A method of attributing a financial value to water is needed to allow individuals, investors, banks and governments to appraise and understand their water resource, according to RICS' information paper which was launched today (January 17, 2010).
A universal method for attributing value to water as a separate resource has never existed. However, population growth and burgeoning levels of food production mean that the world's water resources are becoming increasingly valuable. By ascribing a financial value to water, the commercial sector would be encouraged to manage and develop the resource in a more positive way.
Currently, when buying or leasing a property or piece of land, water resource valuations are being carried out on an improvised basis, or indeed not at all, due to the lack of a definitive methodology. However, the nature and availability of water resources could have a considerable impact on the value of property. RICS would like to see a standardized approach to ensure valuation accuracy and bring about a step change in attitude as to how water is both used and managed.
Hugh Fell, FRICS, primary author of the paper, said: "This paper is the first of its kind to suggest placing a value on the world's most precious resource, water. Population growth and the dramatic rise in demand for food has led to a growing requirement for water and placed a serious strain on resources. The economic value of water will, undoubtedly, become increasingly important in an environment of heightened awareness and security of supply.
By launching this paper, we are highlighting the fact that water is a separately identifiable asset that has a financial value. Once a monetary value is placed on the resource, and people begin to understand its true worth, it is likely that the commercial and financial sectors will sit up and take far more notice of this valuable resource."