinking water will affect the export, agricultural and tourist industries, which
together form the basis of the Californian economy.
142 http://www.waterinfo.org.
143 http://www.drreese.com.
144 “Unequal Consumption,” UNEP and UNESCO Youthxchange website, http://www.youthxchange.net/main/ff2b215_drinkingwater-d.asp.
145 http://www.drreese.com.
146 “California’s Water: A Crisis We Can’t Ignore,” Association of California Water Agencies, September 2007, http://www.calwatercrisis.org/pdf/
ACWA_FactSheet_Sept2007.pdf.
52
Appendixes
The Californian economy relies heavily on the export of computers, transportation, nonelectrical
machinery and chemicals. There are two ways in which the export industry, which accounts for 5.3% of
California’s jobs, could be affected by a decline in access to safe drinking water.147
Firstly, manufacturing industries require high levels of human capital, which has been found to be
negatively affected by a lack of safe drinking water. Studies have shown that California will not have
enough skilled workers to meet the demands of its economy in the coming years.148
Secondly, the export industry is reliant upon the emerging markets. China and South Korea are among
the top five destinations for Californian goods, worth $10.6 billion and $7.4 billion respectively.149 If
these economies were to falter, due to a lack of access to safe drinking water, the Californian economy
would lose these valuable markets.
California is also dependent upon the tourist industry. During 2005, travel spending directly supported
911,800 jobs (up 5.4% from final 2004 figures) with earnings of $28.0 billion.150 A scarcity of safe drink-
ing water could render California a far less attractive tourist destination.
Bringing in $31.68 billion in revenue in 2004 alone, Californian agriculture is twice the size of any other
state’s agricultural sector.151 Overall, 22% of farm workers in California in 2003 to 2004 had incomes below
the federal poverty level,152 which in 2003 was $9,573 for an individual and $14,680 for a family of three.153
The price of drinking water has already risen by 27% in the United States in the last five years.154 If prices
continue to rise at these rates, it will become increasingly difficult to sustain these low wages.
Lastly, a drinking water crisis could have a negative impact on an already unstable housing market in
California. This could have consequences throughout the economy, with a likely increase in the number
of redundancies and bankruptcies in addition to a sharp decline in the $33 billion in property tax
collected by the state each year.155
If the Californian economy were to decline because of losses incurred from a lack of access to safe
drinking water, the U.S. economy as a whole could suffer. California is responsible for 13% of the total
GDP of the United States.156
147±'EPMJSVRME)\TSVXW.SFWERH*SVIMKR-RZIWXQIRX²3J½GISJ8VEHIERH-RHYWXV]-RJSVQEXMSR-RXIVREXMSREP8VEHI%HQMRMWXVEXMSR97(ITEVX-
ment of Commerce, 8 July 2008, http://www.ita.doc.gov/td/industry/otea/state_reports/california.html.
148 “California Needs More Skilled Workers with Advanced Education,” Workpermit.com website, 25 May 2007, http://www.workpermit.com/
news/2007-05-25/us/california_skilled_professionals_education.htm.
149 Ibid.
150 “Tourism Continues to Boost California Economy 2005,” Entertainment Magazine, 28 March 2006, http://emol.org/emclub/?q=californiatouri
smeconomicboost.
151 “Economy of California,” Wikipedia website, http://en.wikipedia.org/wiki/Economy_of_California.
152 “The California Farm Labor Force: Overview and Trends from the National Agricultural Workers Survey,” Aguirre International, June 2005,
http://agcenter.ucdavis.edu/AgDoc/CalifFarmLaborForceNAWS.pdf.
153 Ibid.
154 Edwin H. Clark II, “Water Prices Rising Worldwide,” Global Policy Forum website, http://www.globalpolicy.org/socecon/
gpg/2007/0307waterprices.htm.
155 “California,” Wikipedia website, http://en.wikipedia.org/wiki/California.
156 “Economy of California,” Wikipedia website, http://en.wikipedia.org/wiki/Economy_of_California.
53
Appendixes
Case study: Uganda

