Aude-Sophie Rodella Esha Zaveri François Bertone Editors About the Water Global Practice Launched in 2014, the World Bank Group’s Water Global Practice brings together financing, knowledge, and implementation in one platform. By combining the Bank’s global knowledge with country investments, this model generates more firepower for transformational solutions to help countries grow sustainably. Please visit us at www.worldbank. org/water or follow us on Twitter: @WorldBankWater. About GWSP This publication received the support of the Global Water Security & Sanitation Partnership (GWSP). GWSP is a multidonor trust fund administered by the World Bank’s Water Global Practice and supported by Australia’s Department of Foreign Affairs and Trade, Austria’s Federal Ministry of Finance, the Bill & Melinda Gates Foundation, Denmark’s Ministry of Foreign Affairs, the Netherlands’ Ministry of Foreign Affairs, Spain’s Ministry of Economic Affairs and Digital Transformation, the Swedish International Development Cooperation Agency, Switzerland’s State Secretariat for Economic Affairs, the Swiss Agency for Development and Cooperation, and the U.S. Agency for International Development. Please visit us at www.worldbank.org/ gwsp or follow us on Twitter: @TheGwsp. Aude-Sophie Rodella Esha Zaveri François Bertone Editors © 2023 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. 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Cover, report design and visualizations by Voilà: | chezVoila.com Acknowledgments This report was prepared by a team led by Aude- The team is grateful to colleagues from the Sophie Rodella (TTL, Senior Economist), Esha Zaveri World Bank for their helpful inputs and sugges- (co-TTL, Senior Economist), and François Bertone tions at various stages of the book’s development, (Senior Groundwater Specialist) under the strategic including (in alphabetical order): Gabriela Azuela, guidance and general direction of Juergen Voegele Bogachan Benli, Meskerem Brhane, Eileen Burke, (Vice President, Sustainable Development Practice Gaia Hatzfeldt, Sarah Keener, Amjad Khan, Group), Saroj Jha (Global Director, Water Practice), Christina Leb, Talajeh Livani, Sanjay Pahuja, Gustavo Jennifer Sara (Climate Change Global Director, formerly Saltiel, Amal Talbi, Pieter Waalewijn, Marcus Wishart Water Global Director), Soma Ghosh Moulik (Practice and Fan Zhang. Manager), Yogita Mumssen (Practice Manager) and the management of the Water Global Practice. The team was fortunate to receive excellent advice and guidance from the following peer In addition to research completed by the authors, reviewers at various points in the report prepara- this report is based on background papers, notes, tion process: Richard Damania (Chief Economist, and analyses prepared by a core team of internal and Sustainable Development), Abedalrazq Khalil external collaborators. (Lead Specialist and Program Leader), Genevieve Connors (Practice Manager), Giovanni Ruta (Lead Internal collaborators included (in alphabetical Environmental Economist), Elisabeth Lictevout order): Soumya Balasubramanya (Senior Economist), (Director, International Groundwater Resources Edoardo Borgomeo (Water Resource Management Assessment Center), Dorte Verner (Lead Agriculture Specialist), Christian Borja Vega (Senior Economist), Economist). The team also benefited greatly from the Si Gou (Water Resources Management Specialist), feedback provided by the report’s external advisers Tejasvi Hora (Consultant), Hanan Jacoby (Lead at various key points during the report prepara- Economist), Lucy Lytton (Senior Groundwater tion process: Alan MacDonald (British Geological Specialist), Siobhan Murray (Geographer), Jane Park Survey), Robert Reinecke (University of Potsdam), (Consultant), Précila Rambhunjun (Consultant), and Veena Srinivasan (Water, Environment, Land, and Pedro Rodriguez Martinez (Consultant), Seojeong Oh Livelihoods Labs). (Consultant), Ali Sharman (Consultant) and Karen Villholth (Consultant). The World Bank Water communications, knowledge, and publishing teams, comprising Erin Barrett, External collaborators included (in alphabetical Meriem Gray, Sarah Farhat, Zubedah Robinson, and order): Fabiola Alvarado (University of Oxford), David Gray, provided valuable guidance for turning Olivia Becher (University of Oxford), Mathilde Degois a manuscript into a finalized report. Bruce Ross- (Tel Aviv University), Ariel Dinar (University of Larson provided excellent editorial support and, with California, Riverside), Ram Fishman (Tel Aviv Joe Caponio, edited the report. Francis Gagnon and University), Dustin Garrick (University of Waterloo), the team at Voilà: provided skillful information design Danielle Grogan (University of New Hampshire), and designed the report. Laureline Josset (Columbia University), Upmanu Lall (Columbia University), Richard Lammers (University Finally, Georgine Badou and Kanny Diaby provided of New Hampshire), Chen Li (Tsinghua University), helpful administrative support for which the team Di Long (Tsinghua University), Simon Meunier is grateful. (Université Paris-Saclay, CentraleSupélec, CNRS, Sorbonne Université, GeePs), Divya Prakash (University This work was made possible by the financial of California, Riverside), Alexander Prusevich contribution of the Global Water Security and Sanitation (University of New Hampshire), Melissa Rohde Partnership (see https://www.worldbank.org/en/ (The Nature Conservancy), Meritxell Ruiz programs/global-water-security-sanitation-partnership) (Consultant), Howard Tobochnik (Tel Aviv University), of the Water Global Practice, World Bank Group. Yoshihide Wada (King Abdullah University of Science and Technology) , Yiming Wang (Tsinghua University) and Guillaume Zuffinetti (Université Paris-Saclay, CentraleSupélec, CNRS, Sorbonne Université, GeePs). v  Content Acknowledgments p. v Groundwater glossary p. 53 Abbreviations p. viii Ending notes p. 55 Summary  p. ix References p. 58 Valuing Staying Getting the hidden solvent— highest return wealth avoiding on a critical bankruptcy adaptation currency Groundwater’s economic Depletion: Drawing Aligning private and attributes are a blessing— down reserves, draining social opportunity costs and a curse p. 3 wealth p. 22 of groundwater use: Three policy levers, four Groundwater underpins Degradation: Tainted water, policy areas p. 41 the development of compromised wealth p. 32 agriculture, cities, and Not-so-marginal costs: critical ecosystems  p. 10 Competition: Precious Revamping energy subsidies wealth under pressure p. 34 and using solar power p. 43 Groundwater’s climate buffering is nature’s Drilling incentives and multi-risk insurance p. 15 behaviors: Reforming producer subsidies p. 45 Replenishing the groundwater account: Annexes Enhancing supply through groundwater 1. Aquifer typology: four aquifer types and their key characteristics recharge  p. 47 2. What economic theory tells us about groundwater 3. Groundwater Dependent Ecosystems (GDEs) Pulling all the policy levers: 4. Groundwater and cities Hard-learned groundwater 5. Groundwater quality: the exponential threats management lessons  p. 49 6. Will We Run out of Groundwater? Groundwater Policy and Management Instruments Making groundwater use 7. Examining the multi-risk insurance of groundwater a higher priority: A call for Technical annexes can be found online. urgent political action p. 51 vi The hidden wealth of nations List of List of maps boxes and figures Box 1.1 Types of aquifer shape Figure 1.1 Groundwater share potential groundwater uses and risks of irrigated areas p. 3 for development and resilience p. 6 Figure 1.2 Percentage of urban and Box 1.2 Who owns groundwater?  p. 9 rural populations relying on groundwater for their water supply  p. 4 Box 1.3 When the hidden wealth is shared across borders: Map 1.1 Subnational poverty headcount Transboundary aquifers p. 18 ($1.90) with top tercile regional poverty rate and aquifer typology p. 11 Box 2.1 Eye in the sky: using satellite data to measure groundwater Figure 1.3 Reliance on groundwater storage changes p. 24 intake for drinking water source p. 12 Box 2.2 What happens when Map 1.2 Groundwater-dependent groundwater resources become ecosystems in Sub-Saharan scarce? Uncovering fault lines Africa, by category p. 13 with primary data p. 27 Map 1.3 GDEs are critical to livelihoods Box 2.3 Rippling impacts of groundwater in some of the poorest areas p. 14 overexploitation in Jordan p. 30 Figure 1.4 Malnutrition and the Box 2.4 Sinking cities, surging costs: role of shallow groundwater in measuring groundwater-induced Sub-Saharan Africa p. 16 land subsidence in Jakarta  p. 31 Figure 1.5 Groundwater is key to Box 3.1 Increasing and protecting protecting economic growth p. 17 supply: Aquifer recharge and nature-based solutions p. 48 Map 2.1 Declining trends and seasonal groundwater deficits using downscaled GRACE satellite data p. 23 Figure 2.1 A conceptual framework for adaptation responses to depletion p. 26 Map 2.3 Groundwater availability is key to urbanization in developing countries but can compete with agricultural land p. 34 Map 2.4 Groundwater-dependent ecosystems are at the crossroads of migration routes and fragility hotspots in the greater Sahel region p. 36 Figure 3.1 Policy levers and areas to mitigate the challenges of asymmetric information and common-pool resources p. 42 vii  Abbreviations ACLED Armed Conflict Location and Event Data Project AEZ Agricultural Export Promotions Zone IGRAC International Groundwater Resources Assessment Centre IPCC Intergovernmental Panel on Climate Change FAO Food and Agriculture Organization of the United Nations FEWS Famine Early Warning Systems Network FLW Food lost or wasted GDE Groundwater-dependent ecosystem GEF Global Environmental Facility GHG Greenhouse gas GRACE Gravity Recovery and Climate Experiment GWS Groundwater storage HAZ Height-for-age-Z score IPCC Intergovernmental Panel on Climate Change LSM Land-surface model MAR Managed aquifer recharge MNA Middle East and North Africa NASA National Aeronautics and Space Administration NBS Nature-based solution NGO Non-governmental organization SAR South Asia region SDG Sustainable Development Goal SSA Sub-Saharan Africa region TBA Transboundary aquifer TWS Terrestrial water storage UNEP United Nations Environmental Program UNESCO United Nations Educational, Scientific and Cultural Organization UNICEF United Nations Children’s Fund USGS United States Geological Survey WHO World Health Organization viii The hidden wealth of nations Summary Groundwater is our most important freshwater But groundwater overexploitation exposes econo- resource. But the lack of systematic analysis of its mies to exponential risks—including maladaptation. economic importance has evaded attention from Globally, major alluvial aquifers account for more policymakers and the general public—threatening than 60 percent of groundwater depletion embedded the resource. Groundwater provides 49 percent of in international trade—including from regions with the water withdrawn for domestic use by the global transboundary aquifers, adding further complexity population and around 43 percent of all water with- and urgency to their management. In the Middle East drawn for irrigation. This report offers new evidence and South Asia, up to 92 percent of transboundary that advances the understanding of groundwater’s aquifers show signs of groundwater depletion. The value, showing how groundwater is a major asset in a effects of this depletion are already painfully felt in country’s resource portfolio—but also the costs of its South Asia, where groundwater once provided an mismanagement and the opportunities to leverage agricultural revenue advantage of 10-20 percent, a its potential. In a new contribution from this research, benefit now disappearing in areas affected by deple- a global aquifer typology has been developed and tion. In Sub-Saharan Africa, where groundwater has validated. It considers key aquifer characteristics that been underused given its potential, expanding solar matter for resilient development and poverty reduc- pumping without adequate safeguards could threaten tion—determining the economic accessibility of the rural livelihoods relying on groundwater-dependent groundwater resource to individual farmers, its sustain- ecosystems. A hidden risk that is becoming more ability, and buffering capacity of the aquifer to seasonal visible comes from deteriorating groundwater quality variations and climate shocks. Along with other data because of rapidly expanding urban areas, unreg- sources, it enables novel global economic analysis. ulated industrial sites, and inadequate agricultural practices. Harder to measure, this quality risk presents New analysis shows that what groundwater lacks a growing threat to groundwater sustainability and in visibility, it makes up for in value. At the global the benefits it bestows. level, groundwater can buffer a third of the losses in economic growth caused by droughts. It is especially Faced with growing demand, groundwater’s specific important for agriculture, where groundwater can features prime it for overexploitation in a classic reduce up to half of the losses in agricultural produc- tragedy of the commons—with exponential impacts tivity caused by rainfall variability. By insulating farms disproportionately affecting the most vulnerable. It and incomes from climatic shocks, the insurance of doesn’t have to be that way. The recommendations are groundwater translates into protection against malnu- informed by greater understanding of groundwater’s trition: lack of access to shallow groundwater increases benefits and costs articulated around a framework of the chances of stunting among children under five information, incentives, and investments and their by up to 20 percent. In Sub-Saharan Africa, untapped corresponding policy levers. Two key dimensions are groundwater irrigation potential could be key to important. First is how the type of aquifer shapes the improving food security and poverty reduction. Little potential uses. And second is the country and regional land is irrigated there, but local shallow aquifers repre- degree of groundwater abstraction, from those who sent over 60 percent of the groundwater resource, and have underused the resource and have yet to harness 255 million people in poverty live above them. its potential to those who have overexploited it and suffer the damaging consequences. The findings also inform the issues policymakers confront when attempting to align private and social opportunity costs of groundwater use. Urgent cross-sectoral action and high-level political mobilization are needed. Note. All data used and produced for this report are or will be available at: https://wbwaterdata.org/ ix  U ntapped or overdrawn, groundwater is a critical asset for poverty reduction, resilient growth, and climate adaptation. It was valued by ancient civilizations, which relied on groundwater for their water supplies, as the Romans did, even when building cities close to rivers.1 Groundwater today, and more so in the future, will be a foundation for adapting to climate change. It provides 49 percent of the volume of water withdrawn for domestic use by the global population2 and around 43 percent of all water withdrawn for irrigation, watering 38 percent of the world’s irrigated land. 3 Its unique economic attributes, including its common-pool nature, are a blessing—and a curse. And its characteristics determine its present and long-term uses and possible negative spillovers. These need to be brought out of the shadows for the resource to yield its potential and be managed adequately. 2 The hidden wealth of nations Groundwater’s economic attributes are a blessing —and a curse G roundwater is key to water supply and agriculture and, thus, to food security: ranging from overexploited to underused, the level of its use varies greatly across regions. In the Middle East and South Asia, where irrigation has been a corner- stone of agriculture, up to 55 percent of irrigated lands use groundwater. In Sub- Saharan Africa, where less than 5 percent of agricultural land is irrigated, this figure comes down to less than 7 percent of irrigated lands using groundwater (figure 1.1). Groundwater abstraction has played a major role in accelerating food production and food security globally since the 1960s.4 Of more than 500 of the world’s largest cities, more than half have groundwater as part of their water portfolio. 5 More than 80 percent of large cities in the Middle East, South Asia, and Central Asia rely on groundwater as their main source. In Sub-Saharan Africa, around 44 percent of the population relies on groundwater for drinking. And on average, a quarter of the urban population in the region relies on groundwater. In countries like Nigeria, this reliance rises to close to 60 percent (figure 1.2). Such reliance highlights how groundwater is critical for water supplies—and how important it is to protect its quality.   