DESALINATION: Balancing the Socioeconomic Benefits and Environmental Costs

This research report explores the numerous benefits and costs of desalination as a means of producing potable water. Desalination refers to the process of removing salts and other impurities from water. There can be no human development without water, but can water scarce countries develop sustainably thanks to desalination? The answer to this question requires an understanding of how desalination works and under which circumstances its benefits can be maximized and its drawbacks attenuated.

Accordingly, this report has the following purposes:

1. Understanding desalination technologies and the economic, financial and institutional aspects of desalination assets
2. Deciphering the various socioeconomic benefits and environmental costs of desalination
3. Proposing a simple framework for the assessment of sustainability credentials of desalination assets

Desalination is one of the possible answers to global water challenges. As such, it has to be used strategically when conventional solutions to water scarcity are not sufficient. Desalination technologies can enhance prospects for sustainable development in certain regions in dire need of reliable water supply. The environmental drawbacks of desalination procedures can be partially mitigated by appropriate project design choices. Nonetheless, desalination also cannot substitute for the institutional capacity and political will to implement water efficiency measures or the social willingness to use water sensibly.

In practice…

Natixis has been active in the water desalination sector for more than 10 years, mainly in the Middle East, acting as a lender and financial adviser to large desalination projects in Oman, the UAE and the Kingdom of Saudi Arabia. Adel Elsoh, head of Infrastructure Finance META, highlights that “the bank has recently been involved in the structuring and financing of the first-ever sustainable loan for a water desalination project globally for the Taweelah Reverse Osmosis plant in the UAE. This project includes the construction of a photovoltaic power plant that will provide 30% of the project’s electricity capacity in the first ten years, demonstrating how the carbon impact of a desalination plant can be mitigated”.