Growing Investment in Water Projects
Over the last decades, the Arab countries have seen a rise in population growth and industrialisation, as well as the consequences of global warming, which together has put increasing pressure on already the most water-stressed region of the world.
As the climate warms further, the social and economic fallout will be intense in the Middle East and North Africa (Mena) region, which has about 70% of the world’s most water-stressed countries. The financial burden of being water-scarce is estimated to cost governments 7-14% of their gross domestic product by 2050.
Mena is witnessing a long-term increase in demand for water and wastewater services. According to the World Bank report, the water demand gap will quintuple by 2050 from today’s 42 cubic kilometres per annum to approximately 200 cubic kilometres per annum. Also, supply chain disruptions in the Covid-19 pandemic period have highlighted the need to boost water security across the region where many countries rely on transborder water supplies.
The region spearheads the global desalination market. It has around 48% of the ongoing desalination projects. In the GCC, water demand is projected to increase by about 62% by 2025. About $120.3bn worth of water and wastewater projects are currently planned or underway across the region, of which about $89.6bn is in the GCC.
Governments in the region are backing large-scale investment programmes, and also accelerating efforts to increase private sector participation in the water and wastewater sectors with public-private partnerships (PPP) and privatization.
In the last two years, production costs for water desalination in the Middle East have fallen by nearly half. Improvements in energy efficiency, low-interest project financing, greater economies of scale and more cost-effective plant configurations, are the main factors.
Increasing scarcity of water resources in the region is a challenge to achieve sustainable development. Alongwith capacity-building projects, it is crucial to save water and energy, which in turn reduces greenhouse gas emissions and contributes to climate change mitigation.