Figure 1.1 Groundwater share of irrigated areas SAR Total irrigated area EAP ECA MNA LAC SSA % of surface water irrigated area 45% 77% 76% 51% 75% 94% 6% 55% 23% 24% 49% 25% % of groundwater irrigated area 3 Valuing hidden wealth Figure 1.2  Percentage of urban and rural populations relying on groundwater for their water supply Reliance on groundwater is common on rural areas. Some urban areas are also heavily reliant on this resource. Mali Burkina Faso Malawi Cote d’Ivore Congo, Rep. Congo, Dem. Rep Mazambique Zambia Tanzania Zimbabwe Guinea Bissau Madagascar Uganda Cameroon Chad Liberia Togo Guinea Equatorial Guinea Reliance on groundwater Benin in rural areas in Central African Republic is high, Angola These countries have 90% of its population Sierra Leone urban areas in which relies on it South Sudan over 50% of the population depends on Nigeria groundwater Central African Republic % of population that relies 0% 50% 100% on groundwater Source: Latest household survey available, WHO/UNICEF Joint Monitoring Program. This report shows that groundwater is a key asset in a country’s portfolio to reduce poverty and promote resilient and equitable growth. Until now, groundwater’s wealth has been underestimated, leaving it undervalued and taken for granted. Groundwater’s hidden nature and unique characteristics further contribute to under- valuing the resource. Indeed, like the Water-Diamond paradox popularized by Adam Smith, whose origins are even more ancient (See Plato’s dialogues—Euthydemus6), groundwater is critical to many key services and yet is often taken for granted, with few considerations for how this life-sustaining common-pool wealth should be best used, managed, and protected. Using banking as an analogy, groundwater recharge can be equated with income and groundwater withdrawal with expenditure. To achieve balance, natural discharge and withdrawals should not exceed recharge. If they do, overextraction could compromise the long-term use of groundwater. Bankruptcy would occur if overextraction were also 4 The hidden wealth of nations to jeopardize the “inheritance” of this wealth. Beyond the physical compromising of the resource, economic accessibility could be compromised at lower thresholds, with severe poverty and equity consequences. Groundwater is a common-pool resource, reflecting its open and relatively easy access by individuals for some aquifer types. Common-pool resources are rivalrous in con- sumption, meaning that when one person uses such a public good, it can interfere with the ability of others to use it. It is also non-excludable to some extent, particularly in an open-access situation—meaning that it is costly or impossible to prevent potential users from tapping the resource. If each of those users seeks to maximize groundwater use, two key implications follow. First, unfettered access leads to unfettered competition. Second, with multiple users at scale, this competition can undermine the benefits and services groundwater provides to people, economies, and ecosystems in and outside the areas of use, with exponential consequences. Faced with growing demand, those features prime groundwater for overexploitation in a classic “tragedy of the commons,” on hypercharge because of climate change (see Annex 2 on what economic theory says about groundwater). Accessing groundwater depends on how far it is below the surface and on the cost of drawing it—both shaped by the type of aquifers. Key aquifer characteristics matter more directly for resilient development and poverty reduction—determining economic accessibility of the groundwater resource to individual farmers, its sus- tainability, and buffering capacity of the aquifer to seasonal variations and climatic shocks. In a new contribution from this research, a global typology considering those dimensions has been developed and validated, enabling novel global economic analysis. This global dataset consolidates, extends, and refines existing global datasets to bolster the understanding of aquifer types and their potential risks.7 Those char- acteristics also matter for the management approaches required to facilitate long- term sustainability,8 reap the expected benefits,9 manage the relationship between individuals accessing a common-pool resource,10 and foster successful collaboration between local users for aquifer management.11 Two aquifer types, local shallow and major alluvial, are priorities for development thanks to their potential for individuals to tap. (See box 1.1 on types of aquifers and development implications.) Economic accessibility—determined by capital investments and pumping costs to tap groundwater—has poverty and equity implications. Economic accessibility is primar- ily defined by groundwater depth, with 8 meters as a technical threshold allowing lower-cost surface pumps. Greater depths require submersible pumps at higher costs. Surface motor pumps and their declining costs have expanded groundwater use in South Asia. This threshold has important poverty implications, with rural poverty increasing by 10 percent in areas below this 8-meter cut-off.12 Lowering the water table below this 8-meter threshold excludes users who can’t afford additional drilling to keep pumping their drying wells. A second economic dimension pertains to the marginal cost of pumping, principally for energy to lift water, which increases with the depth of the water table. Lowering the water table through overextraction implies that poorer users will be priced out by users capable of paying for the energy. In theory, prohibitive marginal pumping costs constrain further declines in the water table.13 Certain types of aquifers are more exposed to the drawbacks of the common-pool characteristics of groundwater. In local shallow aquifers just below the surface, pumps operated from the surface make groundwater economically accessible to individual farms and households. Local shallow aquifers offer the most potential from a develop- ment perspective, particularly in Sub-Saharan Africa, and have smaller overexploita- tion risks than other aquifers. In contrast, the characteristics of major alluvial aquifers expose them to overexploitation. These aquifers are typically under river flood plains, and the amount of water drawn can be considerable. For them, drilling more than 50 meters down is typically required, and boreholes can often reach 200 meters down. The deep pumping increases the extraction costs—and thus, who can access ground- water. In more complex aquifers, typically in interconnected rock formations, explo- ration and even deeper drilling and pumping push the costs beyond the resources of individuals or groups and require governments to step in. 5 Valuing hidden wealth Box 1.1  Types of aquifer shape potential groundwater uses and risks for development and resilience Until now, a systematic and data-sup- Box figure 1   ported approach has been missing to Bathtubs, egg cartons, capture key aquifer characteristics that and complex and karstic aquifers matter more directly for resilient devel- Source: Adapted from USGS (1999) and Beattie (1981). opment and poverty reduction. Indeed, determining the economic accessibility of the groundwater resource to indi- vidual farmers, its sustainability, and buffering of seasonal variations and Major alluvial climatic shocks has not been priori- aquifer tized, contributing to the undervalu- ation of groundwater’s critical contri- bution to development. A new global dataset was developed and validated around four main types of aquifers, capturing those key char- acteristics to help inform policymakers to plan and manage groundwater for resilient development and poverty Local shallow reduction. It consolidates, extends, aquifer and refines existing global datasets to bolster understanding of the aquifer types and their potential risks (see Annex 1 for detailed definitions). As represented in box figure 1, in large aquifers made of unconsolidated sediments, extraction and recharge behave similarly to water stored in a massive bathtub. And in fractured/ weathered hard-rock aquifers, they Karstic behave like water stored in pockets of aquifer an egg carton. Whether a given region mostly has bathtub or egg-carton aquifers offers preliminary insights into the accessibility and potential of groundwater. Indeed, understanding those key aquifer characteristics has implications for the potential uses of groundwater and the types of risks and externalities to consider. Those char- acteristics also matter for the manage- Complex ment approaches required to facilitate aquifer long-term sustainability,1 reap the expected benefits, 2 manage the rela- tionship between individuals accessing a common-pool resource, 3 and foster successful collaboration between local farmers for aquifer management.4 1. Beattie 1981; Fishman et al. 2011; Cuthbert et al. 2022. 2. Edwards 2016. 3. Beattie 1981. 4. Shah 2010. 6 The hidden wealth of nations Two typologies describe the aquifers Two typologies describe the aquifers accessible to individuals, where the requiring institutional support to geology risk is limited (water wells access the resource, i.e., where geology and boreholes systematically find a risk is high, borehole siting requiring minimum of groundwater) and the high technicity and investments and investment cost is minimal (water wells risk of not hitting the expected ground- and boreholes are of limited depth): water rate is high, or where the invest- ment cost is high due to the depth of • Major alluvial aquifers are massive the boreholes: bathtubs. They do not respond much to local rainfall. If pumping • Complex aquifer systems are large exceeds the recharge, the water aquifers in consolidated geological table is gradually drawn down over formations. They mostly are super- decades—like a bathtub that’s posed or juxtaposed sedimentary leaking faster than a tap can fill it. or volcanic terrains that are more Major alluvial aquifers are easily or less permeable. They may have accessible to individuals through significant tectonic or geomor- simple boreholes with little risk. phological features, making them Their geomorphologic homoge- complex and partially compartmen- neity often means they are tapped talized. Freshwater is often pumped for only a few activities (usually at depths of several hundred meters irrigation). via complex boreholes. • Local shallow aquifers are egg • Karstic aquifers are complex cartons, typically situated in weath- systems with caves, sinkholes, and ered and fractured rock overlying underground streams. Water circu- parent non-weathered rock. They lates in a “pipe jumble” of discrete are typically shallow (often less than conduits that range from a few 50 meters) and vary widely in per- centimeters in diameter to tens of meability and storability. As a result, meters in diameter. They are vulner- they often function as small indi- able to contamination (as recharged vidual aquifer units. Local shallow via sinkholes), and water flows are aquifers are easily accessible to very concentrated. Due to the large individuals through traditional open extent of most karst basins, the local wells. Because they are local, the groundwater can be considerable. impacts of pumping them are local. But it is accessible only to institu- tions with the financial and tech- nical capacity to explore the karst, identify the conduits, and construct boreholes, which could be hundreds of meters deep. 7 Valuing hidden wealth Environmental externalities affecting groundwater quality and dependent ecosys- tems also matter for poverty, intergenerational equity, and sustainable development. Externalities—the costs transferred to society not borne directly by the related activity—can compound the welfare effects. Those externalities include the loss of groundwater-dependent ecosystems, land subsidence, and deteriorated quality (saline intrusion, fertilizer contamination, new emerging pollutants). Environmental effects are determined by the rate of groundwater extraction and policies shaping pumping, drilling, and other behaviors-notably contamination control-through incentives. Indeed, groundwater extraction entails an intensive margin (pumping) and an exten- sive margin (well and borehole drilling). Either or both may be affected by agricultural policies. Given the costly investment involved, welfare implications may be greatest for the drilling margins.14 Environmental externalities are also shaped by policies not considering social costs, including groundwater quality. The pumping costs for groundwater economic accessibility have important poverty and equity implications. Two dimensions define this economic accessibility due to the technology and pumping costs involved in groundwater extraction.15 The first economic dimension: water at a depth of up to 8 meters, is a technical threshold allowing lower-cost surface pumps; greater depths require submersible pumps at higher costs.16 Surface motor pumps and their decreasing costs have expanded groundwater use in South Asia. Lowering the water table below this 8-meter threshold excludes users who can’t afford additional drilling to keep pumping their drying wells. A second economic dimension pertains to the marginal cost of pumping, principally for energy to lift water, which increases with the depth of the water table. Lowering the water table through overextraction implies that poorer users will be priced out by users capable of paying for the energy. In theory, further decline of the water table is constrained by prohibitive marginal pumping costs. 8 The hidden wealth of nations Box 1.2  Who owns groundwater? Groundwater has no built-in owner- willingness of rightsholders to comply ship, as it is naturally an open-access with the granted user rights, and the common-pool resource. However, with efficient and effective enforcement of humans using groundwater for their this regulation. In developing coun- needs since immemorial times, the tries, such enforcement is limited by question arose: Who does it belong the weak capacity (and often political to, and of course with more intense sensitivities) of the governments and use, this question became even more the perception of the unfairness of the pertinent. In the early days of the measures. Going toward an effective modern period, before high-intensity integrated local water resource man- use, the default of ownership fell on agement is thus key in such enforce- the landowner who had a well on his/ ment and, in high maturity settings, her land, supported by early doctrines a possible contribution to reducing indicating that all resources, including groundwater depletion. percolating water (i.e., groundwater) on the land belonged to the landowner. However, not all governments followed Anticipating or reacting to increasing this path, with Chile, India, Pakistan, problems of groundwater overexploita- and the U.S. state of Texas being cases tion, a common trend over a period in point due to their high dependence from the 1960s and strongly in the on groundwater. With private ownership 1990s has been to vest ownership– of groundwater (also termed the rule or other equivalent legal status–of of capture in Texas) still prevailing as a groundwater resources in the govern- legal right, the continuing challenge for ment of states on behalf of the people these countries is to identify measures and in the long-term public interest of that guide and support groundwater equity and sustainability.1 The cus- management and protection through tomary private ownership right was broader water and land use manage- replaced by user-type rights granted ment plans, groundwater conservation and regulated by the government in areas, monitoring and information on the form of permit (license, authoriza- groundwater status, education, and the tion, or concession) systems. promotion of conservation and supply side technologies, especially managed While it did not prevent over-depletion aquifer recharge. Finally, the support as such, this transition was generally for and encouragement of local-level smooth in most countries. The success- self-management, which speaks to ful functioning of the permit systems the solidarity of stakeholders and local generally depends on proper knowl- action, is a common ground for possible edge of the groundwater resources, the avenues in these contexts. 2 1. Burchi and Nanni 2003. 2. One example of a program adopting this approach is the India National Groundwater Management Improvement Program, or Atal Bhujal Yojana (ABHY), which is supported by the World Bank. It seeks to reposition water users at the center of efforts to replenish ground- water. The US$900 million program, of which half is a loan from IBRD, will be implemented between 2020–2025 and aims to strengthen the institutional framework for participatory groundwater management in seven states (Haryana, Gujarat, Rajasthan, Karnataka, Madhya Pradesh, Maharashtra, and Uttar Pradesh). By engaging in regular water budgeting exercises at the village level and in designing participatory water security plans, community members not only have a say in how groundwater is managed but, moreover, become increasingly aware and informed of the variation of the water table and are incentivized to change their own behavior in how they consume water. 9 Valuing hidden wealth Groundwater underpins the development of agriculture, cities, and critical ecosystems Food security What groundwater lacks in visibility, it makes up for in value, and nowhere is this value more visible than in agriculture, where it’s been shaping destiny. Groundwater was one of the core ingredients of what the Nobel Prize-winning economist Angus Deaton calls the “great escape” from scarcity.17 Vast quantities of groundwater have sustained the intensification of agriculture brought on by the Green Revolution in various regions of the world. Millions of farmers depend on groundwater irrigation to help produce 40 percent of the world’s crops, including a large proportion of staple crops like rice and wheat.18 In South Asia, the rapid rise in groundwater-based irrigation since the 1960s has been driven primarily by atomistic or personal irriga- tion systems that eclipsed an earlier era dominated by centralized surface irrigation projects.19 In India, groundwater-based irrigation directly sustains up to 20 percent of cropping intensity, 20 28 percent of the total annual irrigated crop production, and more than half of dry season irrigated crop production. 21 And in the arid and semiarid areas of the Middle East, groundwater has been the backbone of water and food security. Overall, groundwater has supported the upward trends in yields and productivity—success that also underplays the fact that a significant proportion of the groundwater to achieve this gain has been through an unsecured loan (of groundwater) from future generations. Well managed, the resource can provide food security for many more—particu- larly in Sub-Saharan Africa. Local shallow aquifers in the region hold 61 percent of the groundwater available but are largely untapped, with only 7 percent of the total cultivated area of 183 million hectares now irrigated. Although an estimated 40 million hectares could be suitable for irrigation from this water source, it is used for only 12.8 million hectares, and most of the irrigated land is in five countries only: Mauritius, Madagascar, Sudan, Ethiopia, and South Africa. In Sub-Saharan Africa, one of the key assets to increase irrigation is groundwater, however more so at a small scale with the growing affordability of technologies such as solar pumps. 22 Existing evidence hints at the potential of groundwater irrigation for food security but mostly ignores the groundwater endowment in protecting household nutrition. In rural Benin, solar-powered drip irrigation systems installed in communal gardens increased the consumption of vegetables among program beneficiaries during the dry season, and irrigators were 17 percent less likely to feel chronically food insecure one year after the project started. 23 Existing estimates project that a 120-fold increase (by 13.5 million hectares) of groundwater irrigation is likely possible, even when looking at only 13 countries in Sub-Saharan Africa. 24 While more work is needed to refine those estimates and to 10 The hidden wealth of nations provide some insights on the phase-in of possible investment to promote farmer-led irrigation at scale, such results hint at the potential an expansion of groundwater irri- gation could do to improve the livelihoods of about 40 percent of the rural population in some of the world’s poorest countries. Most promising for farmer-led irrigation are local shallow aquifers, given their ease of access, limited concerns for their overex- ploitation, and potential for weathering inter-seasonal variations. In Sub-Saharan Africa, more than 255 million people living in poverty ($1.90 line) reside in areas where the expansion of shallow groundwater is feasible and could reduce poverty by protecting people from climate shocks (map 1.1). In West Africa, close to 40 million people suffer from acute food insecurity—brought on by the very large annual variability in the shocks to rainfed crop and livestock yields. That puts rural livelihoods at the mercy of the vagaries of weather and now of climate change. Irrigation can also extend the agricultural season through dual-crop farming in a calendar year and thus lessen seasonal deprivations and adapt to climate change. For the G5 Sahel (Burkina Faso, Chad, Mali, Mauritania, and Niger), the World Bank estimates that by 2050, with no adaptation policies and investments, the poverty rate would increase from 27 percent in the medium-growth baseline (no climate change) to 29 percent in the wet and optimistic climate scenario and to 34 percent in the dry and pessimistic climate scenarios. 