Review Paper: Water and Economic Growth in Developed and Developing Countries

Water withdrawals are expected to continue growing, further straining available freshwater resources for economies. This review focuses on two key relationships between water and economic growth for developed and developing countries. Rising freshwater withdrawals and stress are directly related to how our economies use water to develop and grow. There is also concern that increasing water scarcity will impact economic growth across countries and regions. Unless there is a marked improvement in the water intensity of countries, economic growth will be the most important driver of increasing water withdrawals and scarcity. Although analysis of the impact of freshwater stress on the growth of economies is inconclusive, there is mounting evidence of an impact at the river basin and sub-national level. Decoupling rising water use from growth will require major water management reforms. Two of them are discussed here: Ending excessive subsidization of irrigation and reallocating subsidies for water supply and sanitation to expand delivery in developing countries.