February 25, 2005

2005: Highlight # 2

Does water scarcity mean water poverty? Shah argues that it is the 'nature of the economy' rather than its 'water endowments' that determine water access poverty...

Water Poverty and Economic Development

Cross-country Analysis and Implications for Policy Reform

Tushaar Shah

Global water discussions are dominated by the 'water-scarcity-determining-water-poverty' hypothesis. But a new global database compiled for the Water Poverty Index shows that Water Access Poverty is strongly related to Human Development Index, and more specifically, with per capita GDP (adjusted for Purchasing Power Parity) and very weakly with water resource endowments of countries.

Poor access to water and a highly informal water economy are characteristics of low income countries at early stages of economic growth. Analysis suggests that the 'level of informality of the water economy' may well be the key determinant of how much can developing countries 'leap-frog' in crafting water policies and institutions that work only with high level of formalization; it may also determine both the feasibility as well as the priority of a country's water sector strategy.

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