25 In those five countries, 62 percent of groundwater is in local shallow aquifers. Map 1.1   Subnational poverty headcount ($1.90) with top tercile regional poverty rate and aquifer typology Source: World Bank Groundwater Aquifer Typology and World Bank poverty data. Aquifer typology Karstic Local/Shallow Complex Major alluvial  ubnational Poverty S Headcount > 58 (top tercile) 11 Valuing hidden wealth Urban services Although seldom recognized, groundwater also sustains the growth of cities, and most large cities in developing countries rely on groundwater as one of their main sources of water (see Annex 4). In most developing countries, groundwater represents 60 to 90 percent of water intake points (figure 1.3). Groundwater has some key advan- tages for the provision of water for domestic purposes, assets that are even more valuable in developing countries. First, decentralized groundwater sources can facili- tate access in more recently developed areas of growing cities where network access is not available. Second, its natural quality is typically high—if geogenic and anthro- pogenic contamination is not a concern. Third, large aquifers have a large capacity effect, helping to manage demand and buffering against dry shocks. In Africa, access to shallow groundwater facilitates urbanization, itself a driver of poverty reduction. More than half of Africa’s population is expected to live in cities by 2040. Indeed, given the absence of infrastructure to provide water in urban and peri-urban areas, easier economic access to groundwater, such as local shallow aquifers, can lead households to self-supply through private wells. And the use of such private wells has ballooned with urbanization in Latin America, South Asia, and Sub- Saharan Africa. The presence of such aquifer facilitates the installation of new and often poorer households in urban areas and are often an improvement over the rural access previously enjoyed. But the haphazard multiplication of those private wells can risk contamination without a corresponding expansion of sanitation infrastructure and urban waste management, particularly exacerbated in the event of floods. And once drilled and operating, private wells may constitute obstacles to the expansion of utility services, even when water supplied at the cheaper social tariff would be con- trolled and of better quality. Figure 1.3  Reliance on groundwater intake for drinking water source Groundwater Other water intake points intake points Middle East & North Africa 89% of WIP use groundwater Europe & Central Asia 84% South Asia 81% Sub-Saharan Africa 67% East Asia & Paci c 64% Latin America & Caribbean 60% Source: World Bank calculation using data on urban water intake points from The Nature Conservancy and McDonald (2016). Note: The calculation covers 220 cities from non-high-income countries: 19 from low-income, 111 from lower-mid- dle-income, and 90 from upper-middle-income countries. The non-high-income countries were identified by the World Bank income classifications set on July 1, 2022. The percentage values were calculated by city and then averaged across cities in each region. 12 The hidden wealth of nations Groundwater-dependent ecosystems Less visible but equally critical, groundwater also sustains a broad range of ecosystems critical to livelihoods. Groundwater-dependent ecosystems (GDEs) require access to groundwater on a permanent or intermittent basis to meet all or some of the water requirements to maintain plants and animals, their ecological processes, and their ecosystem services (see Annex 3). The importance of GDEs has been increasingly rec- ognized over the past decade, helped in part by the broader discussion around climate change and the recognition of the net carbon sink role of GDEs. 26 GDEs also support the livelihoods of some of the most vulnerable Sub-Saharan populations, sometimes in hidden ways, such as for pastoralists in the Sahel through the hydraulic lift of some trees. 27 Still, GDEs are not systematically identified and mapped at scale, particularly in developing countries. This lack of information is problematic since GDEs, particularly in dryland areas, are most exposed to small variations in the groundwater that can threaten their existence. A new World Bank database of GDEs in Sub-Saharan Africa shows their diversity—and their importance to people living in poverty. Compiled using a wide range of sources reflecting local and academic knowledge, the database identified more than 200 GDEs across four main geographic types—inland surface waters, coastal and marine ecosys- tems, oases and springs, and terrestrial vegetation (map 1.2). This new database helps bring GDEs into focus but will require further expansion and refinement to reflect all GDEs in the region better and contribute to their monitoring and protection (box 1.1). GDEs are in areas of high vulnerability to poverty, providing key socioeconomic services in addition to their critical role in broader ecosystems (map 1.3). Map 1.2 Groundwater-dependent ecosystems in Sub-Saharan Africa, by category Source: World Bank GDE database and World Bank’s Global Subnational Atlas of Poverty. GDE categories Inland surface waters Terrestrial springs / Inland surface waters Terrestrial vegetation Coastal and marine  Inland surface waters / Coastal and Marine 13 Valuing hidden wealth Map 1.3  GDEs are critical to livelihoods in some of the poorest areas Source: World Bank GDE database and World Bank’s Global Subnational Atlas of Poverty. Subnational Poverty Headcount Ratio at $1.90 per day ≤ 14 ≤ 33 ≤ 52 ≤ 69 ≤ 98 GDE 14 The hidden wealth of nations Groundwater’s climate buffering is nature’s multi- risk insurance I ncreased variability of water can weigh heavily on communities and is one of the most significant sources of risk facing communities in developing countries. Adapting to rainfall variability is often much more challenging than accommodating long-term trends because of the unpredictable duration and uncertain magnitude28. Not surprisingly, most countries have listed water as the priority for adaptation in their climate change plans. The latest IPCC report also finds that most climate change adaptation strategies target agriculture, which accounts for 70 percent of global water consumption. One of the most ubiquitous adaptation strategies is irrigation, the stra- tegic storage and water application on crops. These efforts can play a crucial buffer role in shielding crops from some of the hardships and uncertainties arising from the increased variability of rainfall and increased heat. 29 Groundwater buffers against droughts because it can provide access to fresh water when surface water resources are scarce. Empirical studies in South Asia confirm that climatic variability increases groundwater utilization. 30 Use of the resource can be of particular importance in areas like Sub-Saharan Africa that are highly vulnerable to climatic shocks. In 2022 alone, drought conditions in eastern Ethiopia, northern Kenya, and Somalia led the UN to warn that some 22 million people could risk star- vation. In Somalia, the rainfall in the March to May season was the lowest in the past six decades. And large parts of DR Congo and Uganda have also experienced very dry conditions compared with the average. 31 To what extent can groundwater cushion such shocks, protect agricultural productivity, and ensure food security in Sub- Saharan Africa? New analyses for this report show that individually accessible, sustainable shallow groundwater has the potential to insulate agriculture from the adverse effects of rainfall variability—protecting food security and human capital (see Annex 7). Without such a natural buffer provided by local shallow aquifers, households could suffer almost twice the loss in agricultural productivity. This, in turn, has ramifications for food security and the health outcomes of children. Droughts can alter household income and nutritional intake, with important consequences for physical and cogni- tive development. Stunting is widespread in Sub-Saharan Africa. More than 35 percent of children under the age of five are considered stunted (more than two standard deviations below the reference height-for-age of their cohort). Children who experi- ence a large dry shock in infancy are more likely to be stunted, which in turn can lead to long-term health impacts that stretch well into adulthood. 32 Disturbingly, women who experience a large dry shock in infancy are also 29 percent more likely to have a child suffering from some form of anthropometric failure. 33 15 Valuing hidden wealth To what extent can shallow groundwater insulate against such early-life shocks? Analysis for this report—using a spatially disaggregated health database of 687,652 children across 32 countries in Africa spanning 15 years—finds that while rainfall shocks experienced in a child’s earliest years can decrease height-for-age (HAZ) scores and increase the likelihood of stunting, access to shallow groundwa- ter has the potential to buffer against such harmful impacts (figure 1.4). Indeed, the results show that without such access, greater exposure to droughts in early childhood, on average, decreases the HAZ score (Panel A, Figure 1.4) and raises the chances of stunting by up to 20 percent34 (Panel B, Figure 1.4). Thus, by insulating farms and incomes from shocks, the insurance of shallow groundwater translates into protection against malnutrition, particularly for children under the age of 5. These findings highlight the urgency of boosting sustainable access to local shallow aquifers in Sub-Saharan Africa. Doing so can shape the destinies of millions of children, which is critical for the future development of Africa. Access to shallow groundwater can also boost the benefits of small-scale irrigation. Evidence suggests that small-scale irrigation can help to address local nutrient deficiencies and improve dietary diversity, contributing to the resilience of smallholder producers. 35 Cities can also benefit from the natural buffer that groundwater affords: the impact of day-zero-type events on city growth is negligible when they can rely on well-man- aged groundwater as part of their water source portfolio. Recent headlines from Chennai, India; São Paulo, Brazil; and Cape Town, South Africa, show that some of the world’s megacities are beginning to face day-zero events, where water supplies threaten to dry up. As the challenge mounts to absorb the growing demands of urban populations and as shocks to water supplies increase, city planners increasingly need to rethink urban planning to ensure that cities remain engines of economic growth. Groundwater could ensure such a future. Recent analyses suggest that groundwa- ter may have protective effects on cities, buffering their economic growth from the effects of day-zero type of events. 36 Figure 1.4  Malnutrition and the role of shallow groundwater in Sub-Saharan Africa PANEL A PANEL B Height-for-age (HAZ) score Likelihood of stunting -0.4 -0.2 0 0 20% 40% With groundwater Local/ Shallow Without groundwater Non-Local/ Shallow Without groundwater access, Without groundwater access, dry rainfall shocks in early life dry rainfall shocks in early life can can decrease HAZ score increase the chances of stunting 16 The hidden wealth of nations Together, groundwater’s effects on farms, cities, and families cascade into overall effects on economic growth—with easily accessible aquifers buffering up to a third of the global losses in economic growth in the event of a drought. During drought years, local shallow and major alluvial aquifers that are readily accessible to individu- als provide a natural insurance policy and have the potential to buffer up to a third of the global losses in economic growth, with the largest buffering effects seen in areas dominated by major alluvial aquifers (figure 1.5). 37 This numerical result corroborates with known differences in aquifer systems. While major alluvial aquifers are vast, often regional, groundwater tanks with large buffer capacity that can overcome multiyear climatic shocks, local shallow aquifers depend primarily on seasonal recharge and can overcome interannual climatic shocks. In sum, the benefits are enormous. Groundwater can play a critical role in adap- tation to climate change, but only if action is taken to protect it. As groundwater becomes depleted and extraction is more constrained, the resilience it bestows may diminish. Without action, we risk increasing our vulnerability to climatic shocks, leaving groundwater users and ecosystems high and dry. The next chapter delves deeper into these challenges. Figure 1.5  Groundwater is key to protecting economic growth Impact of Dry Rainfall Without With Shocks on GDP groundwater groundwater growth per capita (% points) Access to Access to local/shallow major alluvial 0 -0.5 Groundwater access has the potential to buffer up to a third of the global losses in economic growth -1 17 Valuing hidden wealth Box 1.3  When the hidden wealth is shared across borders: Transboundary aquifers For most human history, ground- Transboundary aquifers are particu- water has been perceived as a local larly important in arid and semi-arid resource. But rapid and uncontrolled regions, where groundwater serves groundwater exploitation and pol- as the primary source of water for lution over the last decades have human and environmental sustenance. shown the importance of examining Regions with high dependence on groundwater problems and solutions transboundary aquifers include the at regional and, increasingly, global Sahara (Northwestern Sahara Aquifer scales. Groundwater—and external- System, Nubian Sandstone Aquifer ities originating from its use—often System), the Middle East (Mountain cross-national borders, flowing within Aquifer, Umm Er Radhuma aquifer), transboundary aquifers. Borders over South Asia (Indo-Gangetic basin), these aquifers make their coordinated South America (Guarani) and areas management and development along the United States and Mexico more complex.  border (Lower Colorado, Hueco Bolson aquifers, among others). While The International Groundwater economic dependence on these trans- Resources Assessment Centre (IGRAC) boundary aquifers has not been quan- has identified at least 468 transbound- tified, assessments suggest that many ary aquifers: 106 of these are in Africa, of these aquifers are being depleted, 135 in the Americas, 130 in Asia (includ- with depletion rates showing signifi- ing Central Asia) and Oceania, and 97 cant acceleration since the turn of the in Europe.1 In Africa, transboundary century. 5 Hotspots of transboundary aquifers underlie 40 percent of the groundwater depletion include the continent where 33 percent of the Indus River Plain (India, Pakistan), the population lives, often in arid or semi- Nubian Sandstone (North Africa), the arid areas. 2 The exact identification and Umm Er Radhuma aquifer (Arabian delineation of many transboundary Peninsula), and aquifers located along aquifers is still incomplete, particularly the USA–Mexico border.6 As pressure at the local level where transbound- on these systems grows, conflicts over ary aquifers may be small but still their use and management might arise. key for livelihoods. 3 The number of Already, around the world, transbound- identified transboundary aquifers has ary aquifers underlie 40 percent of been increasing steadily since the first countries affected by conflict. Transboundary Aquifers of the World Map was released in 2009.4 1. IGRAC 2021. For an interactive map of transboundary aquifers, visit https://ggis.un-igrac.org/view/tba.   2. Nijsten et al. 2018.  3. Fraser et al. 2020.  4. IGRAC 2009.  5. Wada and Heinrich 2013.  6. Wada and Heinrich 2013.  7. Sadoff et al. 2017. 18 The hidden wealth of nations Most nations exploit groundwater from of their transboundary aquifers using transboundary aquifers unilaterally these Draft Articles as guidance without knowing the cross-border impli- represent important milestones. cations or even that the aquifer is trans- Additionally, both global water con- boundary. In fragile contexts and those ventions, the 1992 Convention on the with legacies of significant tensions over Protection and Use of Transboundary natural resources, transboundary water Watercourses and International Lakes cooperation can act as an import- and the 1997 Convention on the Non- ant approach to deescalate tensions, navigational Uses of International promote stability, and build resilience Watercourses, also cover transbound- to shocks that might otherwise act as a ary groundwater resources, with the trigger for conflict.7 former covering all transboundary aquifers even when not associated to To date, only six treaties targeting an international watercourse and the specific transboundary aquifers have latter covering alluvial aquifers only.   been ratified compared to hundreds for transboundary rivers and lakes. As pressure on these systems grows, more attention needs to be devoted to fos- tering cooperation on shared ground- water. In this respect, the 2008 Draft Articles on the Law of Transboundary Aquifers prepared by the International Law Commission and the 2009 General Assembly Resolution A/RES/63/124 encouraged countries to make appro- priate bilateral and regional arrange- ments for the proper management Source: Background paper for this report by Borgomeo (2023). 19 Valuing hidden wealth Depletion: Drawing down reserves, draining wealth G roundwater levels are being depleted at alarming rates in the world’s arid and semi-arid regions, with the effects most visible in the Middle East and South Asia. In Iran, where groundwater extraction dates back at least two and a half millennia, but with a typical escalation in the 1960s and 1970s, the situation is dire. More than three-quarters of the land is under extreme groundwater overdraft —over-abstracted volumes between 1965 and 2019 have cumulated to ~133 km3, a loss that is about 3.4 times the capacity of the Three Gorges Dam, the world’s largest hydropower project. 38 Not too far away, in India, groundwater use exploded by 500 percent over the past 50 years, making it the world’s largest guzzler of groundwa- ter. 39 These trends have contributed to rapid declines in groundwater levels, especially in the northwestern states where the Green Revolution took off. Estimates suggest that over-abstracted volumes reached 122 to 199 km3 between 1996 and 2016 alone. In its simplest terms, groundwater depletion refers to a sustained multiyear decline of the water table, resulting from withdrawals that exceed average available groundwater resources. It results from groundwater mining and denotes a situation of unsustain- able withdrawal. This slow-moving phenomenon of depletion is thus distinct from transient fluctuations in groundwater levels. While detectable across most aquifer typologies, sustained long-term water level trends don’t occur in local shallow aquifers that deplete and replete seasonally. Here, instead, groundwater stress can manifest as increasing variability in seasonal depletion that impacts the short-term availability of the resource. Depletion, both seasonal (increasing volatility of the water table) and long-term (multiyear decline of the water table), can cause ground- water stress. It is usually accompanied by a reduction in the yield of boreholes and water wells and even their complete drying up or failure. Ultimately, users face less volume and higher costs of extraction, in effect, a loss in returns from investment in the resource. Since groundwater remains a crucial asset, its depletion can reduce economic welfare by depreciating its natural capital. A recent valuation exercise applied to the Kansas High Plains’ groundwater aquifer revealed that Kansas lost approximately $110 million per year of the state‘s total wealth held in groundwater between 1996 and 2005 due to the depletion of its groundwater supply.40 Perhaps more critically, depletion decreases the buffering capacity of the impacted aquifers leaving less water available for when it is most needed as regions face increas- ing temperatures and more variable precipitation and aquifer recharge because of climate change. As reliance on groundwater grows even as access to supplies dwindles, the impacts of drought and heat on water users could be greater in the future than today. Paradoxically, the groundwater resource that has cushioned climatic variability in the past may fail to continue attenuating its adverse impacts in the future. 