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Thirsty world needs higher water prices -OECD

14 May 2007 13:48:32 GMT
Source: Reuters

PARIS, May 14 (Reuters) - Governments must put a higher price on water to help tackle growing shortages in a world threatened by climate change, the head of the OECD said on Monday. Higher prices would encourage investment in technology and infrastructure and discourage people from wasting water, Angel Gurria, secretary general of the Organisation for Economic Co-operation and Development told the OECD forum in Paris.

"Water is generally underpriced and sometimes practically given away as a free good and that leads to waste. Yes it's a right, but that doesn't mean it has to be free... because it's scarce," Gurria said.

"Pricing water so that there is capacity for reinvestment, making consumers of the water pay for the cost of water supplies is an effective public policy instrument to encourage responsible use."

He added that in poorer, developing countries significant public spending may be needed before true pricing of water can be implemented but "the question of falling prey to populism (by offering free water) is very very dangerous, they are doing a very great disservice to the neediest."

Careful water management is becoming increasingly important as global warming leads to droughts across the developed world.

At the same time, growing populations are putting further strain on water supplies in developing countries. Increasing industrialisation is further adding to the pressure.

"There are substitutes for coal and petroleum, but there is no substitute for water. Yet we treat it as if there is an unlimited supply which has virtually no cost. This to me is the most pressing and critical issue we face today," Peter Brabeck, Chairman and Chief Executive Officer of Nestle <NESN.VX>, the world's largest food company, told the OCED forum.

A U.N. panel recently issued a dire climate change warning in the shape of three reports which put the blame squarely on mankind, but said the threat could be averted at little cost.

Its second report in April outlined climate change impacts such as more hunger and water shortages in Africa and Asia, heatwaves in the United States and a rise in sea levels that could go on for centuries and drown coastal cities.

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Last updated:Mon May 14 15:46:36 2007