Urgent reforms to raise efficiency in the way water is used around the world are needed to avert serious shortages in the next decades, and markets in water can help, the OECD said on Wednesday.

In about 40 years' time more than four out of 10 people in the world may be living in river areas in the grip of severe shortage, it warned.

"Efficient use of water is essential, and pricing it properly can discourage waste," the Organisation for Economic Cooperation and Development said.

"Economic instruments such as water markets can help to achieve this in a flexible way."

The OECD, a forum and source of advice on policy in many fields for governments in advanced countries, was commenting on the release of a study it published called Meeting the Water Reform Challenge ahead of a world water forum in Marseille, southern France, on Tuesday.

The organisation warned that reform was needed urgently "if the world is to head off serious deterioration in the quality and quantity of water available."

OECD secretary general Angel Gurria warned that "without major policy changes, we risk high costs to economic growth, human health, and the environment."

But much could be done, he said. "Economic instruments like tariffs, taxes and transfers -- the 3Ts -- are powerful tools to ensure an efficient use of water."

The report pointed to some of the factors raising pressure on water resources, citing rapid urbanisation, population growth and changing economic dynamics for managing water supply.

Competition for the use of sources of water would increase because demand was forecast to rise by 55 percent up to 2050.

"By that time, 3.9 billion people -- more than 40 percent of the world's population -- are likely to be living in river basins facing severe water stress."

More than 240 million people, living for the most part in rural areas, would probably not have improved access to water by 2050 and nearly 1.4 billion people would not have basic sanitation.

Increased pollution from agriculture and poor treatment of waste would contaminate ground water, rivers and oceans.

"Governments should pay closer attention to the way in which their water, energy, agriculture and environmental policies interact," the OECD advised.