22 The hidden wealth of nations To get a glimpse of the changes in groundwater storage globally, we make use of the Gravity Recovery and Climate Experiment (GRACE) satellites that have extensively been used for monitoring depletion. Using downscaled satellite data from April 2002 to December 2020, Figure 2.1 highlights hotspots based on the two groundwater stress indicators used in this analysis—declining trends and seasonal deficit (figure 2.1 and box 2.1). We find significant groundwater stress hotspots in the Indo-Gangetic basin, Iran, the Arabian Peninsula, and parts of Southern Africa. Moreover, up to 92 percent of transboundary aquifers in the study region show signs of dwindling groundwater storage. Aquifer type Major alluvial Complex Local / Shallow Karstic  Seasonal deficits Probability of depletion  High Low Map 2.1  Declining trends and seasonal groundwater deficits using downscaled GRACE satellite data Source: Downscaled Gravity Recovery and Climate Experiment (GRACE)-observed groundwater storage (GWS) esti- mates prepared for the report (Chen et al., 2023). Notes: GRACE satellite data used extensively for monitoring depletion are downscaled at a granular scale to under- stand global changes in groundwater storage. Using downscaled satellite data from April 2002 to December 2020, the map highlights hotspots based on the two groundwater stress indicators used in this analysis—declining trends and seasonal deficit. The confidence of estimated negative trends in GRACE-derived GWS is based on nine potential realizations of GRACE (CSR, JPL Mascons, GFSC) products and LSMs (CLM, Noah). The high to low gradation in the probability of depletion refers to the number of GRACE GWS realizations where a particular grid cell showed negative significant (p-value<0.05) trends. 23 Staying solvent—avoiding bankruptcy Box 2.1  Eye in the sky: using satellite data to measure groundwater storage changes The Gravity Recovery and Climate downscaled GRACE-TWS by subtract- Experiment (GRACE) satellites have ing non-groundwater components (like provided a revolutionary way for mon- snow, surface water, and soil moisture). itoring groundwater storage changes This downscaling approach was used to at a global scale and filling knowledge estimate monthly changes in ground- gaps, especially in data-scarce regions. water storage at a 0.5° resolution for GRACE data capture changes in terres- the study region, which included Sub- trial water storage (TWS), which is an Saharan Africa, the Middle East, and aggregate of changes in snow, surface South Asia from 2003–2021. water, soil moisture, and groundwa- ter. The groundwater storage (GWS) Interpretation of GRACE data has signal can be isolated by subtracting mostly relied on the use of trends to non-groundwater components. The understand changes in groundwater base units are “centimeters of equiva- storage at a given location.1 Areas in lent water thickness,” which represents red highlight regions with significant a change in gravity caused by a change (p-value<0.05) negative trends in GWS in the height (centimeters) of water between 2003–2020. For this analysis, spread out over a given area. we perform trend estimates over multiple models using a combination However, the spatial resolution of of TWS solutions and land-surface GRACE (~90,000 km2; 3° x 3°) limits model (LSM) estimates. The high to its ability to inform management low gradation in certainty refers to decisions at a finer regional scale. To the number of models for which the overcome these spatial limitations, a GWS time-series showed significant machine-learning (Random Forest) negative trends for a particular grid approach was used to downscale cell. Since long-term water level trends the spatial resolution of GRACE- mostly capture stress in major alluvial groundwater estimates from 3° reso- aquifers, we also use the GRACE data lution to 0.5° resolution for the report to measure increasing seasonal vari- (Chen et al., 2023). The downscaling ability in storage to capture groundwa- approach involved, first, training ter storage change across local shallow Random-Forest models at a 3° res- aquifers systems. 2 The dotted areas olution to establish the relationship depict the Deficit 10/20 stress indicator between GRACE-measured TWS and highlighting areas that experienced predictor variables such as precipita- short-term stress and pronounced tion, evapotranspiration, and runoff. groundwater storage deficit periods The trained model was then applied at between 2010–2020. 3 the target resolution using predictor variable data at a 0.5° resolution. Last, Details regarding the construction of the GWS signal was isolated from the the indicators are provided in Annex 7. 1. Asoka et al. 2017; Shamsudduha and Taylor 2020. 2. Fishman et al. 2011; Hora et al. 2019. 3. Thomas et al. 2014, 2017. 24 The hidden wealth of nations Nearly 24 to 38 percent of areas underlaid by local shallow and major alluvial aquifers that provide promising buffering benefits for Sub-Saharan Africa, the Middle East, and South Asia show some signs of stress. As explained in Chapter 1, groundwater plays a crucial buffer role in shielding farms, cities, and families from some of the hardships and uncertainties arising from the increased rainfall variability and heat. The benefits have no doubt been enormous. But the depletion seen in many of the same regions most dependent on groundwater has spurred concerns about the socio- economic consequences and the possibility that it may arrest progress in economic development and poverty alleviation. Not surprisingly, most of these depleted areas occur in areas underlaid by major alluvial aquifers where long-term declines in water tables are possible. But other metrics of stress, such as increased volatility in the water table are also seen across other aquifer systems. To investigate whether the buffering abilities of groundwater are changing over time, the analysis expands on chapter 1 and measures the modulating effect of local shallow and major alluvial aquifers on economic growth during drought events across eight-year periods from the early 1990s to the mid-2000s. Over time, the buffering benefits of groundwater are dissipating, with most of the impact driven by areas underlaid by major alluvial aquifers that have experienced increasing declines in groundwater storage. These results corroborate country-spe- cific analysis in India that shows that groundwater played a buffer role against droughts and dry shocks up to the mid-1990s, providing a 10–20 percent agricultural revenue advantage, which then disappears after 1995 possibly due to lowering of groundwater tables.41 In sum, the results suggest that depletion makes it harder to exploit the full potential of groundwater. Uncertainty induced by climate change will only add to this vulnerability as sustainable groundwater irrigation in the future becomes less feasible.42 The consequences of depletion are far-reaching—severely reducing farm output, either when output is measured directly or, in a few cases, when embodied in land values. In India, cropping intensity can decline by up to 20 percent.43 Food grain production can decline by 8 percent in response to a 1-meter decline in the water table from its long-term mean.44 And a one-standard-deviation reduction in the depth of the water table can result in a loss of profit amounting to 13 percent of the value of output, or 14 percent of annual household income.45 More depleted areas can also face declines in land values or in lease prices.46 And groundwater deple- tion can increase poverty.47 In areas where water tables are lower, poverty rates are 10-12 percent higher than where groundwater is more easily accessible. This provides strong evidence against the idea that equitable adaptation possibilities are sufficiently available to fully mitigate the impacts of depletion.48 How do users cope with such depletion? They adopt three main strategies to cope with depletion: change withdrawals, change use, and change dependence on the groundwater resource (figure 2.1).49 Depletion mostly, but not always, leads to increases rather than reductions in extraction effort—such as drilling deeper wells. In Iran, the operating times of water wells have increased by 17 percent, indicating an intentional effort to increase ground- water withdrawals. 50 But this form of response varies greatly across the world. Perhaps the largest study of the responses to depletion, Jasechko and Perrone (2021)—analyz- ing 39 million wells from 40 countries—finds that as groundwater tables are falling in many areas, wells become deeper over time, but this is not the case in many other areas. Indeed, in some parts of semi-arid India, man-made water harvesting structures have served as an adaptation to groundwater depletion. 51 And they are said to have conserved the resource to a significant extent through collective action at the com- munity level and later with government support. 52 As depletion leads to deeper wells, socioeconomic inequalities also deepen. Where the evidence is quite clear, however, is that where drilling takes place, depletion exac- erbates socioeconomic inequalities in affected populations. Why? Mainly because the better off can deepen their wells and “chase the water table,” while others lose access 25 Staying solvent—avoiding bankruptcy to the resource or experience intermittent or permanent well failure. 53 This dynamic is documented in multiple studies in India, 54 North Africa, 55 China, 56 Mexico, 57 and even in high-income countries. 58 So, the poor and the marginalized must often resort to other coping mechanisms, like buying water, cultivating less profitable crops, or even leasing or selling their land (box 2.2). 59 Women and girls living in rural areas bear an added burden from this groundwater insecurity due to the responsibilities for water collection they assume in many countries. Figure 2.1  A conceptual framework for adaptation responses to depletion Arrow legend GROUNDWATER RESOURCE IS EXPLOITED Might lead to Groundwater income invested in Groundwater resource is depleted other forms of capital (Eg. human capital through education) Different adaptation responses to groundwater depletion CHANGE IN WATER CHANGE IN HOW CHANGE IN WITHDRAWAL EFFORT WATER IS USED DEPENDENCE Categories of Changes in extraction Changes in usage along Changes in dependence potential adaptation practices through slowing intensive and extensive through re-allocation of Accommodating to down net withdrawals margins through ef cient labor and capital to other changing circumstances OR intensify extraction water use or production less groundwater practices dependent sectors In uencing factors Pricing of groundwater, Information and other Opportunities for What in uences pricing of energy required barriers to adoption, non-groundwater the categories of to pump, regulation for promotion of ef ciency dependent income adaptation selected restricting withdrawals generation. If adaptation is effective, then Volume of extracted Groundwater Overall Impact groundwater is economic value income is maintained is maintained maintained Source: Background paper for this report by Fishman and Zaveri (2023). 26 The hidden wealth of nations Box 2.2  What happens when groundwater resources become scarce? Uncovering fault lines with primary data As groundwater resources become new ones. Results in Karnataka are scarcer, how will the equity and similar. Once a well fails, the poorer efficiency of allocations be affected? are less likely to cope by deepening Primary data across different geogra- it or drilling a new one. The result is a phies reveal that often the poor and collapse of farm income. marginalized disproportionately suffer the impacts of depletion—overrepre- Some studies describe a dynamic of sented among these groups are “chasing down the water table,” which often women. is followed by an abandonment of groundwater-dependent activities. A In three districts in Andhra Pradesh, boom in groundwater exploitation in surveys between 2016 and 2019 reveal the Kuchlagh sub-basin of Balochistan, that 15 percent of the wells failed Pakistan, eventually led to rapid deple- between the two surveys, a dramatic tion. The researchers documented rate for a period of three years. the process and the way local farmers Marginalized farmers were more likely responded over two decades, a uniquely to experience such failures. Overall, long-term perspective. They did not only 17 percent of those whose wells find any indication of either conflict or failed managed to sustain cultivation institutional adaptation to conserve the on their plot. For the others, the share resource, or an improvement in water of the cultivated area went down by use efficiency. Instead, farmers adapted 70 pp, the likelihood of the plot being by drilling deeper, by using water from left fallow went up by 75 pp, and profits alternative sources or by transitioning from the plot declined by a staggering to non-groundwater-dependent income 80 percent. There was some suggestive generation activities. evidence of male labor migration in response to well failures, but overall, no Hardest hit by depleting groundwater evidence of any effective adaptation. levels are often women and girls, who are already tasked with the responsi- In Gujarat, where informal groundwa- bility of collecting water for household ter markets are active, surveys show use in most parts of the country, and that they are governed more by norms who will face the toughest burden and social contracts than by supply and under increased water insecurity. demand. Water buyers are 30 percent Aside from the drudgery that walking less likely to belong to dominant long distances to collect water from castes—and have lower education, water points entails, the decreasing assets, and income. While all owners availability of water sources is likely sell water to poorer water buyers at to have a host of related gendered socially accepted rates, when water effects: girls who need to secure water becomes scarcer, these buyers are the are likely to miss school or dropout first to face reductions in supply. In altogether; women may be forced to anticipation of growing future ground- forego engaging in income-generating water scarcity, water buyers are also activities because their time is spent more likely to report reducing cultiva- in collecting water; the already lower tion, while well owners are more likely yields of female farmers will decrease to report deepening wells or drilling even further under water insecurity. Source: For India, background papers prepared for this report by Fishman, Gine, Jacoby (2023), Patel et al., (2023), Blakeslee and Fishman (2023); for Pakistan, Van Steenbergen et al. (2015). 27 Staying solvent—avoiding bankruptcy User responses to reductions in water withdrawals reflect incentives. Another type of adaptation strategy users may employ when they are forced to face a reduction in water withdrawals is in changing the use of groundwater along extensive or intensive margins using efficient practices. For farming, this would mean either a reduction in the extent of irrigated land or in the amount of irrigation water applied per unit of land. More efficient technologies, such as micro-irrigation, can save water, but the technologies require upfront investments that could place a burden on some water users, despite financial savings over the long term. Even if resources are available to promote investment in water-saving practices and technologies, water savings might not translate into additional groundwater availability because water savings could be reallocated to other uses—an effect known as the Jevons paradox.60 In many places, the water is not properly valued. Where the use of water does not reflect the true value of the resource and where energy for pumping is subsidized, farmers could be incentivized to expand irrigated acreage rather than save water. While the potential for water-saving technologies to alleviate growing global water stress has been hailed by scientists, economists, and policymakers alike, they alone will not be sufficient to reduce pumping.61 If users cannot improve water use efficiency enough to offset the reduction in with- drawals, the reduced withdrawals can reduce output and revenue. This, in turn, may result in other forms of adjustments, such as a reallocation of capital and labor to other less groundwater-dependent sectors. There is less evidence of these “down- stream” economic impacts, but some cases suggest migration and shifts of labor to off-farm income-generating activities in response to depletion.62 Often these oppor- tunities are available only to the wealthy, educated, and more advantaged. If oppor- tunities of this kind are not available to all households, this could lead to a cascade of adverse social and economic impacts, such as drops in consumption, expenditures, and investments in human capital. Can groundwater depletion be “weakly sustainable”—where the benefits drawn from past use of the depleted resource still yield benefits when it is no longer available? The evidence is cautionary. A well-known idea in the economic theory of the use of natural resources is weak sustainability, which entails the maintenance of income even while the resources on which production was initially dependent become depleted.63 This is achieved by re-investing rents from the use of the resource in other forms of man-made capital that facilitate a shift to other production systems once the resource is exhausted.64 For groundwater, weak sustainability might be achieved if the rents from groundwater exploitation are invested in forms of capital that allow users to diversify income generation away from groundwater-dependent activities and thus maintain incomes even as the resource is exhausted. Such investments can be at the levels of national or local government or by users directly and could enable effective adaptation of livelihoods. However, there remains sparse evidence and no clear indi- cations of these dynamics across regions. In several countries in the Middle East and North Africa, some claims suggest that the overexploitation of groundwater resources has briefly and unsustainably spurred rural incomes and enabled the long-term education and migration of younger populations.65 But in countries like India, there is limited evidence that households in more severely groundwater-depleted villages make bigger investments in human capital through the education of their children.66 Other studies find no indications that improved access to groundwater has resulted in either an increase or a decrease in the pace of local structural transformation, i.e., the movement of labor away from the agricultural sector.67 These observations suggest concerns from both food security and economic devel- opment perspectives. While it remains unknown with the available evidence whether the depletion of groundwater aquifers is (weakly) sustainable or economically efficient from a broad development point of view, the available evidence does suggest that local adaptation to groundwater depletion cannot be expected to take place “on its own,” without external enabling circumstances or interventions, at least in the farm sector. There is limited evidence that farmers can adapt farming to the reductions in water availability, even though proven technologies and practices can substan- tially improve water use efficiency. There is also limited evidence that farmers make 28 The hidden wealth of nations investments that may allow them to smoothly transition out of irrigated cultivation once the resource depletes. If policymakers would like to see affected populations adapt, on or off the farm, they may have to stimulate these kinds of adaptations. More importantly, the critical functions and services provided by groundwater suggest that depletion’s consequences go beyond the impacts on groundwater users. It affects ecosystems and surface-water users because pumping captures water that would otherwise discharge to springs or rivers and support groundwater-dependent ecosystems (box 2.3). For example, declining groundwater also means that rivers can dry up in the dry season when water is most needed because the baseflows from aquifers feed perennial rivers.68 Agricultural return flows form another “hidden pathway” between groundwater and surface water resources. When groundwater is pumped for irrigation, a portion becomes runoff and enters the surface water system. These hidden connections between surface water and groundwater systems suggest that surface water users may not realize that the state of the aquifer—which may be upstream of their location—also determines their surface water supply. Analyses for the report reveal that the hidden pathways of groundwater in river basins that intersect with aquifers at risk of deple- tion in the future are the greatest in South and East Asia.69 This means that a loss of groundwater resources may have larger spatial consequences than previously realized. Without groundwater, the surface water contributions to irrigation can decrease by up to 20 percent, affecting ~51,000 square kilometers of irrigated areas, some of which are across national borders from the depleted aquifers. 