Tackling Asia’s Water Challenges

By Cecilia Tortajada 18 October, 2018

Tortajada from the Lee Kuan Yew School of Public Policy calls for action from the investment community to help solve Asia's water challenges

USD4.3trn per annum is produced in 10 river basins in the Hindu Kush Himalaya (HKH) region; inaction would have grave consequences economically, socially & environmentally in the long run
Compared to the UK & US, market understanding of climate-related financial risks & perhaps opportunities for co's still have to be understood much better by the investment communities in Asia
A new era of water for growth calls for new strategies & new partners - the investor community has the potential to become a key partner in such times of change

Cecilia Tortajada was one of the four water experts/ laureates that we had the pleasure of hosting for the launch of our new report “No Water, No Growth – Does Asia have enough water to develop?”. During the launch week, we and the experts met investors, philanthropists, C-suite executives, journalists and NGOs at a variety of public and private forums where we discussed the report and the need to shift the conversation from access to clean water to water-nomics.

Hear from Cecilia on why the report matters and what needs to be done below.

Water for overall economic and social development, water for growth, is the focus of the latest assessment on Asia by China Water Risk (CWR).

The Hindu Kush Himalaya (HKH) hosts some of the highest mountains on earth & one of the most important water reserves in the form of glaciers, ice & snow

CWR, in collaboration with the Chinese Academy of Sciences, have prepared a comprehensive assessment on the possible economic risks in Asia due to impacts of climate change in the Hindu Kush Himalaya (HKH), the water towers of Asia. According to International Centre for Integrated Mountain Development (ICIMOD), the HKH hosts some of the highest mountains on earth and one of the most important water reserves in the form of glaciers, ice and snow. Climate change impacts in the region are very likely to exacerbate the already serious problems resulting from physical scarcity of water resources, mismanagement, acute pollution and over-exploitation of surface and ground waters.

The study focuses on 10 rivers and their river basins. These are: Amu Darya, Brahmaputra, Ganges, Indus, Irrawaddy, Mekong, Salween, Tarim, Yangtze and Yellow. These rivers originate in Afghanistan, Bangladesh, Bhutan, China, India, Myanmar, Nepal and Pakistan, and flow through Cambodia, Kyrgyzstan, Laos, Tajikistan, Thailand, Turkmenistan, Uzbekistan and Vietnam, with populations that reach more than one billion people.

USD4.3trn per annum, or 1/3 of the GDP in the HKH region is produced in 10 river basins

CWR discusses the material exposure of these 10 river basins. It is explained that USD4.3trn per annum, or one third of the GDP in the HKH is produced in these river basins. Implications of water scarcity and pollution on the economies in the region would be devastating. CWR’s study thus proposes that water is seen through the lens of economic development, or water-nomics, where water resources are managed considering the impacts they have on economic development and development is planned depending on the water resources available balancing competing needs. The objective: to produce higher GDP with less water, and create less stress on the existing resources.

“Inaction would have grave consequences economically, socially & environmentally in the long term”

Inaction would have grave consequences economically, socially and environmentally in the long term. CWR has thus initiated multi-stakeholder dialogues on water-nomics with decision makers, technopreneurs, tycoons, bankers and investors to discuss the risks the investment communities can face. The goal is to create awareness, promote investor’s contributors in basin stewardship and encourage business-unusual innovations in green finance to close mitigation gaps.

On this topic, the North American Task Force of the United National Environment Programme Finance Initiative (UNEPFI) has recognised the need to understand better the macro impacts of climate change on financial risk and on what would be specific debt sectors that would be impacted the most.

The Bank of England acknowledges that climate change will threaten financial resilience in the short-term, and prosperity in the long term. The banking sector in UK, representing approximately 11 trillion British pounds, recognises that approximately 70% of banks are aware of the impacts climate change can create in terms of financial risks. Responses have included the effects of the most immediate physical risks to their business models such as exposure to mortgages of housing in flood-prone areas or exposure of their investments in countries affected by extreme weather events.

In Asia, market understanding of climate-related financial risks & perhaps opportunities for co’s still have to be understood better by investment communities

In Asia, however, market understanding of climate-related financial risks and perhaps also opportunities for the companies still have to be understood much better by the investment communities.

If data and information are serious constraints in North America and Western Europe for better studies and forecasts, they are a much bigger problem in Asia.

Water is necessary for the domestic, agricultural, livestock and industrial sectors, also for the environment. Limited water because of quantity or quality can seriously constraint development. CWR calls Asia water-nomics a liquidity crunch as countries in the region do not have the water resources they require to continue grow at fast and disorganised pace. And this may mean that economic development models will have to be changed. A main challenge for every economy.

