Latin America and the Caribbean (LAC) holds over a third of the world's freshwater resources, yet many still struggle to access clean water, and droughts are a growing concern. How can the region turn its water wealth into a powerful engine for economic growth and job creation? In this interview, David Michaud, World Bank's Practice Manager for Water in the LAC region, addresses this question and highlights how the World Bank Group is championing the water agenda.
- Latin America is a global water superpower, so how can its countries turn this natural wealth into an economic engine without draining its sources and what is actually standing in their way?
- That's an excellent question. It highlights a critical paradox in Latin America. The region is a global water superpower, holding the second-largest per-capita water resources in the world. This has been fundamental to the region’s economic development, allowing it to become a major food exporter and to develop one of the greenest energy matrices through hydropower. It also sustains invaluable ecosystems, such as the Amazon, which are crucial for global biodiversity and tourism.
However, this abundance is deceptive since the distribution of water is very uneven across and within countries. For instance, over 65% of Peru's population and the majority of its GDP is on its desert coast. Some of the Caribbean islands are among the most water-stressed countries. Mexico's industrial north is also very arid. In areas with plenty of water, quality is often threatened by pollution from activities like illegal mining or the use of agrochemicals. To address this, we need a two-pronged approach: Better care of our shared water resources, and more productive use of water by all sectors.
First, on caring for our shared resources: we must recognize that the same water that grows our food also powers our cities and sustains our industries. This requires robust institutions and infrastructure to manage both the quantity and quality of water resources such as lakes, rivers and aquifers. A great example is the World Bank water security project in Ceará, Brazil. We're financing large-scale water conveyors to bring water from dams to cities in the dry hinterlands, complemented by a real-time monitoring system for this scarce resource. Similarly, in Espiritu Santo, we’re supporting landowners to maintain the forests in the headwaters of the State’s main sources, while in Bolivia, we're empowering local communities to jointly manage their water resources, ensuring a fair and sustainable share for everyone.
Second, on being more productive in our use of precious water: every drop must be used to its fullest potential. In Peru, we're helping farmers modernize their irrigation systems, enabling them to produce more food with less water and increase their incomes. In El Salvador, where more than half the water in San Salvador was being lost to leaks, we're working to reduce these losses and ensure more water reaches every citizen. In Chile, Mexico and Peru, the WBG has been actively exploring options for water reuse and circular economy. These projects demonstrate that through strategic investment and smarter management, we can turn water from a source of vulnerability into a powerful engine for sustainable growth.
- We often think of water as a utility, but could it be a massive job enabler? How can better water systems and services provide a path to more and better jobs for people? What investments or policies are needed to make this a reality at scale in the LAC region?
- While the saying 'just add water' might be a bit simplistic for job growth, it's absolutely true that water is a critical enabler of more and better jobs across sectors as diverse as agriculture, tourism, and even mining.
Let's start with agriculture. For a family farmer, having reliable access to water through irrigation can boost productivity by as much as 50%. This isn't just about growing more crops; it's about growing higher-value crops. It allows a farmer to shift from planting annuals to investing in long-term assets like avocado trees, or to develop a dairy business. This transition up the value chain creates more stable and significant revenue for rural families. Sustainable irrigation can also provide a critical buffer against drought shocks, helping safeguard farmers’ crops and related incomes from rainfall variability and extreme dry events.
Then there's tourism, which is a cornerstone of many economies in the region. Tourists expect and deserve clean beaches and reliable water services. To support this, the World Bank Group is developing a major regional program for the Caribbean that aims to dramatically increase wastewater collection and treatment in coastal areas. By improving water quality, we're not just protecting the environment; we're safeguarding the very foundation of the tourism industry and all the jobs that depend on it.
Finally, a fascinating development is happening in the industrial sector. I was recently at a desalination congress in Chile, where major mining corporations have long struggled with securing water for their operation. They've now largely solved their own water needs through desalination, and now they are suggesting that with government coordination, they could build these large-scale water systems in a way that enables the development of the regions around them, as a whole.
