Ms. Kalpana Kochhar, Ms. Catherine A Pattillo, Ms. Yan M Sun, Mrs. Nujin Suphaphiphat, Mr. Andrew J Swiston, Mr. Robert Tchaidze, Mr. Benedict J. Clements, Ms. Stefania Fabrizio, Valentina Flamini, Ms. Laure Redifer, and Mr. Harald Finger
This paper examines water challenges, a growing global concern with adverse economic and social consequences, and discusses economic policy instruments. Water subsidies provided through public utilities are estimated at about $456 billion or 0.6 percent of global GDP in 2012. The paper suggests that getting economic incentives right, notably by reforming water pricing, can go a long way towards encouraging more efficient water use and supporting needed investment, while enabling policies that protect the poor. It also discusses pricing reform options and emphasizes an integrated and holistic approach to manage water, going beyond the water sector itself. The IMF can play a helpful role in ensuring that macroeconomic policies are conducive to sound water management.
Ms. Kalpana Kochhar, Ms. Catherine A Pattillo, and Ms. Yan M Sun
the expense of proper water infrastructure maintenance and investment or the development of technologies to improve efficiency. This exacerbates future water shortages or leaves segments of the population without access.
Existing price signals are often way off the mark. The IMF study found that public water utilities in many countries charge just a fraction of the amount needed to cover all supply costs, such as those for maintenance. Based on these estimated price gaps and the quantity of water consumed, watersubsidies totaled almost $500 billion, or about 0