70 Loss of groundwater supply— whether physical or economic—can thus have greater impacts on total water resources than a simple estimate of groundwater extraction might reveal. Sinking cities reveal that the initially hidden impacts from groundwater over-depletion can then become exponential through land subsidence. While having groundwater part of a city’s “water source portfolio” is an undeniable asset, when this asset is not well managed and groundwater is over-abstracted, the dewatering consequences can translate into land subsidence. This situation affects countries and cities around the world, from Mexico71 to Iran, Vietnam, and Indonesia. Subsidence greater than 4 millimeters a year is considered problematic. In Iran, the land is sinking at a rate of 6 centimeters a year, 72 while Jakarta is sinking faster than any other city in the world, having subsided more than 3.5 meters since the 1980s and continuing to sink at rates up to 20 centimeters a year.73 The absence of reliable piped water is one of the causes of groundwater overexploitation, as users without piped access resort to unregulated abstraction.74 Land subsidence in coastal areas also increases the risks of saline intru- sion in the aquifer as well as the risk of flooding and sea-level rise, as is observed in the Mekong Delta.75 The impact of salinization of groundwater and subsidence, partially caused by groundwater depletion, in the Mekong and Red River delta in Vietnam, will result in reducing agriculture contribution to GDP by 1.67 percent by 2035. 76 In Indonesia, Inaction on curbing groundwater over-abstraction is predicted to increase the impact of floods due to land subsidence and reduce GDP by up to 1.42 percent by 2045.77 Land subsidence threatens 15 of the 20 major coastal cities ranked with the highest flood risk worldwide.78 While the impacts of sea-level rise have been extensively studied, groundwater-led land subsidence has received limited attention (see Box 2.4), with the main focus on infrastructure, ignoring other costs and impacts, particularly those affecting more vulnerable populations.79 29 Staying solvent—avoiding bankruptcy Box 2.3  Rippling impacts of groundwater overexploitation in Jordan In Jordan, 39 percent of irrigated new wells. In 1998, the Groundwater agriculture is based on groundwater Management Policy was promulgated. that is mostly mined, the abstraction In 2002, the Ministry of Water and rate being over 225 percent of the Irrigation issued an Underground sustainable groundwater resource. The Water Control bylaw to control private Country Climate and Development agricultural abstraction, introducing Report for Jordan,1 published in January quotas. Water meters were installed (on 2023, highlights the need for better legal wells), and since 2004, farmers groundwater governance. In the Azraq have been regularly receiving their highlands, where the first wells were water bills. drilled in the 1930s, only in the 1960s did irrigated agriculture really started Groundwater over-abstraction was developing with diesel motor pumps. reduced only after 2004, thanks to the It boomed in the late 1970s and 1980s implementation of the institutional when modern irrigation and cropping framework, combined with the steep techniques were introduced. Until the decline in water tables, increasing 1980s, tariffs and subsidized electricity groundwater salinity, and the rise of and diesel, as well as subsidies for some operational costs. While the groundwa- field crops and stone fruits, contrib- ter table continued to fall, many farms uted greatly to the growth of Jordan’s were abandoned across the region, but agriculture. The absence of a policy no detailed survey was conducted. In to mitigate agricultural expansion and 2010, the Ministry of Interior Affairs land exploitation dangerously spread ordered the destruction of approx- agricultural investments in Azraq. imately 1,000 to 2,000 illegal farms younger than two years. The impact The expansion of agricultural land on poverty and agricultural production continued in the 1990s, dramatically in the region was not measured. Solar increasing the water salinity and drying pumping now emerges as a trump up the oases. To cope with such an card, notably for illegal farms, which impact of groundwater-based irriga- are challenged by recent tough water tion, the drilling of wells was frozen in pricing regulations that make them 1992 when no licenses were given to unprofitable. 1. World Bank Group 2022. Source: Demilecamps and Sartawi 2010. 30 The hidden wealth of nations Box 2.4  Sinking cities, surging costs: measuring groundwater- induced land subsidence in Jakarta Measuring groundwater-induced land subsid- tool for mapping subsidence. However, their ence in cities is a challenging task, as many data require careful calibration with local GPS factors influence land subsidence, including stations. Ideally, these would be used with natural tectonic subsidence. The nature of information on the location and pumping subsurface terrain determines whether a site is rates of water wells and the subsurface soil susceptible to land subsidence from ground- maps, and evidence of subsidence from these water extraction. This is the case if the terrain is tools could prioritize efforts to integrate local unconsolidated. Where water is pumped from sources of information and project impacts. an aquifer that underlies a thick clay layer, the clay may compact as it is depressurized. Aquifer Such a granular, data-driven technique is terrain itself can also compact when partly employed for Jakarta. The map below shows a dewatered with the lowering of the water table, regional and close-up view of areas with ongoing notably in areas prone to earthquakes that land subsidence at rates that indicate a risk of enhance such compaction. Locally, tall build- infrastructural damage based on processed ings, due to their higher mass, lead to higher C-band Sentinel-1 A/B remote sensing data.1 subsidence. Urban subsidence can have irrevers- Most are built areas that include critical infra- ible impacts on critical infrastructure—failure, structure, such as 12 health-related buildings flooding, and the disruption of transportation and 15 schools. A structured approach to the and other services. Early action and regulation problem would consider first the development of of pumping in areas prone to subsidence that such maps to focus data collection and analysis leads to high impact are consequently critical. on the possible pumping locations causing the This requires coordinated efforts to assess and most significant impact; a detailed physical and predict the physical and economic impacts. economic impact analysis; and policy formula- tion for regulating the pumping and the mon- Remote sensing tools that can provide infor- itoring of future subsidence patterns. Such a mation on emerging rates of subsidence global-local approach to data collection and at high spatial resolution are now being analysis would provide for the documentation of promoted. Interferometric Synthetic Aperture uncertainties in each source of information and Radar (InSAR) has enabled the detection of their valuation as part of an economics-driven changes in surface elevation at a resolution strategy for urban resource management. of several meters and is being promoted as a 1. Wu et al. 2022. Box figure 1 Regional and close-up view of land subsidence areas in Jakarta with symbols of critical infrastructure location Source: Background paper for this report by Dinar, Lall, Prakash, and Josset (2023). Areas of ongoing subsidence Lithology map Unconsolidated sediments Mixed sedimentary rocks Intermediate volcanics Critical infrastructure Education Health 31 Staying solvent—avoiding bankruptcy Degradation: Tainted water, compromised wealth C omplex hydrogeology with specific temporal and spatial scales makes the protection of groundwater quality a priority concern for its sustainable use. The quality of groundwater and its vulnerability to pollution is affected by many factors, including the natural rainfall regime and other natural recharge processes, hydrogeological settings, and anthropogenic activities. The thickness and hydraulic properties of the unsaturated zone and the presence of confining layers above the aquifer, and the hydraulic properties of the aquifer itself are the key factors deter- mining groundwater vulnerability. However, the densification of economic activities increases the risks associated with groundwater contamination and the unknowns of how cocktails of different types of contamination interact. Natural and human-induced groundwater contamination occurs at different scales, but the associated risks and costs demand attention before the impacts become irreversible. Groundwater quality is influenced by regional-scale climate factors and local-scale heterogeneous aquifer properties. One of the key challenges of ground- water quality management is to accommodate the multiple spatial scales of system processes and interests.80 Unlike surface water processes, groundwater processes also occur at multiple temporal scales, with travel times ranging from days to millennia. The substantial time lags between cause, and effect makes it difficult to detect and understand groundwater contamination. And time lags between interventions and results also influence the remediation measures and management of groundwater quality. Remediation measures of deep groundwater contamination can be especially challenging with the long travel time, as deep groundwater may require millennia to flush. And by the time groundwater contamination is observed, remedial action is likely to be very expensive or technically impossible. Groundwater is exposed to natural (geogenic) contamination. The natural chemistry of groundwater largely depends on the nature of the aquifer matrix. The major natural contaminants found in groundwater are arsenic, fluoride, and manganese81 widely present, as well as radionuclides and heavy metals at numerous hot spots. Exposure to elevated concentrations can lead to cancer, heart and lung diseases, and dental and skeletal problems. Since the 1980s, natural contaminants have been recognized to be more extensive and substantial than previously thought.82 Nitrogen contamination is most concerning—for both its health threats and pro- hibitive costs of removal. Irrigation typically reduces groundwater quality through the percolation of fertilizer and pesticide and can also increase groundwater salinity (see Annex 5 on groundwater quality). Nitrogen pollution is the most influential global driver of human-made biodiversity decline after habitat destruction and the emission of greenhouse gases.83 UNEP estimated that nitrogen costs the global economy between US$340 billion and US$3.4 trillion annually when considering its impact on 32 The hidden wealth of nations human health and ecosystems.84 Although it is known that oxidized nitrogen can be lethal to infants (commonly known as the blue baby syndrome), studies have also shown that those that survive endure longer-term damage throughout their lives due to stunted growth and impaired development in infancy, which could lead to poor productivity in later life.85 According to the FAO, nitrates are the most common chemical contaminant found in groundwater aquifers worldwide, largely as a result of farming practices.86 Furthermore, the presence of nitrates in groundwater is suspected to enhance the mobilization of other deadly pollutants, such as uranium, compound- ing the threat of groundwater pollution.87 Urban sludge is also an important source of contamination, particularly for local shallow aquifers—more so in the event of floods. It contains a wide range of con- taminants, mixing into a toxic cocktail that can dangerously threaten aquifers. It is composed of phosphates, nitrates, and untreated sanitation (including bacteriological contaminants) of various byproducts from industrial and medical sites and of heavy metals, hydrocarbons, and other urban waste. Aquifers that are more easily accessi- ble by individuals (local shallow and major alluvial) are particularly exposed. Private wells in urban settings risk becoming pathways of groundwater contamination, more so during floods. Beyond water-borne disease outbreaks, the direct threat to public health is largely unmonitored, pointing to a hidden crisis of considerable propor- tion and most affecting those in poverty and vulnerability without alternative water sources. In Indonesia, for example, groundwater quality is deteriorating rapidly, with 93 percent of groundwater samples exceeding national pollutant threshold levels, more than 70 percent of this contamination being attributed to leaking septic tanks and poor septage disposed of.88 Climate change increases existing salinity concerns, with coastal areas, where 40 percent of the world’s population lives, most exposed. More than 600 million people (around 10 percent of the world’s population) live in coastal areas that are less than 10 meters above sea level, while close to 2.5 billion people) live within 100 km.89 Most of these people rely on groundwater extracted from coastal aquifers, exposed to the risk of saline intrusion from a combination of excessive pumping of fresh ground- water, sea-level rise, and other impacts of climate change such as increasing storm surge and natural or induced land subsidence. Seawater intrusion in coastal aquifers is now recorded in most coastal countries. The list of sites already impacted is long and growing, from Spain to Gaza Strip, from Senegal to Zanzibar, in Pakistan, Vietnam, or Indonesia, or on both the Atlantic and the Pacific coasts of the American continent. Given the costs associated with flushing out salt after contamination, such intrusion threatens the long-term quality and sustainability of those aquifers.90 Adding to the “toxic mix” of degradation threats, the rising demand for “climate action minerals” highlights the broader concerns that mining activity presents for groundwater quality. Mining is intensifying to meet the demand for electronics, bat- teries, and renewable energy needed for the green energy transition. Better monitor- ing and enforcement mechanisms are needed to prevent groundwater contamination. And a synthesis of the global groundwater impact of mining is urgently needed.91 33 Staying solvent—avoiding bankruptcy Competition: Precious wealth under pressure C ompetition between urban and rural users for groundwater is heating up. By 2030, both Sub-Saharan Africa and South Asia will see most of their people reside in urban areas.92 Cities have traditionally lifted people out of poverty, but there are concerns that frequent climate change-related shocks may slow down this effect.93 And while denser types of urbanization can be economically and environmentally beneficial to cater to growing populations, they also involve well-known shifts in land use and less visible but equally critical changes in groundwater use and replenishment patterns. For instance, expanding urban footprints can reduce groundwater recharge through soil sealing. This trend is set to increase, with soil sealing expected to grow by 80 percent by 2050.94 Increased urban demand and reduced groundwater recharge areas translate into growing urban groundwater stress—difficult to quantify due to the lack of complete global datasets of aquifer-specific changes. This can aggravate competition between groundwater uses across the urban-rural continuum (map 2.3). More easily accessible groundwater from local shallow and major alluvial aquifers is most exposed to competition and degradation. Access to shallow groundwater allows urban migrants to gain access to water—directly or indirectly—where network access is unavailable. The largest urban sprawl is in Sub-Saharan Africa, where undeveloped land around cities over local shallow or major alluvial aquifers shrank by close to 21 percent over 2010–20. Such fast-paced low-density urbanization threatens the quality of those aquifers and their recharge process. It can also displace vulnerable populations from productive agricultural land and informal settlements where the lack of legal clarity in land tenure presents an additional obstacle to providing infrastructure and services. Less visible competition for groundwater can have irreversible consequences for groundwater-dependent ecosystems (GDEs) and be a spark in the context of fragility. The Sahel is fragile, with high levels of poverty, exposure to weather shocks, and a recognized climate change hotspot.95 Tensions over water between pastoralists and farmers are expected to be heightened by climate change.96 Less well-known is the way GDEs are located on some of the key population routes and fragility hotspots. A machine learning–enhanced dataset of potential GDEs in dryland areas shows four well-known fragility and food insecurity hotspots (map 2.4).97 Better understanding the interdependencies between GDEs, climate change, rural livelihoods, food security, and social stability as part of integrated policies and programmatic decisions is essen- tial to reduce tradeoffs and inadvertent consequences. Competition for groundwater may not always lead to conflict, but even the status quo can hasten its depletion. In Pakistan, groundwater in the Indus basin is most heavily used in Punjab and Sindh, where 88 percent of rural households lack piped water, and in parts of Khyber Pakhtunkhwa and Balochistan.98 A substantial proportion of 34 The hidden wealth of nations those households rely on springs, wells, boreholes, and other groundwater sources. While overexploitation of the major alluvial aquifer of the Indus Basin for irrigation is apparent in parts of Punjab, more extreme examples are in smaller alluvial aquifers that are part of complex systems, as in Kuchlagh in Balochistan, where overexploita- tion for agriculture has led to progressive depletion. Basic provisions governing access to groundwater and the restriction of groundwater use99 were not implemented, and the aquifer gradually dried up. There was no conflict. Nor did the depletion trigger cooperation, the use of efficient irrigation methods, or the adaptation of local groundwater recharge measures—all because of a “socio-institutional void.”100 Map 2.3  Groundwater availability is key to urbanization Annual average growth in developing countries but can compete with rate toward irrigated land agricultural land 1992-2020 0-1% Source: World Bank elaboration using data on land cover classification 1-2% from Copernicus Global Land Service and on land area equipped for 2-5% irrigation classified by the Food and Agriculture Organization. The  5-10% sample of cities is drawn from the European Commission’s Global +10% Human Settlement–Urban Centre Database R2019. 