Setting the table for mitigating GHG emissions in the water sector
In anticipation of COP27, Global Water Intelligence’s latest report “Mapping Water’s Carbon Footprint” has the potential to open-up billions of dollars in climate finance for water as both a mitigation and adaptation solution. All statistics cited in this blog come from GWI’s report dated November 14, 2022 unless otherwise noted.
Co-authored by Rich Thorsten, Chief Insights Officer, Water.org; Genevieve Edens, Director of ESG and Impact, WaterEquity
Water has become a key theme at COP27 and throughout larger discussions around climate. Climate change will primarily be felt through the water cycle: people will be exposed to too much water, not enough water, or unpredictable water. But investing in climate-resilient water and sanitation to expand access to the billions of people who are among the most vulnerable to the effects of climate change is also a key solution in building resilience for communities and for watersheds.
Water also has a role to play in global mitigation efforts. GWI’s new white paper Mapping Water’s Carbon Footprint provides a new analysis of the water sector’s global greenhouse gas emissions and suggests possible solutions to mitigate those emissions at each stage of the value chain. GWI’s paper is an important contribution to our understanding of how water supply and sanitation service delivery affects climate change, and how those services contribute to emissions. According to GWI, the water sector represents 1.8% of global carbon emissions and nearly 5% of global methane emissions. As billions of people without safely managed water or sanitation improve access, emissions from the sector will continue to increase unless the sector takes mitigation seriously. The findings from the white paper underscore why the sector must find ways to expand and improve service delivery to attain SDG6 while limiting or reducing greenhouse gases over time.
Water and mitigation are a win-win
For water supply systems, reducing emissions can go hand-in-hand with improving access. In 2022, 27% of global water utility opex will be spent on energy. Non-revenue water (water that is pumped but then lost or unaccounted for) represents 30% of global water system input volume — and can be as high as 70% in some countries. Fixing leaks, optimizing pressure, and replacing old equipment and technology can drive down costs for utilities while reducing energy consumption, and also can improve the continuity and quality of service. Utilities that are more financially sustainable have the potential to expand their networks, prepare against climate threats, and ensure continuous access despite shocks that might occur. GWI’s report also makes the case for investments in energy efficiency and renewables as a win-win for reducing emissions, lowering costs, and improving services.
These findings have the potential to open up billions of dollars in climate finance for water as both a mitigation and adaptation solution. Water supply infrastructure and utilities have been historically underfunded. According to the World Bank, investments in water infrastructure must at least triple to fully achieve SDG6. While infrastructure investments overall have grown by 350% in the last decade, only 1.9% of commercial financing went towards water specifically. This report helps make the case for investors interested in climate mitigation efforts to view water as impactful in the race towards net zero.
Sanitation is a Conundrum
While water is a win-win, mitigation solutions around sanitation continues to pose more potential trade-offs than triumphs. Two-thirds of the overall water sector emissions come from wastewater treatment and non-sewered sanitation. That may even be an underestimate given the difficulties of measurement; one study estimated that in Kampala, Uganda sanitation may represent as much as half of the city’s emissions. At the same time, we urgently need to invest in sanitation — an estimated 4 billion people lack access to safely managed sanitation services, including over 400 million who practice open defecation. Containing, collecting, and treating sanitary waste is a necessary to protect public health, whether through sewerage networks or on-site sanitation facilities, even knowing that developing functioning sanitation systems typically results in increased GHG emissions.
In many emerging market cities, wastewater might be collected via a sewerage system, but is then discharged untreated into water bodies — in Central and Southern Asia, only 25% of wastewater is safely treated. This poses a huge threat to riverine ecosystems, human health, and economic growth. One study found that GDP of areas downstream of urban centers with untreated waste practices was lowered by up to a third. In many countries, new regulatory requirements and public investment is poised to increase wastewater treatment. In taking this necessary step we should consider solutions that also reduce methane emissions, such as anaerobic treatment with biogas capture.