Uganda’s goal for water supply and sanitation, which is crucial to the long-term economic success of the
nation, is stated as follows:
To manage and develop the water resources of Uganda in an integrated and sustainable manner so
as to secure and provide water of adequate quality and quantity for all social and economic needs for
present and future generations with the full participation of stakeholders.157
The quality of drinking water is cause for concern in Uganda. The fourth Water and Sanitation Sector
Performance Assessment of 2006 concluded that 90% of drinking water from protected and treated
water supplies met national standards.158 However, only 56% of the rural population of Uganda
has access to those water sources.159 As a result, outbreaks of waterborne diseases are frequent and
catastrophic in their effects. In 2005, for example, an outbreak of cholera in 11 provinces and one slum
resulted in 2,200 cases and 56 deaths.160
Uganda is facing problems of supply and demand. Demand for drinking water is expected to increase rap-
idly in the coming years. In 2008, the population grew at 3.6%, far above the world average of 1.2%. Indeed a
fertility rate of 6.9 children, compared to a world average of 2.7, means that according to latest estimates issued
by the Population Reference Bureau (PRB), Uganda will experience the highest population growth rate in the
world within the next few decades.161 By 2050, the population is expected to exceed 150 million, putting an
ever greater strain on falling freshwater resources. There are indications that Lake Victoria, the largest lake in
Africa, is shrinking.162
Since 1986, significant progress has been made in extending the provision of safe drinking water, as
the opening statement suggests. Uganda has formally adopted a Sector Wide Approach to Planning
in the water sector, which plays a key part in its Poverty Eradication Action Plan (PEAP). Yet this
commitment has yet to deliver results. Five years into its creation the Uganda Water Partnership has
not financed a single project. Uganda still has a long way to go to achieve the Millennium Development
Goals, let alone those set by Africa Water Vision, which aims for a 70% reduction in those without
access to safe drinking water by 2015.163 Indeed it is estimated that to achieve these goals, 1,000 new
wells or boreholes with hand pipes and 30 piped systems will need to be constructed every year from
now until 2015.
157 Ministry of Water and Environment presentation, http://www.unepdhi.org/MWR2015/Presentation%20-%20IWRM%20experiences%20

and%20MDGs%20in%20Uganda.pdf.
158 “Coverage Estimates: Improved Drinking Water—Uganda,” WHO/UNICEF Joint Monitoring Programme for Water Supply and Sanitation,
2006, http://www.wssinfo.org/pdf/country/UGA_wat.pdf.
159 Ibid.
160 “Unusual Cholera Strain Spreads in Uganda,” Mail & Guardian Online, 5 August 2005, http://www.mg.co.za/article/2005-08-05-unusual-
cholera-strain-spreads-in-uganda.
161 Herro, Alana. “Uganda on Track to Have World’s Highest Population Growth.” Worldwatch Institute, 18 September 2006, http://www.
worldwatch.org/node/4525.
162 Jessica Partnow, “Battle for Resources Grows as Lake Victoria Shrinks,” National Public Radio, 29 May 2008, http://www.npr.org/templates/
story/story.php?storyId=90931419&ft=1&f=1025.
163 Anne Perkins, “Background: Water in Uganda,” The Guardian website, 28 March 2008, http://www.guardian.co.uk/katine/2008/mar/28/
katinegoalbackground.water.
54
Appendixes
Furthermore, a large expenditure in education will need to be made to train the technicians needed to
maintain these new water sources.
Uganda prides itself on being one of the fastest-growing African nations. GDP growth over the last
decade has averaged 6% per annum. However, a lack of access to safe drinking water could threaten this
growth in coming years.
Uganda will suffer primarily because of the decline of the developed and emerging economies.
A likely reduction in aid as the more prosperous nations ail will hit the Ugandan economy hard. Low
tax revenue, due to poor exploitation of a narrow tax base, and widespread corruption mean that in
the face of a chronic deficit in public spending, Uganda remains heavily dependent on donor funds.
Approximately half of Ugandan public expenditure is funded by such aid.
Furthermore, the decline of the developed and emerging nations threatens the revival of Uganda’s export
market. Uganda is currently trying to reduce its deficit in foreign trade through strategies to promote
the export of coffee, tea and flowers.164 The success of those strategies depends on the economic success
of the economies of its export markets, which are all developed nations, such as Netherlands, Belgium,
Germany and France.165
A reduction in aid and a failure to revive the Ugandan export market will compound the economic
challenges that a decline in access to safe drinking water will impose upon Uganda directly. If access
to safe drinking water begins to decline once more, human capital will decline sharply. Investments in
education to improve the low literacy rate of 66.8% of the population will go to waste. Furthermore, as
waterborne diseases again become more prevalent, life expectancy will fall. Less educated, less healthy
workers will become less productive, ultimately preventing Uganda from diversifying its economy away
from agriculture, which currently employs 82% of the workforce.166
Another worry is that a lack of access to safe drinking water could destabilize the nation by exacerbating
existing tensions among hostile ethnic groups, rebels, armed gangs, militias and various government forces.
164 “Poverty and Development in Uganda,” Ministry of Foreign Affairs of Denmark, 2004, http://www.um.dk/Publikationer/Danida/English/
CountriesAndRegions/Uganda/Strategy/kap02.asp.
165 “Africa: Uganda,” U.S. Central Intelligence Agency World Factbook, https://www.cia.gov/library/publications/the-world-factbook/geos/ug.html.
166 Ibid.
55
Appendixes
Appendix 7: About HaloSource