35 Staying solvent—avoiding bankruptcy Map 2.4  Groundwater-dependent ecosystems are at the crossroads of migration routes and fragility hotspots in the greater Sahel region Source: World Bank using The Nature Conservancy GDEs data, (a) mapped GDEs and pastoral lands with transhumance pathways. (b) Transboundary fragility hotspot clusters based on grid-level cross between Armed Conflict Location & Event Data (all events between January 1, 1997, and February 2021, ACLED) and GDEs. (c) Food insecurity as of October 2021. Food security data is at the district level from the Famine Early Warning Systems Network (FEWS). Note: The four hotspots are the Liptako-Gourma region at the borders of Mali, Burkina Faso, and Niger; the Lake Chad Basin at the borders of Chad, South Niger, Northern Nigeria, and Cameroon; the Darfur region at the borders of Sudan, South Sudan, Chad, and the Central African Republic; and the South Kordofan region between Sudan and South Sudan. Likely GDE  Pasture% Border crossing  Transhumance route  0 10 25 50 75 100 Fragility cluster  Conflict events Top 15% by GDE  0 36 146 384 985 1616 Fragility cluster  Food insecurity phase  ould be worse without W Minimal Crisis humanitarian assistance  Stressed Emergency 36 The hidden wealth of nations 37 Staying solvent—avoiding bankruptcy W ho owns groundwater? Growing intensity of use makes the question more pertinent. As a com- mon-pool resource with open access, groundwater has no built-in ownership. Before the intensive use of the past half-century, ownership fell by default to landowners with a well on their land. Then in the 1960s and more in the 1990s, governments increasingly sought to vest ownership—or another legal status—in the state on behalf of the people and in the long-term public interests of equity and sustainability.101 In these situations, customary private ownership has been replaced with rights that have been granted to users and reg- ulated by the government (or stakeholders) through permits, licenses, concessions, and authorizations. Beyond rights, asymmetric information shapes groundwater use: information gaps are a key challenge felt most acutely in developing countries, where institutional and enforcement capacities are weak. Asymmetric information constrains what policymakers can achieve in managing groundwater. Limited knowledge and monitoring of groundwater use and abstraction rates mean policymakers often operate with imperfect informa- tion about resource availability and quality. Water authorities might not even be aware of the location of boreholes and wells, especially when they are not registered. Some uncertainty can be reduced with better scientific knowledge. New technologies can contribute to reducing uncertainty. For instance, in East Asia, satellite imagery is used to measure evaporation, from which groundwater abstraction can be estimated, a method being considered in other parts of the world.102 While such indirect methods cannot match the accuracy of in situ mea- surement, they can help in information triangulation to reduce uncertainty if transparently documented and peer-reviewed. Because eliminating uncertainty and asymmetric information is not a realistic short-term goal, policy reforms must find ways to factor in this uncertainty, moving toward integrated local and national water resource management. 40 The hidden wealth of nations Aligning private and social opportunity costs of groundwater use: Three policy levers, four policy areas A ddressing the challenges and defining context-specific policies that account for multisectoral implications require activating three policy levers that form the core policy framework: information, incentives, and investment. The lack of adequate information about groundwater, including fundamental knowledge of the resource itself and how it responds to pressures, has resulted in both overexploitation and missed opportunities. When groundwater is taken for granted by users, it can lead to overexploitation and degradation. And when knowledge of groundwater’s benefits is lacking, it can be underused, resulting in missed development opportuni- ties. Inadequate information also means that policymakers are, by and large, operat- ing blind when deciding on the equitable use of groundwater resources. Alignment of incentives, the second policy lever, is at the core of groundwater management, reflecting how the management of the resource transcends the mandate of the water institutions nominally charged with that task. Unless incentives at the user, institution, national, and transboundary levels are considered, policies to manage groundwater, however well-informed by scientific knowledge, will remain ineffective. Similarly, without the first two policy levers, the third lever, investment, will underperform at best or cause maladaptation at worst. In aligning the private and social opportunity costs of groundwater use, policymakers can use these three policy levers in four main policy areas to determine which instru- ments to use and how to adapt them to the state of groundwater development: 1. Policies that influence the marginal costs of abstraction by increasing or lowering the costs of energy required to lift the resource from the ground. Energy subsidies and new technologies such as solar pumping or drip irrigation dominate this reform area. 2. Policies affecting investments related to new drillings, such as production or trade promotion subsidies that incentivize the expansion of groundwater-based irrigation. 3. Policies relating to environmental externalities, such as those affecting groundwater quality or downstream users, including groundwater-dependent ecosystems. 4. Policies affecting supply, for instance, by expanding enhanced nature-based recharge solutions or improving knowledge of the resource and the overall accounting and efficiency of investment related to groundwater to ensure that available supply is used efficiently and sustainably. 41 Getting the highest return on a critical adaptation currency The Figure 3.1 below represents the policy levers and policy areas framing the choices and instruments that policymakers have at their disposal to mitigate the challenges of managing groundwater, given asymmetric information and groundwater’s properties as a common-pool resource. Where to start? A systematically integrated approach combining cross-sectoral expertise and political leadership can deal with issues spanning from underuse to overexploitation of ground- water. Such an approach is urgently needed to leverage groundwater potential without risking negative externalities and, equally, to mitigate the consequences of overexploita- tion in other areas. The following sections discuss these policy areas and their links, reflecting on global examples that can inform the way forward (see Annex 6). Figure 3.1  Policy levers and areas to mitigate the challenges of asymmetric information and common-pool resources Three policy levers for Policymakers... INFORMATION INCENTIVES INVESTMENT Policies affecting investment related to new drillings Policies Policies in uencing the to inform policy areas relating to marginal cost to manage groundwater environmental of abstraction externalities Policies affecting supply 42 The hidden wealth of nations Not-so-marginal costs: Revamping energy subsidies and using solar power A dapting to climate change involves both energy and water dimensions. Groundwater is the most extracted raw resource globally, and its extraction has an important energy dimension. But without adequately considering groundwater, expanding access to greener energy—say, through solar pumping—could become a liability, with adaptation measures making people more, rather than less, vulnerable to climate change. Setting up maladaptation prevention policies, institutions, and invest- ments ahead of a massive expansion of cheaper solar energy has to be a priority. Investment returns from groundwater use are shaped by energy costs, and energy policies have so far incentivized groundwater overexploitation. Costs associated with groundwater are largely driven by fixed drilling costs for sinking wells and variable pumping costs related to pump maintenance and energy demand, which is affected by the overall depth of the water table, the extracted volume, and the unit cost of energy.103 Policies in the energy sector fuel groundwater consumption, particularly through subsidies. Previous work has shown the role of energy subsidies in increasing ground- water consumption in agriculture, especially when energy policies do not reflect the groundwater realities of the areas where they are implemented.104 Despite dramat- ically different groundwater scenarios across India, energy policy is remarkably uniform with a federal system of government. Almost all Indian states subsidize power to agriculture by at least 50 percent of the average cost of providing it.105 Awareness of this reality has grown and started to translate into pilot interventions to address the role of energy policies in groundwater overexploitation.106 Rapidly declining solar technology costs have made solar-powered pumps an appeal- ing substitute for diesel and standard electric pumps. Solar technologies for ground- water-based irrigation are gaining attention as the price of solar pumps has fallen.107 While diesel motor pumps remain overwhelmingly popular, solar pumps are an alter- native with growing support. Solar pumps can be surface mounted or submersible and could thus provide an alternative to address the depth-cost relationship. Solar pumps remain more expensive than motor pumps in initial capital, but rapid technological advances can be expected to continue lowering the entry cost. Their low operation costs—solar pumps have virtually zero marginal costs to operate—make them a prom- ising prospect. Solar-powered pumping for irrigation can narrow access gaps in electricity, water supply, and irrigation. In Sub-Saharan Africa, access gaps in water and electricity tend to overlap, particularly in rural areas, and are leading drivers of multidimensional poverty. In addition, food security remains a concern for most African countries, with close to 25 percent of the population suffering from severe food insecurity.108 The potential for solar energy is high in low-use settings, particularly for shallow 43 Getting the highest return on a critical adaptation currency groundwater abstraction. In high-use settings, the expansion of solar-powered irriga- tion/pumping has also been promoted by governments to reduce the cost of energy subsidies, fuel import bills, and carbon emissions.109 Easier access to solar technology enables expanding access to groundwater for irri- gation and water supply, but with higher maladaptation risks, while the virtually zero marginal operating cost contributes to the greater complexity of policy responses in high-use settings. While low operating costs make solar pumping attractive, they also imply a higher complexity in regulating access to water use compared with electricity and fuel-based pumping. Once access has been achieved, users are incentivized to optimize their groundwater use to recuperate their pumping equipment investment and improve their agricultural income, but without considering wasteful water use. Subsidies for capital costs only scale up and speed this process. Preliminary evidence suggests that solar-powered irrigation may lead to more groundwater drawdown in both the short and longer terms.110 For grid-connected pumps in Gujarat (India), the option of selling electricity back to the grid is not incentivizing a lowering of electricity consumption and thus has no impact on groundwater use.111 For off-grid pumps, the increase in water use is even clearer. In Karnataka (India), an expansion of irrigated and cropped areas followed the conversion of a variable cost subsidy on electricity/diesel into a fixed cost subsidy on the capital cost of solar pumps.112 And in Nepal, the subsidy and expansion of solar-powered irrigation led farmers to expand their agricultural livelihoods into aquaculture.113 Wealthier farmers receiving solar pumping subsidies can also be expected to be a factor in increased and more inequitable groundwater use. Still, even in areas of high use in an adequate aquifer setting, the expansion of solar-powered irrigation can yield consolidated benefits. In low-use settings, particularly in Sub-Saharan Africa, the lower cost of solar-pow- ered pumping and the solar-irradiance potential make solar-powered irrigation a prime candidate for expanding irrigated agriculture and decentralized water supply in rural areas. Sub-Saharan Africa has undeniable potential to use groundwater to scale up irrigated agriculture. Based on solar irradiance and location suitability, it has among the highest levels of solar resources globally, especially in higher and lower latitude countries of West, Central, and Southern Africa and parts of East Africa.114 So far, irrigated agriculture is still nascent there, with fewer than 4–7 percent of agricul- tural households irrigating. Solar water pumps have an estimated potential market of 5.2 million Sub-Saharan smallholder farmers. But affordability constraints place the addressable market potential at an estimated 0.64 million smallholder farmers.115 And there are concerns about the design of policies and institutions capable of handling an equitable scaling up of solar-powered irrigation to capture the potential of the technology without threatening the sustainable use of groundwater or generating negative externalities. Adapting to climate change depends on both energy and water dimensions, but without adequate consideration for groundwater, success in expanding access to greener energy—say, through solar pumping—could become a liability in the form of maladap- tation. Unregulated expansion of solar pumping could lead to path-dependent malad- aptation. Over 90 percent of Sub-Saharan Africa’s groundwater-dependent ecosystems risk overexploitation if solar pumping is provided without adequate maladaptation safeguards. Setting up maladaptation prevention policies, institutions, and investments ahead of a massive expansion of cheaper access to energy is a priority. 44 The hidden wealth of nations Drilling incentives and behaviors: Reforming producer subsidies G overnments across the globe support agriculture to the tune of $635 billion a year.116 By influencing crop and irrigation choices, agricultural policies also affect groundwater abstraction and quality. And without reform of groundwater-sen- sitive agricultural subsidies, incentives to promote the sustainable management of groundwater will not be sufficient. To avoid undermining the returns to groundwa- ter investment, action is needed at the highest political level to revamp agricultural policies and subsidies. Producer support subsidies tied to production can lead to lower groundwater supplies. Cropped areas across the globe risk losing up to 13.2 cubic kilometers of water per year, which is roughly the total annual available groundwater resource in countries such as Chad, the Dominican Republic, or Guinea-Bissau.117 Though broad and imprecise, this estimate suggests that coupled producer support subsidies have substantial implications for groundwater resources and can perceptibly deplete aquifers. In Haryana, India, the Mera Pani Meri Virasat Yojana project subsidizes rice producers to suspend growing this water-intensive crop in drought years when the aquifer recharge is reduced. These aggregate impacts mirror patterns in country studies. Output subsidies—such as minimum support prices and government procurement contracts—directly affect agricultural markets and the price that farmers receive, skewing cropping decisions.118 They have led to a 30 percent overproduction of water-intensive crops in India. In the northwestern state of Punjab, rice procurement accounted for 63 percent of the rise in groundwater depletion over two decades.119 In the central state of Madhya Pradesh, wheat procurement beginning in 2007–08 has driven a 5.3 percentage point increase in dry wells and a 3.4 percentage point increase in borehole construction.120 Input subsidies also undermine groundwater quality. Fertilizer subsidies are some of the largest expenditure items in government budgets, with nitrogen more heavily sub- sidized than other fertilizers.121 While beneficial to stimulate agricultural production, boost food security, and stabilize food prices, fertilizer subsidies may also encourage farmers to deviate from optimal practices, resulting in fertilizer use beyond recom- mended rates. That can diminish crop productivity and drive deterioration in ground- water quality.122 Fertilizer and pesticide overuse is especially prevalent in South and East Asia and South American subregions. In areas where fertilizer input subsidies are above the country median, a 10 percent increase in fertilizer use causes 5.7 percent more nitrate to be stored in the vadose zone than in areas where the subsidies are lower.123 As a result, subsidy-induced inefficiencies in fertilizer use can strongly affect groundwater pollution. 