Why we need a new economics of water as a common good

[adace-ad id="91168"]

Water is the lifeblood of our planet — essential for keeping humans and every plant and animal alive. It helps to circulate carbon and nutrients in the air and in soils, and regulates climate. For millennia, Earth’s water cycle has provided reliable supplies and sustained conditions conducive to human development. Yet anthropogenic pressures are now pushing the cycle out of balance, threatening to undermine the reliability of rainfall itself.

The impacts are already being felt across the world — in devastating floods, such as those in Pakistan last year that killed 1,500 people and affected two-thirds of the country’s districts, and in severe droughts such as the five failed rainy seasons in a row that have brought more than 20 million people to the point of starvation in the Horn of Africa. Meanwhile, more than 2 billion people still lack access to safe drinking water, one child dies every 17 seconds from waterborne diseases, and 3 billion people face food insecurity owing to water scarcity — numbers that could grow with the global population unless water provision improves (see

Water managers have always had to deal with natural variability, building larger reservoirs and tapping aquifers to fight scarcity, for example. But current challenges and trends in the rest of this century demand a completely different approach: a radical shake-up in how water is governed, managed and valued, from local to global scales, including a re-evaluation of human water needs (see Supplementary information, Box S1).

Today, the sector concentrates on flows of ‘blue’ fresh water — liquid that runs off the land and is stored in rivers, lakes, reservoirs and underground aquifers. Utilities capture and extract this water locally for drinking and sanitation, agricultural irrigation and industry. They assume it will be continually replenished, naturally, within historical ranges. In many places, that premise already no longer holds.

Each 1 °C of global warming increases global mean precipitation by 1–3%, and it could rise by up to 12% by the end of the century compared with the period 1995–20141. The impacts will be felt unevenly, with the frequency and severity of both floods and droughts rising. Deforestation, land degradation and infrastructure development are also altering precipitation patterns and affecting where water comes from and ends up2. Excessive extraction for irrigation and industry is aggravating water shortages in river basins, from the Colorado in the United States and the Yangtze in China to the Murray–Darling in Australia.

To meet these growing challenges, water must be recast as a global common good. That means states establishing an obligation under international law to protect the global water cycle for all people and generations, and acknowledging that actions in one place have impacts in another — for instance, that deforestation in Brazil affects rainfall in Peru. It means assessing the role and economic value of not just blue fresh water, but also ‘green’ water that is held in the air, biomass and soils. And it means governments and the private sectors reformulating their roles and responsibilities, to develop objectives, policies and funds that can reshape markets and better manage global water supplies.

All these challenges must be discussed at the United Nations Water Conference in New York this week — the first such meeting in almost 50 years. Here, we highlight three areas in which research is badly needed to support discussions.

Understand all water flows within and between nations fully

Managing fresh water on a global scale means going beyond our current fixation on capturing blue water, which constitutes 35% of all fresh water on land, to also encompass green water, which makes up the remaining 65% (see Supplementary information, Fig. S1). Flows of moisture and vapour from land and vegetation are essential for regulating the water cycle and securing future rainfall, as well enabling carbon sequestration in soils and forests.

Globally, up to half of terrestrial precipitation originates from green water evaporated over land, with the rest from evaporation over the ocean3. Thus, landscape changes can alter water supplies in regions downwind, as well as changing local climates and streamflows. For example, deforestation in the Congo Basin lowers rainfall in neighbouring countries, and even across the Atlantic in the Amazon. Heavy irrigation of crops in India can boost the streamflow of the Yangtze River in China, through moisture transported downwind4.

By analogy with watersheds on land, researchers refer to ‘precipitationsheds’ and ‘evaporationsheds’ in the atmosphere. Simply put, a precipitationshed is where rain comes from and an evaporationshed is where evaporation goes to. (Here, evaporation refers to total evaporation from the ocean and green water flows from land, including from soil and water bodies, as well as transpiration from vegetation.)

