Unsustainable water use threat to China, India & Pakistan future

Date: 
May 15, 2012
Maplecroft 2012 water threat index map

The viability of water supplies throughout key regions of China, India, Pakistan, South Africa and the US are under threat from unsustainable domestic, agricultural and industrial demands, according to a new study that maps water use down to 10km² worldwide. 

The growth economies of China and India, and the world’s largest economy USA are identified by risk analysis company Maplecroft, in its newly released Water Stress Index, as having vast geographical regions and sector areas where unsustainable water use is outstripping supply.

Maplecroft’s states that the situation is so serious, it has the potential to limit economic growth by constraining business activities, as well as hampering agricultural outputs.

Resulting reductions in crop harvests in these countries will also negatively impact local food supplies and global food prices, while the socio-economic impacts of water shortages, especially in India and China, have the potential to create unrest and affect stability, as populations and business compete for dwindling supplies.

Water stress has major implications for global supply chains, especially within the major growth economies. According to the index, countries such as South Africa and Pakistan are at ‘high risk’ overall, but have large pockets of ‘extreme risk’ areas.

Investor avoidance

Investors in these countries, especially those in the water intensive mining sector in South Africa, need to take steps to ensure the long-term viability of projects and supply partners.   

Maplecroft has calculated levels of water stress in 168 countries by evaluating renewable supplies of water from precipitation, streams and rivers against domestic, industrial and agricultural use. The Water Stress Index also includes an interactive sub-national map, which has been developed to pinpoint areas of extreme water stress that pose significant risks to populations and business operations at a local level right down to 10km² .

The arid Middle East and North Africa region is the most at risk region in the index, with Bahrain (1), Qatar, (2), Kuwait (3), Libya (4) and Djibouti (5), UAE (6), Yemen (7), Saudi Arabia (8), Oman (9) and Egypt (10) categorized as the most water stressed countries.

However, the widespread use of irrigation for agriculture, combined with increasing domestic and industrial water demand in India (ranked 34th in the index), China (50) and the US (61) mean that increasing pressure is being placed on available water resources in these key economies, which may impact the wider world.

“Businesses should undertake impact assessment and monitoring of water stress and water security and other areas of risk that conflate with such pressures including food security, conflict and energy availability,” said Maplecroft CEO Alyson Warhurst. “Supply chain risk, if not managed strategically, can lead to business discontinuity and unforeseen costs that undermine the profitability of projects”.

China

The populous Northeast Chinese provinces of Beijing, Jiangsu, Shandong and Tianjin are all considered ‘extreme risk’ by the Water Stress Index, due to large scale economic growth and the rapid expansion of cities.

China is taking substantial measures to minimize the risks of water shortages in these provinces through the ambitious South-North Water Diversion Project, which has already cost $22 billion. This aims to pump water from the Yangtze River to Beijing through a series of canals to supply a quarter of the city’s water by 2014. However, due to spiraling costs and uncertainty over the future effects of climate change on water supplies in Southern China, doubts have been raised about the long term sustainability of the project, raising concerns for business with interests in the most water stressed areas.