Water Forward: Powering a New Wave of Jobs in Latin America and the Caribbean

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.

- The cost of fixing Latin America's water infrastructure is massive. How can the World Bank Group convince private investors that water isn't just a social good, but a smart, stable investment? Where are we seeing the biggest 'wins' right now?

- Attracting more investment into the water sector is one of the most critical challenges we face, and it requires a shift in mindset. For a long time, we've treated water almost exclusively as a social good and a human right. And it is. Because of this sensitivity, the conversation about the true cost of securing water for everyone has often been avoided. We've relied almost entirely on public financing. However, with public budgets becoming increasingly strained, that model is no longer sustainable. This underinvestment has had severe consequences: today, over 330 million people in Latin America lack access to safe sanitation, and 130 million live in areas prone to severe drought.

This is precisely why the World Bank Group is launching the Water Forward initiative. It's about completely rethinking our approach and recognizing that water is at the same time a social good, an environmental asset, AND a vital economic input, and that none wins when we don't value it properly. The goal is to bring governments, the private sector, and development partners to the same table to identify the real barriers to financing and to co-create innovative solutions-be they regulatory, institutional, financial, or technological.

Through Water Forward, we are actively engaging with countries that recognize that the old way isn't working and are ready to undertake the necessary reforms to attract a broader range of investors - and secure water for all, today and tomorrow. We're incredibly proud that countries like Bolivia and Jamaica are already stepping up as launch partners for this initiative, showing real leadership in tackling this challenge head-on.

- How will Water Forward's solutions be adapted to the specific social, economic, and geographic realities of LAC? What countries are already at the forefront of this agenda?

- That's a crucial point, and it gets to the very heart of our strategy. Latin America is an incredibly diverse region, so the Water Forward initiative is a flexible framework. Our approach is designed around five anchor programs that represent the building blocks of water security. These are: ensuring our cities can thrive, helping farmers become more productive and resilient, guaranteeing access for the last-mile communities, strengthening our industries, and protecting water as a vital public good.

Within this framework, there are scalable solutions that can be customized to each country's specific reality. The challenges in a small island nation in the Caribbean are vastly different from those in the high Andes or the Amazon basin - and countries within and beyond the region can learn from each other. So, the key is to adapt these solutions to fit the local context.

And the good news is, we don't need to reinvent the wheel. In many ways, LAC has already shown the path forward. Look at Chile, which reformed its water sector 20 years ago and became a global leader in providing sustainable urban water services. Look at Brazil, whose 2020 universal services law unlocked one of the largest waves of private investment the water sector has ever seen. In Peru, this is increasingly taking shape through a circular approach to water-where wastewater is no longer seen as waste, but as a resource that can be reused, generate energy, and reduce pressure on scarce water sources. And more recently, we are proud to see countries like Bolivia and Jamaica eager to join Water Forward and pioneering new ways to achieve water security at scale.

This is exactly what Water Forward aims to be: a platform where countries can learn from these successes-and from each other - to secure water for the people, the economy and the environment of the region. And we look forward to engaging with governments, private actors and development partners in that endeavor.

To know more about the this initiative, join the event Water Forward: Driving Jobs and Prosperity