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Water, Human Development and Economic Growth: Some International Perspectives
  • M. Dinesh Kumar
  • Z. Shah
  • Sacchidananda Mukherjee
  • Arun Mudgerikar
The recent years have seen renewed interest in understanding how growing threats to water security affects future progress in human development and economic growth of nations. The underlying concern is that water insecurity could decouple economic growth and progress in human development. The international development discourse is, however, characterized by unhealthy debates with divergent views. Though scholars have provided robust evidences to the effect that water security catalyses human development and economic growth, number of regions for which these evidences are available is too limited for a global consensus on this issue. Water poverty index(WPI), conceived and developed by Sullivan (2002), and the international comparisons now available from Laurence, Meigh and Sullivan (2003) for 147 countries enable us to provide an empirical basis for the argument. In order to realistically assess the water situation of a country, which can capture the crucial attributes like access to water for various uses; level of use of water in different sectors; condition of the water environment; and technological and institutional capacities in water sector, a new index named Sustainable Water Use Index (SWUI) was derived from WPI. In this paper, the authors first analyze the nature of linkage between water situation of a country, vis-à-vis access and use, water environment and institutional capabilities in the water sector on economic growth. For this, data on sustainable water use index derived from WPI; human development and per capita GDP (ppp adjusted) for 145 countries, and data on global hunger index (GHI) for 117 countries are analyzed. In order to illustrate how creating water storages supports economic growth of countries which fall in hot and arid, tropical climates index, data on per capita dam storage were analyzed for 22 countries. The regression analyses between SWUI and per capita GDP show that improving the water situation, vis-à-vis improved access to and use of water, institutional capabilities in water sector and improved water environment, through investments in water infrastructure, creating institutions and making policy reforms, can support economic growth of a nation. This is explained by the regression between SWUI and HDI, which showed that increase in SWUI raised the indicators of human development, paving the foundation for growth. This strong linkage can be partly explained by the reduction in malnutrition and infant mortality with improvement in water situation as indicated by the strong inverse relationship between SWUI and GHI. Whereas regression between per capita GDP and decomposed HDI shows that a country’s progress in human development has little to do with its economic prosperity, and that a country can achieve good indicators of development even at low levels of economic growth, through welfare oriented policies which encourage investments in water, health and education infrastructure. This means, economic growth is not a pre-requisite for solving water related problems. Instead, countries should invest in water infrastructure, institutions and policy reforms to achieve human development and sustain economic growth. Further analysis shows that hot and arid tropical countries, the investment in large water storages had helped support economic growth. Also, it seems to reduce malnutrition and incidence of child mortality. Finally, the study also provides a methodology for analyzing the linkage between water situation in a region and its economic growth.
  • Human Development Index (HDI),
  • Economic Growth,
  • Water Security,
  • Sustainable Water Use Index (SWUI)
Publication Date
Citation Information
Kumar, M. Dinesh, Z. Shah, Sacchidananda Mukherjee and Arun Mudgerikar (2008), "Water, Human Development and Economic Growth: Some International Perspectives", in the proceedings of the IWMI-Tata Water Policy Research Program’s Seventh Annual Partners’ Meet, “Managing Water in the Face of Growing Scarcity, Inequity and Declining Returns: Exploring Fresh Approaches”, ICRISAT Campus, Patancheru, April 2-4, 2008, Vol. 1, pp. 842-858.