EIU Report:  Water Scarcity Could Impact Asia’s Economic Development

(Jakarta) March 22, 2019 – In conjunction with the United Nation’s World Water Day, the Economist Intelligence Unit (EIU), sponsored by Cargill, published a new report that focuses on water and how the agriculture industry correlate to its future state in Asia. The report states that water scarcity could impact Asia’s economic development.  Almost 90 percent of the responders from the food and agriculture industry in the region agree with this. 

This report, titled Liquidity Premium , is the second part of the research Fixing Asia’s Food Systems. The research, first released in September of 2018, explores a range of issues around food systems in Asia. The five-part research program builds on a survey of 820 industry leaders in the region along with desk research and expert interviews.

The worry about water scarcity is most acute in Indonesia and the Philippines, where 67% of respondents in both countries strongly agree that water scarcity could affect economic development, compared to 43% in Singapore, 44% in Thailand, and 60% for India.

According to the report, Indonesia is amongst top ten countries for people at risk for water insecurity as the country is ranked number four in water and sanitation index (total population lacking sanitation) as well as number six in flood index (expected population flooded). Indonesia is also mentioned as one of relatively water-rich countries that now faces water supply constraint due to poor water management.

“Water scarcity is becoming a big challenge in Indonesia. Similar with other parts of the Asia, the challenge is to keep up with the water demand as the population grows and the lifestyle in diet changes.” said Arief Susanto, Corporate Affairs Director of Cargill Indonesia. “Not to mention the water-related disasters that are happening in the country. This requires the full participation of all parties, from government, enterprises, and each and every one of the public.”

Projections suggest 40% of developing Asia will face severe water shortages by 2030, leading to critical supply-demand gaps.  The report cites several major issues behind this problem: Economic development driving demand for water, increasing sectoral competition for water; Agricultural use of contaminated water poses health risks to livestock and crops; over-exploitation and climate change, Poor management of water - water prices do not reflect its cost, and there is no incentive to pursue water efficiency; technologies are expensive.

According to the report, for Asia to tackle the water scarcity problem, countries should revise water management systems and recognize the price and value of water. In addition, transparency and collaboration among the countries are needed to management potential tensions arising from water scarcity.

Full report can be found here.