HaloSource® is a leading provider of clean-water and antimicrobial technology. It is headquartered in
the United States with operations in India and China. The company provides proprietary solutions to
clean and purify water, killing bacteria and viruses that may cause disease. Revenues are derived from
HaloPure BR®, which provides safer drinking water; HaloShield®, which forms the active ingredient that
imparts antimicrobial properties to household cleaning products such as dishcloths; and SeaKlear® and
StormKlear® products, which provide water clarification applications for treating recreational and industrial
waste water. HaloSource’s strong and rapidly expanding IP portfolio is founded on two core technologies:
N-halamine technology, which harnesses the power of chlorine and bromine, for the company’s
drinking water and antimicrobial businesses
Chitosan chemistry, which causes particles in water to bind together so that they can be filtered
off, for the company’s swimming pool and industrial waste water businesses
R & D is led in-house at the company’s U.S. headquarters by a world-class technology team including
chemists, biochemists, microbiologists and virologists. HaloSource manufactures in India, Pakistan and
China. Key investors include Mars, Unilever Technology Ventures, Origo Resource Partners and the
Masdar Clean Tech Fund.
Three main operating divisions

Drinking water
HaloPure® applications kill disease-causing bacteria and viruses and remove impurities to provide safe
drinking water at the point of use. The technology in HaloPure is effective against a wide range of
germs. HaloSource generates revenues from sales of proprietary HaloPure-based components to partner
companies involved in the manufacturing and distribution of water purification devices to the end user.
The global drinking water market is estimated to be worth $18 billion.
In 2006, HaloPure was launched in India in partnership with the country’s leading provider of home
water filters, Eureka Forbes. HaloPure also has a partnership with Chanitex, a leading Chinese water
treatment company, and with Everest, a consumer device manufacturer, in Brazil.
In early 2009, HaloPure was granted U.S. Environmental Protection Agency (EPA) registration. This
EPA registration will broaden the reach of the technology while extending the potential range of partners
interested in supporting clean drinking water in developed and developing economies worldwide. It also
reinforces HaloPure’s position as the most significant, nonelectric drinking water technology.
Negotiations are under way with a number of key companies for the use of HaloPure technology in a
variety of consumer product applications around the world.
56
Appendixes
Antimicrobial coatings
HaloShield is a patented, antimicrobial coating technology that facilitates the binding of chlorine-based
bleach to textiles and surfaces, for consumer, commercial and military applications. HaloSource generates
revenues from HaloShield through royalties paid by global partners with cobranded applications. Clorox®,
the leading bleach brand in the United States, has partnered with HaloSource to produce Clorox’s
FreshCare towels with HaloShield, which are sold at Wal-Mart® stores across the United States.
Water clarification
SeaKlear treats recreational water such as pools, spas and water parks while StormKlear is used to treat
storm and industrial water, including construction site runoff. HaloSource generates revenues from the
sale of SeaKlear-branded and StormKlear-branded products through distributors and retailers to the
consumer and commercial markets.
Company history
HaloSource was founded in 1998 by Senior Vice President and Chief Technology Officer Jeff Williams,
PhD, to develop and commercialize applications that address the rising demand for safe drinking water and
technologies aimed at reducing infection. In 2001, HaloSource began licensing its powerful antimicrobial
technologies to leading domestic and international partners for integration into their products. In 2002,
HaloSource Corp. merged with Vanson Inc., the chitosan technology company, to combine intellectual
property platforms, share R & D, and capitalize on joint manufacturing facilities and distribution channels
to better serve existing customers in the water purification and clarification industries.
Timeline
1998: HaloSource founded
2001: HaloSource named one of the top 25 private companies in the northwestern United States
2002: HaloSource Corp. merged with Vanson Inc. to form Vanson HaloSource, Inc.
2002: Vanson HaloSource closes $9 million in equity fundraising
2004: John Kaestle joins as chief executive officer, and James Thompson joins as chief financial officer
2005: Vanson HaloSource receives $5 million in funding from Mars, Inc.
2006: Vanson HaloSource, Inc., renamed as HaloSource, Inc.
2006: HaloPure launched in India with Eureka Forbes
March 2007: $6 million in fundraising with Unilever Technology Ventures
July 2007: $15 million in fundraising with Masdar Clean Tech Fund LP
57
Appendixes
2008: Clorox’s FreshCare towels with HaloShield launched at Wal-Mart stores across the United States
2008: HaloSource opens Shanghai facility and starts exporting from India to Latin America
2008: HaloSource receives $11.5 million in funding from Origo Sino-India, Origo Resource Partners
Limited, and Unilever Technology Ventures
Key executives
John Kaestle, CEO
John Kaestle joined HaloSource in 2004. Prior to joining, he was executive vice president and general
manager of the Global Resins Business of Borden Chemical. This $900 million business included 37
operations in nine countries across the world. His career also includes 20 years with Weyerhaeuser
Company. John is a graduate of Haverford College, where he received a degree in economics and
quantitative methods. He received an MBA from the Tuck School of Business at Dartmouth College.
Dr. Jeff Williams, Vice President and Chief Technology Officer