Among the rivers in the HKH, the Ganges, Indus, Yangtze and Yellow are the most important ones because of the populations and economies they support and that are in the order of 1.5bn people and USD3.8trn. Among the countries, it is China, India, Pakistan and Afghanistan the ones that need to maximise their water-nomics performance.

The Yangtze River is presented as an example where trade-offs are being decided on a win-win situation as much as possible. This is not surprising, given that the Yangtze River Economic Belt generates approximately 42% of GDP, one third of rice production, and 73% of hydroelectricity at the national level.

“A new era calls for new strategies and new partners”

Management of water resources, as argued in the study, is never about water: it is about socio-economic development and quality of life of populations affected. The way ahead is a more rational development, trade-offs, broader cooperation, inclusive governance and consideration of uncertainties not only from climate change but from global change. A new era calls for new strategies and new partners. The investor’s community has the potential to become a key partner in times of change.

Further Reading

  • Changing Perspectives: Report Launch At Asia Society – With water experts sharing their views at our Asia Society forum, China Water Risk’s Dharisha Mirando & Dawn McGregor recaps and explores how & why we have to start thinking about water differently
  • Hindu Kush Himalayas – Why The Third Pole Matters – What is the Hindu-Kush Himalayan (HKH) region and why does this “Third Pole” matter for Asia’s economy? How we can protect the region better? We sat down with Dr David Molden, the Director General of ICIMOD, to find out more
  • Water Rights In China: 4 Years On – 4 years on, what is the status of the water rights trading system in China? Find out in our in-depth interview with Prof. Jia Shaofeng, the Deputy Director of the Center for Water Resources Research at the Chinese Academy of Sciences
  • Hong Kong Green Finance Association Launch: Key Takeaways – What is the Hong Kong Green Finance Association and how can it aid China’s Belt & Road Initiative? China Water Risk’s Dharisha Mirando shares 3 key takeaways from the launch
  • New Report: Does Asia Have Enough Water To Develop? – Since our economy runs on water, no water means no growth but there is little conversation on this topic in Asia. To catalyse such conversations, this report provides an overview of the water-nomic challenges facing Asia
  • New Tech & Policy For Climate Resilience: 3 Takeaways – Experts say new tech needs policy support at an interdisciplinary forum for climate resilient urban water systems, hosted by the Centre for Water Technology & Policy of the University of Hong Kong. Check out three key takeaways from China Water Risk’s Chien Tat Low and Woody Chan
  • Green Financing For Climate Resilience – We sat down with Dr Christine Chan from the Climate Bonds Initiative working group to get the latest on green finance globally & in China. How have China’s green bonds been received? What is next for investors?
  • Water Risk Valuation – What Investors Say – See what 70+ investors have to say on different valuation approaches we applied to 10 energy stocks listed across 4 exchanges. Is there consensus? What are they most worried about?
  • Managing the World’s Liquid Asset – Water – Savvy investors now recognise water as a business risk yet there is still no agreed global standard & framework for sustainability reporting. Biswas, Tortajada & Chandler on why corporates & governments must do more to change the culture & mindset over the use of water
  • Water-nomics: Trade-offs Along The Yangtze – With significant economic, water use and pollution disparities along the Yangtze River, China Water Risk & the Foreign Economic Cooperation Office of the Ministry of Environmental Protection, publish a joint brief to explore strategies to find the right development mix. Check out some of the key findings in this review
Cecilia Tortajada
Author: Cecilia Tortajada
Dr Tortajada is a leading international authority on urban water and wastewater management. She currently focuses on ensuring water future in terms of food, energy and environmental governance and ensuring water security through coordinated policies, which include water and natural resources management and water reuse. Dr Tortajada has advised major international institutions like FAO, UNDP, JICA, ADB, OECD, IDRC and GIZ, and has worked in numerous countries in Africa, Asia, North and South America plus Europe. She received the prestigious Crystal Drop Award and has been the only woman President of the International Water Resources Association during its 50 years of history. Dr Tortajada is currently a member of the OECD Initiative on Water Governance and juror for the Finnish Academy’s Euro One Million Millennium Technology Prize. She is also the Editor‐in‐Chief of the International Journal of Water Resources Development; Associate Editor of Water International; member of the Editorial Boards of the International Journal of Water Governance, Journal of Natural Resources Policy Research, and Urban, Planning and Transport Research Journal; as well as Editor of book series with Routledge, Springer and Oxford University Press. Cecilia has also authored and edited over 40 books by major international publishers. Her work has been translated into Arabic, Chinese, Farsi, French, German, Hindi, Japanese, Mongolian and Spanish.
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