Researchers need to understand better how these processes interact and how atmospheric flows of water vapour connect different regions. A new view of interconnectivity is emerging, through combining meteorological databases (including on water vapour, humidity, wind speed and direction) and computer models that connect likely sources and sinks.

To illustrate, we used such data3,5 to calculate volumes, ratios and flows of evaporation and precipitation in several regions (see ‘Atmospheric watersheds’, ‘Terrestrial moisture flows across borders’ and Supplementary information, Fig. S2). Generally, countries where prevailing winds blow from the ocean have a plentiful and consistent source of moisture and little dependence on other nations. Landlocked countries are more vulnerable to natural variability and the practices of neighbours over which they have no control.

Source: Analysis by J. Rockström et al.

For example, Brazil is largely self-sufficient in green water and precipitation. We find that around 60% of its rainfall comes from moisture evaporated from the Atlantic, and 35% from moisture from Brazilian lands, including the Amazon rainforest (see Supplementary information, Fig. 2a). Much of this airborne moisture stays within the country, trapped by the High Andes. But Brazil also exports 25% of its green water to downwind countries, such as Argentina, Bolivia and Colombia. Rainfall in these nations will drop if deforestation in the Amazon continues6, yet no political or institutional arrangements exist to address this dependency.

Rainfall patterns in sub-Saharan Africa, meanwhile, are tightly interwoven. Nigeria derives 64% of the moisture that precipitates its rainfall from within the continent; of this, 22% comes from within and 42% from outside its borders, predominantly from the Congo Basin. In turn, Nigerian land contributes 43% of the evaporated water driving rainfall in neighbouring countries such as Cameroon, Guinea and Ghana. All these countries’ water supplies are thus at risk from deforestation in central Africa.

China, too, is heavily reliant (74%) on water evaporated from land for its precipitation. Of that, 44% comes from internally recycled moisture, and the rest from upwind neighbours, including India, Kazakhstan and Russia. Moisture from Chinese land also has a large role in rainfall across Central Asia and the Tibetan Plateau.

Moreover, no country acquires over half of its moisture from within its own boundaries, implying that even the largest countries rely on evaporation from other areas to sustain their precipitation. Even Russia, the most self-reliant in rainfall and with 45% of its moisture recycled internally (see Supplementary information, Fig. S2a), is still heavily dependent on neighbouring countries (20%) and the ocean (35%).

Source: Analysis by J. Rockström et al. See also Fig. S2b in the supplementary information.

This striking view of interdependence surpasses existing transboundary issues around rivers, lakes and groundwater, which are the usual focus of water governance and disputes. For example, the Grand Ethiopian Renaissance dam on the Blue Nile has an impact on supplies to Sudan and Egypt downriver. Researchers need to study how rifts between countries might grow once inter-reliance is better understood.

To inform policies, scientists need to assess water stocks and flows of green and blue water, locally and globally, using satellites, big data and Earth-system models. Researchers need to know where and through which processes global change is shifting freshwater cycles and supply. The impacts and costs of extreme events, such as parching of soils and extremes of river flow, need to be studied in the context of precipitationsheds and evaporationsheds.

Hydrologists, economists and political scientists will need to set budgets for green and blue water across scales, while keeping the sources and patterns of fresh water within ranges typical of the past 12,000 years during which human civilizations evolved (the Holocene epoch). However, recent analyses suggest that features such as soil moisture are already deviating from historical ranges in some places, being either wetter or drier7.

Rethink how water is valued and who ‘owns’ it

Treating water as a collective resource requires rethinking its economics. Currently, blue water is managed and regulated largely as a public good for drinking and sanitation. Yet public ownership undervalues water, in that one person’s access does not limit another’s, even though water is a finite resource. This promotes excessive, unsustainable and inequitable use. And it discourages private investment. In 2015, private-sector investment in water globally accounted for less than 5% of the total funds allocated to telecommunications, energy, transport and other basic services8.

By contrast, green water is given no economic value, despite the fact that it drives economic development, stabilizes climate change and secures precipitation. It can be public, private or a common good, depending on where it is.

