Wednesday, June 20, 2012

HSBC Announces $100 Million Global Water Development Project

Devex: HSBC to Invest in Developing World’s Water Sector
Devex: Water: The Means to End Poverty
Environmental Finance: HSBC Makes $100m Water, Sanitation Donation
HSBC: HSBC Invests $100m in Water Projects to Improve Lives and Boost Economic Development
Market Watch: Importance of River Basins in Driving Global Growth to Rocket: Top Ten Basins' GDP Set to Exceed That of USA, Japan and Germany Combined by 2050
Reuters: River Basins Critical for Emerging Markets: Report
WHO: Generating Economic Benefits with Improving Water Resources Management and Services

Based on a recent study by Frontier Economics, which demonstrates the economic importance of river basins, HSBC (Hong Kong and Shanghai Banking Corporation), a U.K.-based multinational financing and banking services firm, announced a $100 million project to improve water access and protect water sources in developing countries throughout the world. To accomplish its plan, HSBC is partnering with the World Wildlife Fund (WWF), WaterAid, and Earthwatch. The program will provide economic as well as social and environmental benefits for the countries involved, which span across Asia, Africa, and South America.

HSBC based its plan on a study it had commissioned on water resources in developing countries. The study demonstrated the importance of ten of the world’s most populous river basins, stating that, by 2050, economic development in these ten river basins is expected to produce a quarter of the global gross domestic product (GDP). The increase in GDP comes from an increase in water infrastructure, an increase in health among a nation’s workforce, and an increase in irrigable and traversable water (water that can be used for irrigation and for transportation)—all of which increase a nation’s productivity. The ten rivers in the study are the Ganges (India and Bangladesh), the Yangtze (China), the Indus (Pakistan), the Nile (Sudan, South Sudan, and Egypt), the Huang He (China), the Huai He (China), the Niger (Western Africa), the Hai (China), the Krishna (India) and the Danube (Southeastern Europe). Without significant investment in improving water management, the study found that most of these river basins will be facing water scarcity, thus undercutting their productivity. Reduced productivity would in turn hurt the growth of the developing countries these river basins support.

To prevent future water scarcity in these at-risk river basins, HSBC is implementing its $100 million water development program. Each one of its partners in the project will perform a specific task. WWF will help farmers and fishers implement more efficient water-use practices in Asia, East Africa, and South America. WaterAid will aid in improve sanitation and hygiene in Bangladesh, India, Nepal, Pakistan, Nigeria and Ghana by improving access to safe water. Finally, Earthwatch will address and monitor urban water management issues in twenty cities worldwide by setting up research projects with local conservation groups.

The projects will contribute to economic development in the target countries as studies have shown a direct correlation between increased access to safe water and sanitation and economic growth. By providing universal access to safe water and sanitation, a country can increase its GDP by 15%. The increase in GDP arises from the positive effects that safe water and sanitation have on the health of the country’s workforce and the amount of irrigable and traversable water— all of which, as mentioned above, helps increase a country’s productivity. In fact, the Frontier Economics river study demonstrated that besides improving health and the environment, on average each $1 spent on improving water infrastructure could provide a $5 economic return on the investment or more. Because of this, Frontier Economics believes that loans offered to some African countries to provide universal access to safe water could be paid back in as quickly as three years.

With its $100 million water improvement project, HSBC seeks to take action on opportunities for economic growth in the some of the world’s most populous river basins. Not only will the project increase economic development in the targeted countries, but it will also improve understanding for better practices among similar development projects as HSBC plans to share the findings with the international development community.

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