The Hidden Wealth of Nations: The Economics of Groundwater in Times of Climate Change

At the global level, groundwater can buffer a third of the losses in economic growth caused by droughts and can protect cities against day-zero-type events. It is especially important for agriculture, where groundwater can reduce up to half of the losses in agricultural productivity caused by rainfall variability. By insulating farms and incomes from climate shocks, the insurance of groundwater translates into protection against malnutrition. In contrast, the lack of access to shallow groundwater increases the chances of stunting among children under five by up to 20 percent. In Sub-Saharan Africa, untapped groundwater irrigation potential could be key to improving food security and poverty reduction. Little land is irrigated there, but local shallow aquifers represent more than 60 percent of the groundwater resource, and 255 million people in poverty live above them. But depletion, degradation, and competition for groundwater threaten its sustainability and availability for future generations. Greater understanding of groundwater’s benefits and costs informs the report’s policy framework and recommendations. The findings also reflect on the issues policymakers confront when attempting to align the private and social costs of groundwater use. A central message of this report is that action is needed: groundwater needs to be a political priority and should be carefully managed through integratd cross-sectoral action to benefit society, the economy, and the environment.