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This report focuses on the urban water management challenges facing cities across OECD countries, and explores both national and local policy responses with respect to water-risk exposure, the state of urban infrastructures and dynamics, and institutional and governance architectures. The analyses focus on four mutually dependent dimensions – finance, innovation, urban-rural co-operation and governance – and proposes a solutions-oriented typology based on urban characteristics. The report underlines that sustainable urban water management will depend on collaboration across different tiers of government working together with local initiatives and stakeholders.

The chapter outlines the potential benefits of innovative approaches to urban water management, as well as barriers to their implementation. It covers both technical and non-technical innovation and shows that innovation does not need to be high-tech. It pays particular attention to green infrastructures, smart water systems, distributed infrastructure and urban planning: innovation in these areas can contribute to urban water security, with appropriate business models, at least cost for the communities.

This chapter explores governance arrangements to manage water in cities in OECD countries. Building on previous OECD work on water governance and on two OECD surveys carried out in 2013-14, it identifies governance gaps to urban water management, trends in institutional organisation and policy tools to address them.

As most cities share water basins with rural areas, an efficient and environmentally sensible urban water management system needs to consider the interplay between urban and rural water uses.

OECD cities usually benefit from high levels of protection against water risks and most city dwellers have access to reliable water services. At the same time, OECD cities face significant challenges to protect inhabitants from risks of floods, droughts or deteriorating water quality resulting mainly from urban growth, competition among water users, urban and agricultural pollution and climate change. They also face particular challenges due to ageing infrastructures and the need to adapt existing assets: most OECD cities need to transition from an era of exploiting existing infrastructures to one of building new assets and inserting such assets in existing environments.

Cities in OECD countries have not solved water management. While they currently enjoy relatively high levels of protection against water risks, they face disquieting challenges, including the proven difficulty of upgrading and renewing existing infrastructures, and heightened uncertainty about future water availability and quality. Cities in OECD countries are entering a new era, characterised by the need to retrofit existing assets into more adaptable infrastructure, by different combinations of financing tools and by new roles for stakeholders in water management. The transition to this new era requires co-ordinated action among central governments, local authorities and a variety of private actors.

This chapter examines the main water-related challenges facing cities in OECD countries now and in the future. Central to these challenges are the risks associated with water abundance, water scarcity, water pollution, water ecosystem resilience and the distinctive ways in which cities in OECD countries have managed these risks so far through infrastructures and governance. The chapter proposes a framework to analyse policy responses to these challenges, combining four dimensions: financing, innovation, urban-rural interface and governance. Subsequent chapters explore each dimension further.

This chapter examines the challenges related to financing urban water management. Several factors drive financing needs up when traditional sources of finance are constrained. For example, declining water use per capita in several city centres can positively affects water conservation, but negatively affects revenues from water tariffs, as well as the service provider’s financial capacity to operate and maintain the existing infrastructure.

Cities are major contributors to national economies and play a key role as nodes in global markets. But cities can only develop sustainably when they provide reliable water supply and sanitation services to city dwellers and manage risks of too much, too little or too polluted water.