To manage both blue and green water as a global common good, governments need to reshape water markets — not simply fix them when they fail. Governments must monitor soil moisture and vapour flows, and set policies that value these flows as natural capital. Water governance and management need to span all scales, connecting local watersheds, river basins, precipitation- and evaporationsheds, and eventually the globe.

To bring in businesses and investments, economists need to value water as an asset that generates functions and services for human well-being. This could follow, for example, the framework established in the Dasgupta Review on the economics of biodiversity, published by the UK government in 2021 (see, which sets value on natural capital and manages natural assets within a sustainability framework. Researchers must evaluate the amount of green water needed to sustain biodiversity and carbon sinks in ecosystems. And they must assess the ‘social cost of water’ (akin to the ‘social cost of carbon’), which considers the costs to society of loss and damage caused by water extremes and not meeting the basic provision of water for human needs.

Access to clean drinking water remains a global problem, one that could worsen as the world’s population continues to rise.Credit: Ashraf Shazly/AFP/Getty

Whenever private companies benefit from public subsidies, guarantees, loans, bailouts and procurements, governments could attach conditionalities to contracts to maximize public benefits. For instance, the 1996 amendments to the Safe Drinking Water Act in the United States promoted equitable access to water by creating the Drinking Water State Revolving Fund to subsidize companies that provide water for disadvantaged communities. Similarly, the 2022 US CHIPS and Science Act contractually obliges funding recipients to maximize efficiency with regard to water, waste and electricity.

New forms of public–private arrangements, including permits, property rights and procurements, should be developed to counteract the rent-seeking and value-extractive behaviour that has plagued some national water sectors. In England, for example, since the privatization of the water industry in 1989, £72 billion (US$88 billion) has been paid out to shareholders as dividends, while outdated infrastructure has left the water system riddled with leaks and sewage discharges.

Some preliminary work to reshape the economics of water has begun: two of us (M.M. and J.R.) are leaders on the independent Global Commission on the Economics of Water (, which was launched in May 2022 at the World Economic Forum in Davos, Switzerland. The group is assessing impacts on the global hydrological cycle from climate and environmental change, as well as country interdependencies and the international cooperation needed to treat water as a global common good. A call to action (see and a first review report (see were released the week before the UN 2023 Water Conference.

Start locally and build globally

Effective management of water as a global common good starts locally. National governments, cities and regions need to define goal-driven ‘missions’ that add up globally. For example, nations might pledge to ensure that the supply of green and blue water in the hydrological cycle inside their borders remains within a manageable range, as defined by safe planetary limits or boundaries9. Targets and strategies must be designed to initiate coordination, finance and innovations10.

For example, the European Union’s Water Framework Directive has, since 2000, required the EU member states to develop river-basin management plans jointly with the public. Obligations are reviewed every six years, and non-compliance brings legal sanctions. Although progress has been made, more-coordinated efforts and monitoring would help to realize the directive’s full potential11.

All sectors must be involved. Food production, for example, accounts for around 75% of freshwater consumption globally, with India the largest consumer. India might, for instance, focus on ensuring continuity of food supply without imposing pressures on national use of green and blue water. Production and consumption processes should be redesigned to minimize water waste and maximize water sharing.

In Australia, the national science agency, CSIRO, is working to reduce the economic impacts of the country’s droughts by 30% this decade, by making climate data accessible to farmers to enable them to make informed water-use decisions. Other countries, such as Kenya, are exploring ‘green water credits’ that reward upstream water management beneficial to downstream areas12.

Cooperation and exchange of knowledge will be crucial to join up local and global strategies. As with greenhouse-gas accounting and the Sustainable Development Goals, the UN and other bodies will need to develop mechanisms for overseeing the planet’s water resources; discussions on how to do that must start this week in New York City. None of what we set out here will be easy. But the future of Earth’s bloodstream is at stake.

Source: Resources -

MIT-led teams win National Science Foundation grants to research sustainable materials

Tackling counterfeit seeds with “unclonable” labels