The report coincides with World Water Week, a yearly event by the Stockholm International Water Institute to highlight the global challenges linked to water.
The 167-page publication, Water Security for Better Lives, calls on governments to speed up their efforts to enhance the effectiveness of water management systems and curb the fallout from increased global demand, and shortages and floods caused by climate change.
The OECD said that by 2050 40% of the world's population will live in areas of severe water stress.
The global population is expected to reach 9 billion by 2050, putting ever-greater pressure on supply chains that could lead to shortages. Nearly 20% of people could be exposed to floods, the influential Paris-based think tank added.
Globally, the OECD puts the value of the property at risk from floods at some €35 trillion by 2050.
In Europe, water risks came to the fore in the summer of 2013 as much of the continent suffered severe flooding. The overflowing Elbe, Danube and Vltava rivers caused an estimated €3 billion of damage in Germany, the Czech Republic and Austria. Hungary, Poland and Slovakia were also affected.
Following the floods, the European Environmental Agency (EEA) predicted a rise in extreme weather events due to increased population, land-use change and climate change, among other factors.
To the OECD, governments need to take action now.
“Instead of just reacting to water crises, governments must assess, target and manage water risks proactively,” OECD Secretary-General Angel Gurría said in a statement. “We have been forewarned - there is no doubt these risks are increasing. We must now arm ourselves with risk management strategies that will prevent water shortages and pollution and protect against the droughts and floods that are endangering human lives, ecosystems and economies.”
The OECD cites programmes introduced in France in 2002 to prevent flood risk through contracts between central and local governments.
In the geographically diverse central European country, risk prevention plans pinpoint the natural hazards in a given territory based on scientific and local historical data. These assessments, which may include a cost-benefit of potential floods, are attached to land planning documents.
The OECD also flags inadequate water quality as a risk for the European Union, calling for member state compliance with all EU-level standards, for example on chemical substances.
“More stringent requirements are needed for particular uses, such as specific protection of unique and valuable wetland habitats, protection of drinking water resources, and protection of bathing water, for which specific protection zones must be designated,” the report says.
The OECD again makes specific reference to France, which has taken steps to protect drinking water quality, where the protection of water sources is seen as more cost-effective than end-of-pipe water treatment.
For example, the municipality of Lons-le-Saunier, a town of 20,000 people in the eastern Jura department, began in 1996 to introduce financial aid for farmers working a certain distance from water extraction points. The aim was to deter them from growing maize, make less use of pesticides and other products, cover the soil and leave more grassed strips, which all came at a cost of just €0.01 per m3 of water distributed. French farmers are also subject to a pesticide tax.
EU regulation on water quality presumes that all groundwater should remain unpolluted.
Last year, the European Commission released a water blueprint calling for stronger enforcement of the then 12-year-old Water Framework Directive amid reports that many national governments were not living up to their commitments.
The blueprint was released a day after the EEA reported that 48% of streams and lakes in the EU will fail to be of ‘good ecological status’ by 2015 as required by law, and criticism from environmentalists that national governments flaunt their obligations under the water directive.
The EU also supports water and sanitation in the developing world, through a series of measures. These include the €212 million Water Facility, a programme focusing on the most vulnerable people in urban areas and suburbs in the African, Caribbean and Pacific states.