Report launch: Managing economies and financial systems for resilience
Today, we launch a report over a year in coming. Managing Water for Economic Resilience: De-Risking Is Not Enough is a critical analysis of how to correct deep contradictions in how we manage our economies and financial systems for resilience even as we face increasing uncertainty.
Following some 15 years of critical work across a variety of disciplines, a central insight is that water resources are both a major hazard of climate change and a powerful way of implementing resilience as an operational economic concept. It’s time to see water as a economic connector above and beyond the water sector is our key message.
The language around water — at least for natural resource economists — is often murky, caught in a tension between water as a scarce good that is both shared and public as well as private and owned. The tension here is represented in often quite deep aspects of public policy. Mexico’s constitution, for instance, describes water resources as owned by the people of Mexico. Decisions about water should be made collectively, and for the greater good. Thresholds, protections, and boundaries. For decades, Chile has treated water as a commodity, that can essentially be bought and sold like any other commodity. A commodity can be exhausted, mined, exploited. A commodity can be possessed by the highest bidder.
In both cases, the reality is more complex, but these two countries represent extremes of how water can be conceived in economic terms. And often how many countries transition in phases in their treatment of water.
Many natural resources show such a tension between public and private. Water has the unusual properties of being incredibly climate sensitive, very hard to predict its qualities and quantity in the future, and essential across almost every core aspect of modern and traditional economies. Simply shaving off a few easily identified, high confidence risks misses the scale of the situation where we find ourselves.
The Global Commission on the Economics of Water (GCEW) has proposed water as a global economic good — something more like Mexico’s constitution, mandating that we manage water for the good of our societies, for poverty alleviation and equity, for ecosystems, and for the global climate.
Our scope here is both complementary and quite immediate: can we re-value for its role as the connective tissue for economic resilience?
The challenges for economic resilience for Jordan with its diminishing groundwater supplies and expanding population are quite different than that of Afghanistan — or California. And increasing water scarcity is arguably less important than water’s changeability. Designing financial systems and economic processes that can tolerate or even embrace this increasingly dynamic aspect of water resources is a challenge when we build energy grids and regulatory frameworks designed to last many decades.
The report has been developed with a broad array of economists and climate specialists, with a short section on specific policy and procedural recommendations as well as a dozen cases studies led by topical experts. I am proud to have been a part of the team, co-lead with colleagues Ala’a Kolkaila, Josefina Maestu, Niels Vlaanderen, Diego Rodriguez, Carlos Mario Gomez, Harm Duel, Pan Ei Ei Phyoe, Raul Muñoz, and Tom Panella. Many others contributed to the case studies and ideas herein.
We’re eager for your reaction and response. We hope you will engage in the conversation.
John Matthews
Corvallis, Oregon, USA