45 Getting the highest return on a critical adaptation currency Of the groundwater depletion embedded in international agricultural trade, more than 60 percent comes from major alluvial aquifers. Most of the groundwater deple- tion embedded in the global food trade stems from water-intensive crops, starting with rice (close to one-third) and wheat (over 12 percent), but also including maize, cotton, soybeans, sugar, and citrus.124 Two-thirds of groundwater depletion embedded in the global food trade comes from overuse areas in India, Pakistan, and the United States.125 Trade promotion policies can also contribute to distorting incentives, com- pounding the effects of other policies.126 Some 30 percent of the world’s food supply is lost or wasted, especially in developing countries, much of it due to policies that lower food prices or costs, such as produc- tion and consumption subsidies.127 Governments also unwittingly incentivize food loss and waste by subsidizing inputs, including energy, water, and land conversion. Lower subsidies would have the same effect as higher food prices, resulting in less food loss and waste—outcomes needed even more in areas already experiencing groundwater overexploitation. 46 The hidden wealth of nations Replenishing the groundwater account: Enhancing supply through groundwater recharge G oing back to the banking analogy, if groundwater withdrawals correspond to expenditure and are growing, policymakers need to ensure that balance is achieved by maintaining and enhancing the replenishment of the account through groundwater recharge. Indeed, if natural discharge and withdrawals exceed recharge, overextraction would compromise the long-term use of groundwater, and bankruptcy would occur if aquifer depletion jeopardized the “inheritance.” To avoid this situation, policymakers can manage how much groundwater is extracted and ensure its quality is protected, echoing the first three policy levers previously discussed. However, they also have some margin in preserving and enhancing the natural aquifer recharge as part of integrated water management. Several approaches can be adapted to local contexts and integrated into cross-sectoral interventions like environmental or disaster risk management programs or as part of public work and labor market inter- ventions (box 3.1). 47 Getting the highest return on a critical adaptation currency Box 3.1  Increasing and protecting supply: Aquifer recharge and nature-based solutions One of the main pillars of water Enhanced aquifer recharge is often management is to take advantage of associated with complementary the buffer capacity of the aquifers to techniques such as reforestation, store surface water or treated waste- agricultural terraces, and prevention water for further or downstream use. of land clearing, which contributes Infrastructures specifically dedicated to to increased aquifer recharge. Stone recharging water to aquifers are usually bund building programs are locally classified as managed aquifer recharge implemented in many countries for (MAR) infrastructures. Although soil and moisture conservation. Over popular, they suffer from strong limita- generations, ethnic minorities of Nepal tions. First, they can be implemented have used this technology to control only when the geological conditions soil erosion, promote water reten- are favorable (such as a shallow aquifer tion, and increase crop production. 2 with thick unsaturated zone) and It has a high probability of replication when raw water (such as river water, because it is simple to implement, low stormwater, treated wastewater, or any in cost, and makes maximum use of other raw surface water source) is avail- local resources. 3 In this way, enhanced able on a permanent basis. Second, aquifer recharge and NBS can ensure proper implementation requires unique the protection of the quantity and and specialized skills. Third, the imple- quality of groundwater resources and mentation costs are substantial, with enable the creation of hydrogeolog- every additional cubic meter added to ical nature reserves.4 To date, such a the aquifer costing between $0.4 to concept has not been implemented at $1.4 per cubic meter, on average.1 As a scale but has been adopted by private result, MAR is rarely implemented in investors to protect bottled-water developing countries and is particularly sources, especially in Europe.  difficult in arid countries where surface water is not perennial. Enhanced aquifer recharge activity also presents important labor-inten- An alternative to MAR is enhanced sive job opportunities that could be aquifer recharge that relies on land- part of public works undertaken as scape management and nature-based part of social protection and safety net solutions (NBS). This technique refers programs. For example, reforestation is to limiting rainwater runoff and typically 100 days of work per hectare increasing the soil retention capacity, if done manually, each check dam is enhancing the volume of aquifer usually 5,000 to 10,000 working days recharge while preventing aquifer con- in this configuration, manually con- tamination. Enhanced aquifer recharge structed shallow wells are about 60 techniques are designed to assure working days per well, and construction adequate protection of human health of trenches, canals, and terraces can all and the environment and may also be done manually. achieve other purposes, such as flood mitigation or reduced soil erosion. 1. Vanderzalm et al. 2022. 2. Regmi et al. 2001. 3. van Zanten et al. 2023. 4. Marsily 1992. 48 The hidden wealth of nations Pulling all the policy levers: Hard-learned groundwater management lessons R egardless of the level of groundwater use, experience reveals that policymak- ers have three main policy levers at their disposal: information, incentives, and investment. Sustainably managing groundwater at scale is challenging, and few places have managed to do it beyond the local level. The main lessons that can guide policymakers’ effective use of policy levers are fitting governance to the aquifer type and use, devising fit-for-purpose information systems that can close the gap between groundwater experts and decisionmakers, and nesting integrated and participatory management in target-based adaptive regulation frameworks. First is fitting governance to the type of aquifer and its use. A review of the many experiences across the world in groundwater management reveals many trial-and-er- ror approaches. Such a review also shows the importance of getting the right fit for a given local context by coordinating across sectors and borders.128 Many failures in groundwater management—both in high governance capacity settings and in low capacity and difficult enforcement settings—reflect a failure to encompass aquifer specificities, as well as all the critical actors, issues, and incentives for success. Climate change raises the stakes and costs of not managing groundwater effectively. Many of the reforms needed to address groundwater overexploitation and degradation—and to prevent them where groundwater has been underused—are beyond the reach of groundwater management authorities, such as the influence of energy and producer subsidies on abstraction and drilling. But systematic changes are also needed in the water sector to empower the sustainable management of groundwater, starting with fitting governance to the type of aquifer and its uses. Second is closing the knowledge gaps between groundwater experts and decision- makers through fit-for-purpose information sharing and systems. While inadequate knowledge of groundwater is an impediment to managing this resource, global experience reveals a less recognized finding: the information about groundwater that is typically known by scientists and other experts is also available to decision- makers—but the knowledge of how to use it best may be missing. Information is the lens through which the multidimensional implications of groundwater are refracted. Even in high-capacity settings like Canada, there is always more to learn about how to overcome the difficulties of integrating hydrogeological information into land-use planning activities.129 And even when the needed hydrogeological information is available and validated, its pertinence still depends on its effective use and is condi- tioned by the quality of its adoption by non-specialists. This is more difficult when hydrogeological data are limited and uncertain, and groundwater specialists who can translate the information for decisionmakers are scarce. This lesson is critical to the design of groundwater management systems that enable informed decisionmaking and cross-sectoral collaboration. 49 Getting the highest return on a critical adaptation currency Third is nesting integrated and participatory management in target-based adaptive regulation frameworks. Community participation has been widely recognized as an important component of sustainable governance of common-pool resources since the work of Nobel Prize winner Elinor Ostrom in southern California (United States) in the 1960s. The participation of local user groups in groundwater governance, espe- cially through monitoring, is critical for raising awareness. Implementation of such an approach for selected aquifers in Morocco or India22 demonstrates its interest. It is, however, insufficient to overcome the larger scale issues in groundwater man- agement, particularly across both international and national borders, as shown by the groundwater stress in California, now one of the top 10 economies in the world. One example of integrated management is the European Union’s Water Framework Directive (WFD). With close to 12,000 groundwater bodies in the European Union, it designed the WFD to provide a holistic water management approach for river basins requiring water quality, emission control, and groundwater protection, all of which must be understood within a given context. When implementing the directive, EU member states are free to organize their water administration as they see fit so long as they adhere to the leading principle of managing groundwater according to natural boundaries for river basins, most of the groundwater bodies fitting within these boundaries. The French basin directorate model is the most commonly adopted: in a basin committee setting, water stakeholders determine the management options to be implemented by the basin directorate. In many EU member states, implementation of the directive has shifted the main responsibility for groundwater issues from the municipal level to the basin level,130 resulting in improved water quality and volume. 50 The hidden wealth of nations Making groundwater use a higher priority: A call for urgent political action T his report reveals the urgency of a deep rethinking of groundwater manage- ment that extends beyond the sectors that rely directly on the resource. The three lessons just described should underpin this rethinking and inform the design of fit-for-context institutions, collaboration, and regulation systems affecting ground- water abstraction, drilling, and quality. But none of the lessons can be implemented without high political prioritizing of groundwater. High-level political and cross-sectoral action is urgently required to align the private and social costs of groundwater use and to value and carefully manage this scarce resource properly. Managing groundwater requires integrated vertical and horizontal coordination. Vertical coordination entails the enhancement of regulatory frame- works for groundwater governance and the harmonization of policies from the local to the transboundary levels. In contrast, horizontal coordination requires sustained connections across sectors such as agriculture, energy, urban and rural development, and a central role for authorities charged with strategic development planning. One impediment to this high-level prioritizing is the lack of capacity to account for all investments that rely on groundwater, which obscures the investment gaps in groundwater. This lack of capacity results from the absence of an identifying tag that adequately captures financial resources expended on groundwater. In addition, for groundwater abstraction assets such as wells and boreholes, financial investments too often focus on using the resource while underperforming in delivering water security, productivity, efficiency, and quality. Understanding specific geology and construction risks could significantly improve investment performance. 51 Getting the highest return on a critical adaptation currency With groundwater no longer a hidden wealth, what should this high-level prioritizing entail? Prioritizing the uses of groundwater should be informed not only by the type of aquifers but also by the level of use: • Underuse: improve knowledge of the resource and prioritize the development of local shallow aquifers, the ultimate “no-regret” value for farmer-led irriga- tion, improved food security, and climate shock buffering. In low groundwa- ter-use settings, what is most important is knowing how to derive the benefits of using the resource while avoiding the costs of overexploitation. Although groundwater literacy is vital at all levels of groundwater use, it is most critical in the earlier strategic planning stages when decisions can have long-term con- sequences for the sustainability of the resource, the benefits it will yield, and to whom. Interventions along the chain from policy to investments can have the most impact in low-use settings because they can determine the right balance of resource development and protection policies and establish the right institutions, enforcement mechanisms, and capacities. • Moderate use: protect groundwater quality and aquifer recharge for sus- tainability. Two priorities take precedence in such settings: refining policy and institutions by learning from experience to adjust them to aquifer characteristics and socioeconomic context and prioritizing the protection of groundwater quality and quantity. Policies need to be clear about the pro-poor and welfare distribution effects of groundwater use, as well as being adapted to the type of aquifer. Based on such policies, management measures to reduce externalities should consider costs and benefits according to the type of water demand, aquifer properties, and social and institutional traditions. These measures should prioritize ground- water quality and quantity in the face of threats from salinity, nitrates, pesticides, and emergent pollutants, taking advantage of opportunities to course correct. Similarly, protecting and enhancing aquifer recharge has tremendous potential to increase groundwater availability, which is vital to respond to growing populations, urban development, and climate change. • Overexploited: diversify water sources and manage demand. Where groundwater has been overexploited, needed reforms may come at a higher socioeconomic cost, and such costs are exacerbated by inaction. Deeper socioeconomic consequences may become tipping points even before the resource is exhausted. But exposure to the increasingly untenable costs of inaction in redressing overexploitation can spark a revaluation of the priority needs for groundwater and the urgency of reducing demand. Maximizing the value of groundwater requires valuing and accounting for its economic, social, and environmental costs and benefits; understanding local contexts and incentives; and considering unintended consequences and risks. In high-use settings, policymakers cannot be guided exclusively by a water-efficiency strategy. Equally important is reducing demand, including virtual groundwater trade, through more resource-friendly activities such as optimized crop selection, hydro- ponic crop farming, or feed production for fish and livestock. Diversifying sources through water transfer, reuse, desalination, and enhanced aquifer recharge can sustain groundwater as a strong asset in a water security portfolio. 52 The hidden wealth of nations Groundwater glossary Aquifer is a geological formation, group of formations or part Externality. Externalities occur when decisions about pro- of formation that is saturated and sufficiently permeable to duction or consumption by one person affect someone else transmit economic quantities of water to wells and springs. without this being considered by the decision maker. If one entity’s action has a positive impact on another, the exter- Aquifer productivity indicates the borehole yields that can nality is defined as positive. A classic example of a positive reasonably be expected in different hydrogeological units. externality is an agricultural example, where a beekeeper This parameter is used by some authors to describe the benefit neighboring farmers by supplying pollination services potential of an aquifer based on past borehole design and as an unintended effect of his/her production of honey, and performance. from which the farmers’ crops benefits. When the external- ity decreases the well-being or utility of the affected entity, Aquifer recharge is the volume of water that enters an aquifer. it is defined as a negative externality. A typical example of a Direct or diffuse recharge is the movement of snowmelt, negative externality is pollution. The use of fertilizers in agri- rainfall water or floodwater into the soil, flowing downward culture produces negative externalities such as surface and through the unsaturated zone, until it arrives at the saturated groundwater water pollution. zone of the aquifer. Indirect recharge occurs when the rain- water and snowmelt are concentrated on the ground surface Groundwater Dependent Ecosystem (GDE) is an ecosystem through runoff, and infiltrates at discrete points. Recharge may that requires access to groundwater on a permanent or inter- also occur vertically or laterally from a river or a lake. Aquifers mittent basis to meet all or some of its water requirements also receive underground recharge from adjacent, underlay- to maintain its communities of plants and animals, ecological ing or overlaying aquifers. Recharge also refers to inputs of processes, and ecosystem services. anthropic origin (irrigation returns, losses from drinking water from drinking water networks, artificial recharge, etc.). Groundwater depletion is the inevitable and natural conse- quence of withdrawing water from an aquifer. The concept is Basement aquifer is a discontinuous aquifer developed usually limited to describing the substantial and continuous within the weathered overburden and the fractures of multi-year decline of the water table which represents the loss basement formations, usually composed of hard, crystalline, of aquifer storage resulting from withdrawals that exceed the or re-crystallized rocks of igneous or metamorphic origin with average groundwater resource. negligible primary porosity and permeability. It is character- ized by its weak productivity, its local lateral extent, its limited Groundwater flow. Groundwater moves underground depth (typically less than 100 m) and the strong influence of through the pores of a geologic formation, or through open topography on the groundwater flow direction. fractures or conduits respectively in fractured or karstic aquifers. The groundwater flow is the movement of water Complex porous aquifer and equivalent is used to describe underground in response to the natural gradient of pressure. aquifer system that is not a major alluvial aquifer nor a local For all aquifers, and because of continuous (even though shallow aquifer. The geologic reservoir may consist in one or sometime very slow) recharge and discharge, the piezomet- more permeable formations such as large alluvial plain not ric head (elevation of the water table) is not constant over included in the major alluvial category, or unconsolidated an aquifer: spatial changes in piezometric heads and thus marine deposits, consolidated sedimentary deposits, layers or directions of groundwater flow are described by piezometric series of layers of old sedimentary tectonized terrain (typically maps. The range of groundwater flow is from centimeters per sandstone and limestone, karstified or not), or volcanic terrain day to many meters per day (and even more in some karstic including basalt layers. The thickness of such aquifer system is aquifers). An aquifer reaches a hydrodynamic equilibrium often reported to be hundreds of meters. when the piezometric map is stable, meaning when the groundwater flow is constant. Confined/Unconfined. A confined aquifer is an aquifer located below a formation of low-permeability materials Groundwater mining describes withdrawals that exceed the (typically clay materials), causing it to be under pressure and average available groundwater resource and that cause a con- fully saturated with water. When a confined aquifer is pene- tinuous multi-year decline of the water table. Some authors trated by a well, the water will rise above the top of the aquifer only talk of groundwater mining when the time to revert from (and sometimes up to the ground surface). On the contrary, an influenced situation of the groundwater flows (i.e., with unconfined aquifer is an aquifer partly unsaturated, whose abstraction) to the natural situation after ceasing abstraction upper water surface (water table) is at atmospheric pressure. It is more than two human generations. usually corresponds to the first aquifer from the surface when there is no continuous low-permeability cover. 