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

Friday, March 29th, 2019 | 801 Views

A newly released report by the Economist Intelligence Unit (EIU) and commissioned by Cargill states that water scarcity could impact Asia’s economic development. Almost 90 percent of the respondents from the food and agriculture industry in the region agree with this, while 50 percent of the respondents in China “strongly agree”.

This report, titled Liquidity Premium, is the second part of a research program, Fixing Asia’s Food Systems, commissioned by Cargill and conducted by the EIU. 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 percent of respondents in both countries strongly agree that water scarcity could affect economic development, compared to 43 percent in Singapore, 44 percent in Thailand, and 60 percent for India.

Projections suggest 40 percent 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, etc.

Liquidity Premium was released in conjunction with the United Nation’s World Water Day on March 22, themed “Leaving No One Behind”. China also kicked off a “China Water Week” on this day to promote water saving and efficient management of water resources.

“Water scarcity is becoming a big challenge in Asia as well as China.  The world needs to feed nine billion people by in 2050, and most of the demand comes from Asia,” said Jerry Liu, China President of Cargill Inc. “Water saving and efficient management of water resources are importance so as to help the world get more ‘crop per drop’. And this requires the full participation of all parties, from government, enterprises, and each and every one of the public.”

To get more “crop per water”, The EIU report also recommends considering policies that encourage and optimise crop diversification, promoting virtual trade in water to maximise water-use efficiency, and investing in technologies and extension services that help to address water use-inefficiencies.

According to the report, for Asia to tackle the water scarcity problem, countries should revise water management systems and recognise the price and value of water. For example, they need to change the price of water to better reflect its economic value.

In addition, transparency and collaboration among the countries are needed to management potential tensions arising from water scarcity.