Can natural capital accounting increase water access?

New accounting methods for natural resources could help governments get to the source of the problem when it comes to achieving the Sustainable Development Goal on access to water.

This barrio in Guatemala has no running water or sewers. The country receives abundant rainfall, but lacks infrastructure to deliver water to households (Photo: David Amsler, Creative Commons via Flickr)

On World Water Day, I was invited to reflect on the challenges of achieving the Sustainable Development Goals (SDGs) for water and sanitation at a conference in Dundee, Scotland.

Achieving universal and equitable access to safe and affordable drinking water for all (as the first target of SDG6 suggests) presents many challenges. But a new UN accounting system could help address some of the issues.

The funding needed to achieve them is huge. According to Guy Howard from the UK government's Department for International Development (DFID), we will need trillions of pounds to achieve just the universal and equitable access to safe and affordable drinking water for all – the first target under SDG6.

While some of the funds may come from international sources, such as aid, it is clear that a lot of it will have to come from domestic sources. But how to find them?

Water for all?  

In many places there may be enough water for all, but it does not follow that everybody has access. In many cases conflicts arising over water are not so much about scarcity but about political and institutional issues.

For example, overlapping rights – where the same amount of water is assigned to different users, a lack of or ageing infrastructure which means that water does not reach users, powerful and often privileged groups skew agendas (for example irrigation groups opposing water pricing); or the lack of a central body able to coordinate and enforce regulations, or with little information on water flows and their uses. 

Fast growing urban areas in developing countries often lack basic access to water and enjoy little sanitation, exacerbating inequalities and increasing political discontent. 

Water is a valuable asset

Water is a basic human right, used by people for drinking and sanitation within their homes. Water is also the main raw input for many economic processes, such as hydroelectricity, fisheries and agriculture. The manufacturing and service industries rely on water, and often need a reliable good quality supply.

Water is also key to support natural ecosystems such as wetlands and rivers that provide other services, including spawning grounds for fish, and valuable transport infrastructure (for example, rivers for navigation). 

Yet little is usually known about how water interacts with the economy as a whole. How much water is there, who uses what, and where is value created?

Often the information exists, but it is scattered, not comparable, or misses the key biophysical-economic linkages needed for policy making that will ensure water for all. 

Better accounting for integrated water resources management

The United Nations is promoting a new way of combining the value of ecosystems with economic accounting called natural capital accounting. The idea is to integrate natural capital accounts (currently developed for energy, water, land, fisheries and some ecosystem services) into a country's traditional accounting systems that provide economic performance indicators like GDP.

This means that the data – both quantitative (e.g. cubic metres) and monetary (e.g. dollars) – can be linked to sectors such as agriculture, manufacture and households.

The accounts are being developed by central banks, engaging with a multitude of other organisations from different sectors. They include meteorological and research agencies that quantify flows, water utilities, representatives from the private sector, from ministries of environment and agriculture, and statistical collection bodies. They are also supported by the World Bank, through its Wealth Accounting and Valuation of Ecosystem Services (WAVES) partnership.

Simply bringing all these people together to gather the data, and input on how it will be used, is a major breakthrough compared to the usual approach to water resource management – which like most environmental issues is often dealt with in a silo as though it is not connected to anything else.

Learning from experience

Several countries are racing ahead in preparing natural capital accounts. What the accounts show challenges many of our perceptions about water in the economy.

For example, conflict for water is rife in Guatemala, especially affecting households during dry seasons. Yet the data shows that rainfall is extremely abundant. The problem is that there is a lack of infrastructure to deliver water to households, and there are no resources to invest.

The country's water accounts highlight some of the reasons behind this situation. Despite having so much water, only 1.2 per cent of the flows in 2010 was delivered through managed distribution systems, for example through a water company's pipe network. The rest was open access, and for the most part free.

This also means that most users are left vulnerable to the pendulum of droughts and floods typical to many tropical countries, and the increasing irregularity of rainfall brought by climate change.

And while often blamed as sources of conflict, households use only a tiny amount of total water, compared to other sectors of the economy (agriculture is the main user, followed by manufacture and services).

Informed policy making

The use of the accounts in Guatemala and other countries, such as Botswana, is helping governments design better ways of managing resources, raising finance and making decisions on investment in line with needs and productivity.

Water is often the problem, but also part of the solution. Prices, taxes, and payments for ecosystem services can have a role to play in improving management, reducing waste and capitalising on the country's natural resources.

Better information can also help shape water laws, grounded on realities, as the Centre for Water Law, Policy and Science in Dundee has shown.

Ina Porras (ina.porras@iied.org) is a senior researcher in the Sustainable Markets Group at IIED.