Chapter 2 - Water, Human Development, Inclusive Growth, and Poverty Alleviation: International Perspectives

Abstract

An attempt is made to initially analyze the nature of the link between the water scenario of a country and its economic growth. For this, data on sustainable water use index derived from the water poverty index (WPI); human development index (HDI) and per capita gross domestic product (GDP) for 145 countries, human poverty index for 113 countries, and global hunger index (GHI) for 117 countries were analyzed. Further, the link between water storage and economic growth of countries which fall in hot and arid, tropical climates is analyzed for 24 countries. The analysis shows that improving the water situation of a country can trigger economic growth, as indicated by the exponential relationship between sustainable water use index (SWUI) and per capita GDP (R2=0.69). This phenomenon is explained by the linear relationship between SWUI and HDI (R2=0.80). While it is a truism that all the three subindices of human development have the potential to trigger economic growth in a country, the exponential relation between HDI and per capita GDP (R2=0.90) further reinforce this. However, the regression between per capita GDP and decomposed HDI showed a logarithmic relationship (R2=0.75), suggesting that a country's progress in human development has little to do with its economic prosperity and that good human development can be achieved even at low levels of economy. The causality of SWUI acting as a driver of economic growth was tested by running a two-stage least-square method with HDI as the instrumental variable, SWUI as the predictor variable, and per capita GDP as an independent variable, which showed a regression coefficient of 0.50. This growth is inclusive. The relationships between SWUI and income inequality, and between HDI and income inequality were inverse linear for countries in the medium to high SWUI and HDI ranges. A stronger relationship was found between SWUI and the human poverty index when countries in all ranges of water security were included in the analysis. Further analysis suggest that countries which fall in tropical semiarid and arid climates can and should improve their water security through enhancing their per capita storage, as suggested by the relationship between per capita reservoir storage and SWUI, and per capita reservoir storage and per capita GDP of 24 countries. The last section in the chapter shows how a multiple water use system can provide all-round water security in developing countries.