Dr. Jeff Williams is the cofounder of HaloSource. He was a professor of microbiology at Michigan State
University for 26 years. Jeff is an experienced consultant to the research units of major pharmaceutical
companies, including Merck (1980–83) and Pharmacia & Upjohn. Jeff received BVSc and MRCVS
degrees in veterinary medicine from the University of Bristol (UK) in 1964, and in 1968 he received his
PhD in pathobiology from the University of Pennsylvania, where he was a Fulbright Scholar.
He has published more than 200 scientific papers and book chapters in the fields of tropical and
infectious diseases.
James Thompson, Chief Financial Officer

James Thompson joined HaloSource in 2004. Prior to joining the company, James was a principal in
Alexander Hutton Venture Partners (AHVP), a major investor in HaloSource. While at AHVP, James
led the investment in and provided board-level support to early-stage technology companies. Prior to
joining AHVP, James was a securities analyst with Security Capital Group, an opportunity fund focused
on investing in public and private equities. James has a BA from Gonzaga University and an MBA from
the University of Washington.
Andrew Clews, Vice President, Marketing and Product Development

Andrew Clews joined HaloSource in 2007 following over 15 years of experience in international
business and marketing throughout Asia, Australasia and North America. Andrew leads the company’s
global marketing and branding strategies, product management, public relations, partner alliances and
the commercialization of the company’s clean water and infection control products. Prior to joining
HaloSource, he was senior manager of global brands for Alticor Inc., the parent company of worldwide
58
Appendixes
direct-selling giant, Amway Corporation. Andrew holds a BA in political science from the University of
Auckland, in addition to his postgraduate studies in international business and marketing.
Rick Lockett, Senior Vice President, Water Businesses

Rick Lockett has been with HaloSource since 2003 in regional management and national sales
management, and he now holds the role of senior vice president of water businesses. Rick has a deep
background in commercial sales management in the hospitality, multi-housing, government and water
park industries. He is a National Merit Scholarship recipient from the University of Texas at Austin.
Eric Robinson, Executive Vice President, Operations

