The Cost of Day Zero Events: What Are the Development Implications for Shocks in the City?

FIGURE ES.4: Rainfall and Migrants’ Education

6

Emigrants’ additional years of schooling relative to native population 4

2

0

−2

4 5 6 7 8 9 Mean annual rainfall, in logarithmic form

Source: World Bank figure based on analysis of demographic and economic data of 403 subnational regions covering 21 developing countries from Gennaioli et al. 2013 and climate data from Matsuura and Willmott 2018. Note: The figure shows that (internal) migrants originating from regions with higher average rainfall levels have higher years of schooling relative to natives in the place of origin. The size of the bubble is proportional to the population of the subnational region.

is mitigated, likely because agriculture and irrigation have adapted over time to these shortages. The presence of local employment opportunities for unemployed farm workers in rural areas is also found to be critical for mitigating low-skilled migration as a reaction to drier conditions. In sum, differences in economic structure, climate characteristics, and regional specificities caution against sweeping conclusions.

While much of what is written on the water–migration–development nexus focuses on how water shocks push people from rural areas into cities, very little is written on what happens when cities experience these shocks. Unprecedented urbanization rates, driven partially by the factors previously discussed, are causing some cities to expand faster than water and other critical services can sustain. These growing populations, coupled with a surge in per capita demand for water in cities, are expected to translate to an 80 percent increase in demand for water in urban areas by 2050. And climate change is altering the global hydrologic cycle, increasing the number of extreme episodes and making water supplies less predictable. Recent headlines from Chennai, Tamil Nadu, India; São Paulo, Brazil; and

Cape Town, South Africa show some of the world’s megacities are beginning to face day zero events whereby water supplies become threateningly low. Although these events have grabbed international attention, they are by no means unique, with scores of small cities throughout both the developed and developing world facing similar water shortages.

New research conducted for this report on the impact of day zero events finds that they are far more widespread than previously believed and that they have significant economic costs, slowing down urban

growth. Water shortages, and the resulting restrictions that are put in place to avoid day zero events, can be costly to people and to businesses. In Cape Town, ill-equipped households were forced to ration water to 50 liters per day. In São Paulo, water pressure in the city’s piped network was reduced, restricting water flow to businesses and households alike. Undoubtedly these types of restrictions translate into economic impacts, though the magnitude of these impacts has, until now, remained unexplored.

This report finds that such water shortages can significantly slow

urban growth, compounding the vulnerability of migrants. Depending on the size of the water shock, city growth can slow by up to 12 percent during drought years, enough to reverse critical development progress (figure ES.5). Thus, migrants who travel to cities to avoid the impacts of

FIGURE ES.5: Impact of Rainfall Shocks on City Growth Rates at Urban Water Points

Impact on city growth rates, % (Nighttime lights)

6 4 2 0 –2 –4 –6 –8 –10 –12 –14

–2 –3 –4 –5 –6 –7 Minimum size of water shock (3-year z-score) Dry water shocks Wet water shocks

Source: World Bank figure based on analysis using weather data from Matsuura and Willmott 2018; Nighttime Lights Time Series Version 4, from NOAA National Centers for Environmental Information, Earth Observation Group; and data on urban water sources from The Nature Conservancy and McDonald 2016. Note: Figure shows point estimates of the impact of increasingly large water shocks on urban economic activity with 95 percent confidence intervals.