Cross-cutting issues 2

Addressing the economic and financial aspects of water and energy

The economic value of energy varies in a changing market and may be difficult to assess for long term investments. For water, assessments of economic value must accommodate the fact that water is a public and social good, and access to safe drinking water has been declared a human right by the United Nations. At the same time, assessment of costs and benefits for different water uses needs to address gaps in knowledge of values linked to biodiversity and ecosystem services.However, when addressing benefit sharing, and likely energy and water markets, not least across boundaries, acceptable and reliable estimates are required. When it comes to financing and pricing the situation is equally complicated, due to the asymmetry, volatility and inter-linkages of energy and water prices, with energy mainly being priced on the market and water as a public good. Understanding of these inter-linkages, and their economic and financial implications, are necessary for both public and private decision-makers.