53 Groundwater glossary Groundwater resource, or sustainable groundwater resource, or 10-2 m/s for permeable aquifers. The productivity of the is the rate of groundwater flow that can be harvested wells is influenced by both the permeability coefficient and indefinitely without causing unacceptable environmental or the thickness of saturated terrain. socioeconomic consequences, including severe lowering of the water table resulting in (often irreversible) changing flow Porosity is a measure of the void spaces in a geologic pattern or adverse quality impacts. It does not correspond to material as the ratio of pore volume to the total volume of a particular value that can be calculated according to a single material. Effective porosity is a measure of the volume in rule but depends, within the limits of the average annual which fluid flow is effectively taking place and is recoverable, recharge, on the balance between benefits and impacts that while the residual porosity is the porosity due to the pores not each society decides to accept in an open and transparent communicating between them or with the external environ- process with the community. ment. The porosity, also called total porosity, is then the sum of the effective porosity and the residual porosity. Even if Groundwater reserve is the stock of groundwater stored in linked, there is not a direct proportionality between porosity the aquifer, mostly linked to the size of the geological reser- and hydraulic conductivity. For discontinuous aquifers, the voir and its porosity. In contrast to the groundwater resource, porosity is described by the primary porosity, the intergranular the reserve cannot be harvested sustainably. porosity associated with the original texture of the geologic formation, and the secondary porosity, created through alter- Karstic aquifer is an aquifer hosted in a karst, usually defined ation of the rock, commonly by processes such as dissolution as terrain with distinctive hydrology and landforms that arise and fracturing. from a combination of high rock solubility and well developed secondary (fracture) porosity. The karst is formed from the Shallow alluvial aquifer is generally an unconfined aquifer, dissolution of soluble bedrock, mostly carbonate rock, such as typically 5 to 50 m of saturated thickness, consisting of limestone and dolomite. The list of karst features is long and unconsolidated fluvial clay, sand, gravel, and pebbles within includes variety of micro and macro surficial and underground the valleys of present day or ancient stream and rivers. These objects (notably karrens or lapies, dolines or sinkholes, uvalas, low-lying areas are prone to flooding during the rainy season. poljes, blind and hanging valleys, sinking streams, caverns, The water table often fluctuates in response to discharge to ponors or swallow holes, potholes, and caves). The proper- the riverbed, to pumping, and to varying recharge by direct ties of karstic aquifers greatly vary in space and groundwater rainfall or from the river itself. Due to their shallow and uncon- flow is more concentrated and more rapid than in the other fined nature, alluvial aquifers are susceptible to contamina- aquifer types. There may be large quantities of water in a tion, notably in urban settings. conduit, while borehole a few meters away may be dry if hitting only the matrix. Storativity, or storage coefficient, is a hydraulic parame- ter of aquifers (dimensionless), measuring the volume of Local shallow aquifer is used to refer indistinctly to an water that will be discharged from an aquifer per unit area aquifer classified either as basement aquifer or as shallow of the aquifer and per unit reduction in hydraulic head. For alluvial aquifer. a confined aquifer, storativity results only from the rock and fluid compressibility while in an unconfined aquifer it relates Major alluvial aquifer refers to an aquifer developed in large to the effective porosity of the geologic formation. The deep unconsolidated deposits often as thick as 200 to 300 m storativity of the aquifer will impact how fast the impact of and composed of gravel, sand, silt or clay deposited in river localized pumping or recharge will be reflected in the rest of channels or across floodplains. Irrigated agriculture is usually the aquifer: the higher the storativity, the shorter the lag. extensively developed in such plains and often results in an overexploitation of the groundwater resource (e.g. Mississippi Water table, or groundwater table, describes, in unconfined Alluvial Plain in the USA, Mitidja plain in Algeria, Haouz plain aquifers, the upper limit of the portion of the ground fully in Morocco, Caplina-Concordia coastal aquifer system in the saturated with water. The water table fluctuates both with Atacama Desert shared with Peru and Chile, Indo-Gangetic the seasons and from year to year, as it is affected by climatic Plain shared with India, Nepal and Pakistan). variations and by the amount of natural and anthropogenic groundwater withdrawals. By extension, it is sometime use to Piezometer is a borehole, usually equipped with small describe the hydraulic pressure in confined aquifers. diameter casing (typically 4” or less) dedicated to the mon- itoring of the water level of the tapped aquifer. To prevent artefact measurements, no pumping is applied to this borehole. Permeability coefficient, or hydraulic conductivity, is a hydraulic parameter of aquifers (L.T-1), measuring the resis- tance of a porous structure to the flow of water through it. The permeability coefficient is derived from the permeability of the geologic formation considering that the saturating fluid is water. Poorly permeable aquifers show permeability coefficient as low as 10-4 or 10-5 m/s, when it goes up to 10-1 54 The hidden wealth of nations Ending notes Chapter 1 1. De la Peña-Olivas 2010. 19. Shah 2010. 2. Aquastat n.d.; Margat and Van der Gun 2013. 20. Jain et al. 2021. 3. Siebert et al. 2013. 21. Zaveri et al. 2016. 4. United Nations 2022. 22. World Bank 2018. 5. The Nature Conservancy and R. McDonald 2016. 23. Burney et al. 2010. 6. “For it is the rare, Euthydemus, that is precious, while 24. Pavelic et al. 2013. The study includes Burkina Faso, water is cheapest, though best, as Pindar said” in Plato Ethiopia, Ghana, Kenya, Malawi, Mali, Mozambique, in Twelve Volumes, Vol. 3 translated by W.R.M. Lamb. Niger, Nigeria, Rwanda, Tanzania, Uganda, and Zambia. Cambridge, MA, Harvard University Press; London, 25. World Bank 2022. William Heinemann Ltd. 1967. 26. Mendonça et al. (2017) estimate that perennial lakes, 7. World Bank 2023. which are mainly GDEs, bury some 0.33 billion tons of 8. Beattie 1981; Fishman et al. 2011; Cuthbert et al. 2022. CO2 per year corresponding to about 1 percent of the 9. Edwards 2016. present global CO2 emissions. 10. Beattie 1981. 27. Hydraulic lift is the process for some deep-rooted plants 11. Shah 2010. to take in water from lower, wetter soil layers and exude 12. Sekhri 2014. that water into upper, drier soil layers. This mechanism, 13. Because groundwater is a common-pool resource, two beneficial to both the tree transporting water and the externalities related to pumping can be identified: a neighboring plant, is found in many natural tree-grass “stock externality” relating to the lack of internalization mixtures and ecosystems. It is particularly critical in of the value of the resource, extracting it too quickly, dryland areas. triggering unbridled competition threatening the sus- 28. Adams 2013; Damania et al. 2017. tainability; a “pumping cost externality” resulting from 29. Zaveri 2022. users not internalizing how their own extraction lowers 30. Jain et al. 2021; Taraz 2017. groundwater levels, increasing extraction costs for other 31. BBC News 2022. users, and particularly those located in the correspond- 32. Damania et al. 2017. ing cone of depression (Burlig, Preonas, Woerman 2018; 33. Damania et al. 2017. Pfeiffer and Lin 2012). 34. The sample average of the probability of stunting is 0.40 14. As Jacoby (2023) notes, policies that affect drilling do not and experiencing dry rainfall shocks in infancy results necessarily affect pumping, but nearly all policies that in a 0.08 percentage point increase in the probability of affect pumping affect drilling. This means that given the stunting. costly investment needed for drilling, particularly for 35. Mekonnen et al. 2022. poorer farmers, the welfare implications of changing 36. Zaveri et al. 2021. incentives on the drilling margin are potentially huge and 37. World Bank 2023; Damania et al., 2020; Zaveri, Damania underappreciated. and Engle 2023 forthcoming. 15. Because groundwater is a common-pool resource, two externalities related to pumping can be identified: a “stock externality” relating to the lack of internalization of the value of the resource, extracting it too quickly, Chapter 2 triggering unbridled competition threatening the sus- tainability; a “pumping cost externality” resulting from 38. Noori et al. 2021. users not internalizing how their own extraction lowers 39. Garduño and Foster 2010. groundwater levels, increasing extraction costs for other 40. Fenichel et al. 2016. users, and particularly those located in the correspond- 41. Zaveri and Damania 2019. ing cone of depression (Burlig, Preonas, Woerman 2018; 42. Fishman 2018; Zaveri and Lobell 2019. Pfeiffer and Lin 2012). 43. Jain et al. 2021. 16. Researchers such as Sekhri (2014) have used this water 44. Sekhri 2013. depth exploitation. 45. Ryan and Sudarshan 2022. 17. Deaton 2013; Damania et al. 2023. 46. Hornbeck and Keskin 2014; Fishman, Jain, 18. Jain et al. 2021. and Kishore 2013. 55 Ending notes 47. Sekhri 2013, 2014. 79. See the background paper prepared by Dinar, Lall, 48. As noted in Fishman and Zaveri (2023), quasi-experimen- Prakash, and Josset (2023) for this flagship on the tal studies enabling causal inference of these impacts Economic and Social Cost of Land Subsidence. are almost entirely geographically concentrated in India 80. Jakeman et al. 2016. or the United States. Evidence in the other parts of the 81. The potential toxicity of manganese in certain groundwa- world that experience severe depletion still needs to be ter was highlighted by WHO (2022). improved. 82. Ravenscroft and Lytton 2022. 49. Fishman and Zaveri 2023. 83. Landmark biodiversity agreement at COP15, December 50. Noori et al. 2021. 2022. 51. Shah 2000; Sakthivadivel 2007. 84. UNEP 2019. 52. Patel, Saha, and Shah 2020. 85. Zaveri et al. 2020; Damania et al. 2019; Jones 2019. 53. Liquidity constraints, access to finance, and risk-tak- 86. Mateo-Sagasta et al. 2017; Damania et al. 2019. ing capacity are hypothesized to be the likely culprits 87. Nolan and Weber 2015. (Fishman, Gine, and Jacoby 2023; Blakeslee, Fishman, and 88. World Bank 2021. Srinivasan 2020; Sekhri 2022). 89. United Nations 2017. 54. Sarkar 2011; Blakeslee, Fishman, and Srinivasan 2021; 90. Renard and Poller 2001. Sekhri 2022; Fishman, Gine, and Jacoby 2023. 91. Lall et al. 2020. 55. Ameur et al. 2017; Faysse et al. 2011. 92. United Nations 2018. 56. Kendy et al. 2003. 93. Mukim and Mark 2022; Glaeser 2012. 57. Wester 2008. 94. Flörke, Schneider, and McDonald 2018. 58. Blomquist 1992; Lopez-Gunn and Cortina 2006. 95. Diffenbaugh and Giorgi 2012. 59. Sarkar 2012. 96. McGuirk and Nunn 2022; World Bank 2022. 60. The paradox of 19th century English economist William 97. This analysis was realized as part of a research collabo- Stanley Jevons is that increasing resource use efficiency ration with the The Nature Conservancy. The results are increases consumption—in his case, coal; in ours, included in an upcoming paper (Rhode et al. 2023–under groundwater. review) 61. Postel et al. 2001; Tilman 1999; Foley et al. 2011; Fishman, 98. Mansuri et al. 2018; Lytton et al. 2021. Gine, and Jacoby 2023. 99. For example, section 4 of the Balochistan Ground Water 62. Blakeslee, Fishman, and Srinivasan 2020. Rights Administration Ordinance 1978 provides for the 63. Solow 1974. designation of groundwater basins where permission is 64. Hartwick 1978. required before extracting groundwater. The government 65. Allan 2007. has the power to stop the extraction of groundwater by 66. Fishman, Jain, and Kishore 2013 , Fishman and Zaveri 2023. unauthorized persons. 67. Boudot-Reddy and Butler 2022. 100. Van Steenbergen et al. 2015. 68. Srinivasan and Lele 2017; De Graaf et al. 2019. 69. Grogan, Prusevitch, and Lammers 2023. 70. Grogan, Prusevitch, and Lammers 2023. 71. Mexico City is suffering from one of the world’s most Chapter 3 remarkable land subsidence rates, up to 37 centimeters a year. Groundwater extraction–induced subsidence 101. Burchi and Nanni 2003. has been documented for over a century: surveys show 102. For instance, in China, as part of the Xinjiang Turpan that the total subsidence between 1891 and 1952 had Water Conservation Project. reached 6.0 meters in the city center with the increasing 103. Buisson et al. 2021. groundwater abstraction and an additional 2.5 meters 104. In the case of India, see Badiani-Magnusson between 1952 and 1973. Subsidence continues even and Jessoe 2018. though abstraction has been greatly reduced. Indeed, the 105. Jacoby 2021. subsidence became so extreme in some locations (over 106. One example is the Paani Bachao, Paise Kamao (PBPK) 9 meters) that it threatened building foundations, sewer scheme in the Indian state of Punjab (Mitra et al. 2022). drainage, and transportation systems. However, such programs can be difficult to reproduce 72. Negahdary 2022. even in the same country, for instance, in states with 73. In response to the growing pressures, the Indonesian different experiences with respect to informal groundwa- government, in a dramatic move in January 2022, passed ter markets (IGM) and be challenged by other subsidies a law to officially move the capital from Jakarta to an (output-based) since it incentivizes the production of undeveloped jungle tract in East Kalimantan, Borneo. water-intensive crops. The new capital will be named Nusantara and will replace 107. World Bank 2018. Jakarta as the capital in 2024. 108. FAO 2021. 74. World Bank 2021. 109. In South Asia, solar-powered irrigation is expanding 75. Woillez and Espagne 2022. rapidly as a replacement for fossil fuel irrigation and for 76. World Bank 2019. enabling irrigation access for those who may not have 77. World Bank 2021. it. More than 80 percent of solar-powered irrigation 78. Herrera-Garcia et al. 2021; Lall et al. 2020. pumps globally are in India, where federal and state 56 The hidden wealth of nations governments actively pursue solar-powered irri- 123. Ebadi, Russ, and Zaveri 2023. Before pollution can gation. They are keen to reduce energy subsidies be detected in groundwater, contaminants that for agricultural groundwater pumping, which are accumulate in the subsurface spread vertically threatening the financial viability of state power and laterally in the vadose zone, long before utilities (Bassi 2018) and increasing fuel import reaching the water table. As such, the amount of bills (Shim 2017). For example, electricity subsidies stored nitrate here provides a first glimpse into in Punjab comprised 61 percent of the state’s likely impacts on groundwater pollution over time. fiscal deficit in 2018–19 (Economic and Statistical 124. Analysis done for this report based on Dalin et al. Organization, Government of Punjab 2020). (2017) and using the new groundwater typology. 110. Balasubramanya et al. 2023. See Wada (2023). 111. While low buyback prices may be a factor, it is not 125. Dalin et al. 2017. clear that this would happen with higher prices 126. Sekhri (2022) shows that trade promotion through since pump owners often sell water to other Agricultural Export Promotions Zones–AEZs in farmers (Balasubramanya et al. 2023). India led to increased extraction of groundwater 112. Balasubramanya et al. 2023. and increased groundwater declines in areas 113. Balasubramanya et al. 2023. officially considered overexploited with high social 114. 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At the global level, groundwater can buffer a third of the losses in economic growth caused by droughts and can protect cities against day-zero-type events. It is espe- cially important for agriculture, where groundwater can reduce up to half of the losses in agricultural productiv- ity caused by rainfall variability. By insulating farms and incomes from climate shocks, the insurance of ground- water translates into protection against malnutrition. In contrast, the lack of access to shallow groundwater increases the chances of stunting among children under five by up to 20 percent. In Sub-Saharan Africa, untapped groundwater irrigation potential could be key to improving food security and poverty reduction. Little land is irrigated there, but local shallow aquifers repre- sent more than 60 percent of the groundwater resource, and 255 million people in poverty live above them. But depletion, degradation, and competition for groundwa- ter threaten its sustainability and availability for future generations. Greater understanding of groundwater’s benefits and costs informs the report’s policy frame- work and recommendations. The findings also reflect on the issues policymakers confront when attempting to align the private and social costs of groundwater use. A central message of The Hidden Wealth of Nations is that action is needed: groundwater needs to be a polit- ical priority and should be carefully managed through integrated cross-sectoral action to benefit society, the economy, and the environment.