But as GWI points out, half of the world’s population is not connected to sewered systems and instead relies on small scale, decentralized sanitation systems such as latrines and septic tanks where waste is captured on-site. Only a tiny percentage is then treated — the majority of waste either stays in the containment facility or is dumped into fields and water bodies. Without appropriate design and treatment, waste from latrines and septic tanks can leach into groundwater or be released during flooding, harming public health and intensifying the dangers posed by climate change. Treating and safely discharging (or in some cases transforming waste into energy or agricultural inputs) is critical, but comes with tradeoffs that need to be understood, estimated, and factored into decision-making. Blended finance investments that combine public concessionary investment and private investment, and that can take these tradeoffs seriously, will be critical to catalyzing the needed capital into this area.
Who should pay for mitigation?
Increased access to sanitation solutions for low-income individuals in emerging markets has been a core component of Water.org and WaterEquity’s work since our founding. Together, we have reached over 51 million people with increased access to water and sanitation solutions. We have seen from our emerging research that climate change is already increasing demand for water and sanitation services that can withstand climate events such as droughts, floods, and storms — 62% of our partner institutions anticipate increased demand for water and sanitation loans due to droughts or other climate change-related events and 39% expect higher demand for water supply and sanitation improvements that may better survive such events.
As more people move from practicing open defecation or using shared facilities to having a private toilet at home, we anticipate the number of people relying on on-site sanitation will continue to grow. In fact, we have seen a considerable shift away from open defecation and shared facilities, chiefly toward toilets with septic tanks and different types of pit latrines with 47% of households we reach taking out loans for toilets with septic tanks. Unlike centralized sewerage systems, households are typically directly responsible for the operating costs of these systems. For low-income families, these expenses can represent a large chunk of household incomes.
Mitigation options at the containment stage — such as improving the toilet technology (for example, including biogas digestors or switching from flush toilets to composting toilets) — have the potential to reduce emissions, but also most likely pass these mitigation costs on to the most vulnerable. Alternatively, fecal sludge treatment options, where pits and tanks are emptied and waste is brought to a centralized facility for treatment, can be funded by municipalities or other institutions not individual households, and ensure safe treatment as well as resource recovery. Emissions might be higher with this scenario, but the cost does not fall on the most vulnerable individuals.
In cases where there are tradeoffs, we need to create funding mechanisms that limit impact on the most impoverished and enable service providers to improve services while mitigating GHG impacts. Public investments and tax mechanisms could spread costs among all users while carbon credit markets can incentivize mitigation solutions.
Doughnut economics, an emerging economic concept, puts forth a framework for thinking about how we can create a safe and just space for humanity — by making sure everyone has access to “life’s essentials” while not overshooting planetary boundaries. Access to water and sanitation is a human right and we need to rely on sector players to take on the burden of mitigation efforts, not the billions of people who still lack safely managed access and haven’t yet reached the “social floor” while the rest of the world has already overshot the “ecological ceiling.” Investing now in mitigation is likely to be less expensive than investing in adaptation measures in the future. This is especially true in a rising GHG environment. By not investing enough in emission reduction today, we are burdening future generations with greater costs and impacts. In “win-win” situations, financial institutions and infrastructure enterprises should be incentivized to invest in these no-regrets approaches.
Together Water.org and WaterEquity are setting the table for mitigating GHG emissions and promoting climate and water resilience outcomes. WaterEquity will continue to scale investments across the water and sanitation sector, focusing on building a $1 billion portfolio of investments that include household-level solutions and climate-resilient WSS infrastructure. Water.org is raising philanthropic capital to support these efforts through our Water & Climate Initiative. While we don’t have the answers yet, Water.org and WaterEquity are committed to considering these mitigation and economic options and tradeoffs in how we invest in the future of sanitation. Our planet and those most vulnerable to the effects of climate change depend on it. Our donors and investors are demanding it.
Join leading GWI analysts as they present this pioneering research at the panel “Mapping Water’s Carbon Footprint” as part of COP27 on Monday, November 14 at 9:00am CT. The session will conclude with a panel discussion featuring Water.org’s Rich Thorsten. RSVP Here.
For more information on Water.org’s continuing work on water and climate, visit https://water.org/our-impact/water-crisis/climate-crisis/
For more information on WaterEquity’s infrastructure investment strategy, visit: https://waterequity.org/infrastructure