Eric Robinson joined HaloSource in 2004 to lead operations, regulatory and supply capabilities in
both national and international markets. Prior to joining HaloSource, Eric spent 19 years with Hexion
Specialty Chemicals (Borden Chemical) and FMC Corporation, where he served in progressively more
responsible roles in operations; the supply chain; marketing; environmental health and safety (EH&S);
and technical functions in the specialty, food and electronic chemicals businesses. In his last position at
Borden Chemical, Eric had responsibility for engineering, quality, EH&S and operations for a 36-plant
global network of specialty chemical operations. Eric holds a BS degree in chemical engineering from the
University of California, Davis.
59
Glossary
Borehole
Generalized term for any narrow shaft drilled in the ground, either vertically or horizontally. Boreholes
are often constructed to extract groundwater from underground aquifers.
Gross domestic product (GDP)

The total market value of all final goods and services produced within an economy.
Human development index (HDI)

A measure of development that combines the following factors:
Life expectancy (as determined by life expectancy at birth)
Knowledge (determined by the adult literacy rate and the combined gross primary, secondary
and tertiary enrollment rate, which are given weightings of two-thirds and one-third,
respectively)
Standard of living (determined by the natural logarithm of the gross domestic product per
capita at purchasing power parity in U.S. dollars)
Merit good
A commodity that the public sector provides free or cheaply because the government wishes to
encourage its consumption, e.g., a health service.
Point-of-use water purification

A device enabling the purification process to take place for immediate use. For example, a point-of-use
water device enables water to be drunk from its original source.
Purchasing power parity (PPP)

This theory uses the long-term equilibrium exchange rate of two currencies to equalize their purchasing
power, so that, in ideally efficient markets, identical goods should have only one price.
61
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Access to Safe Drinking Water

and Its Impact on Global

4. What is meant by “access to safe drinking water”? . . . . . . . . . . . . . . . . . 7

5. The extent of the drinking water crisis . . . . . . . . . . . . . . . . . . . . . . . . . . 9

6. The impact of access to safe drinking water . . . . . . . . . . . . . . . . . . . . . 19

7. Will drinking water drought stall economic growth by 2050? . . . . . . 23

8. What can be done? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Despite a concentrated international effort, significant investment and widespread educational

The paper answers the following questions:

How serious is the problem?

> Why will access to safe drinking water decline?

How does access to safe drinking water affect economic growth?

The key findings are:

Table 1:: Sources used in the study2

Variable What it measures Source Publication date(s)2

4 Global Freshwater Resources website, http://www.gipsymoth.org/WaterFresh.asp.

5.1 Drinking water from 1970 to 2006

Five World Water Forums

Three global targets10 to increase access to safe drinking water

Figure 1:: Average global access to safe drinking water, 1970–200613

Figure 1 shows that:

5.2 The future of access to safe drinking water

Figure 2:: Projection of global access to safe drinking water

Figure 2 shows that:

Figure 3:: Access to safe drinking water in the developed world

18 See appendix 2 for the list of countries.

Figure 5:: Access to safe drinking water in the developing world

These results are summarized in table 2.

Region Estimated year of decline20

Developed economies 2005

Emerging markets 2000

Developing world 2015

5.3 Why access to safe drinking water is expected to be in decline

5.3.1 Demand for potential drinking water is outpacing supply

Figure 6:: Global water consumption by sector (%)23

Demand from agriculture

Demand from industry

Demand from the domestic sector

5.3.2 The deteriorating quality of drinking water sources

5.3.3 Cultural constraints

5.3.4 The rising cost of safe drinking water

Government intervention in the form of subsidies

Declining government intervention

Growing tension between supply and demand

Rising supply costs

6.1 The health effects of unsafe drinking water

Parasites, such as Dracunculus medinensis, in organisms living in the water.

Cholera 14051 Caused by the presence of the bacterium Vibrio cholerae in

Poliomyelitis 114,00054 Caused by the presence of the polio virus in water

6.2 The impact of unsafe drinking water on education

Correlation of access to Regions of low Regions of medium Regions of high

Children reaching 0.3146 0.6614 0.3223 0.4328

A decline in access to safe drinking water has a negative impact on education:

6.3 The costs of a lack of safe drinking water

6.3.1 Direct costs of contracting disease

6.3.2 Indirect costs related to the disease

Lost economic contribution of the sick or prematurely deceased

Lower productivity resulting from sick and less educated workers

6.3.3 Costs related to time spent on water collection

7.1 When is growth most likely to be affected?

73 See appendix 1 for the list of countries.

Figure 8:: Projection of global access to safe drinking water

Average percentage of the population with

2015

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