OSLO, Norway - The world must deal with climate change now or pay a much higher price later, the Organization for Economic Co-operation and Development said Wednesday.

In two decades, unchecked environmental damage could leave half the world's population without adequate drinking water, OECD Secretary General Angel Gurria said Wednesday.

"Climate change is mankind's most important challenge.'' Gurria said. "We know the enemy: It is named carbon.''

An OECD report on the environmental outlook to 2030, part of a series of reports compiled every five years, concentrates on climate change, water shortages, energy needs, biodiversity loss, transportation, agriculture and fisheries.

"Without more ambitious policies, increasing pressures on the environment could cause irreversible damage within the next few decades,'' the report said.

"The cost of inaction is high, while ambitious actions to protect the environment are affordable and can go hand in hand with economic growth,'' it said.

The report also stressed the need for a global response. Gurria urged the United States and developing countries with booming economies such as China and India to accept a binding international commitment to reduce global-warming gases.

"It involves that everyone participates,'' he said. "This is very important. We can't have anybody do a free ride.''

By 2030, the world's population -- currently about 6.5 billion people -- is expected to hit 8.2 billion, and the global economy could double in size, largely due to growth in countries such as Brazil, Russia, China and India, the OECD said.

Unchecked, energy consumption in those countries could be 72 per cent higher by 2030, compared with 29 per cent for all 30 of the OECD's member countries.

That would lead to a 38 per cent increase in carbon dioxide emissions by 2050.

However, it said emissions could be held to 2000 levels if Brazil, Russia, China and India, joined by all developed countries, take the necessary conservation steps.

The effect of those conservation measures would reduce the worldwide growth in gross domestic product by only two per cent between 2005 and 2030 while leaving a much healthier environment, it said.

The OECD said governments must adopt policies such as "green taxes'' to encourage sound environmental technologies and practices.

Developed countries much also help poor countries acquire green technologies, it said.