South-east Asia in better position to scale investments in water: Tharman
His comments come as experts advocate for the creation of a new economy that recognises the full value of water and its governing as a global common good
SOUTH-EAST Asia is in a better position than some other parts of the world, being ripe for innovation and ready to scale up the investment needed to address the water crisis, said President Tharman Shanmugaratnam.
His comments came as the Global Commission on the Economics of Water – co-chaired by Tharman – released a report on Thursday (Oct 17) advocating for the creation of a new economy that recognises the full value of water, and how the resource should be governed as a global common good.
The combined effects of changing precipitation patterns and global warming, along with declining total water storage and lack of access to clean water, could lead the economies of lower-income countries to shrink by between 10 and 15 per cent by 2050, estimated the report.
The economies of high-income countries are projected to contract by 8 per cent by 2050.
Fundamental in addressing the water crisis would be to correctly price this natural resource, and allocate subsidies where it is used efficiently and can be accessed by everyone.
The underpricing of water is one of the factors weakening the investment proposition for the water sector, said the report. Investors have also been deterred by the high upfront investments and long payback periods typically required in water infrastructure, without the regulatory consistency that is needed to reduce risks.
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Among its various recommendations, the report highlighted the need to scale up both public and private financing in the water economy.
This could be in the form of governments reprioritising investments in water through public finance, repurposing environmentally harmful subsidies, or providing for realistic tariff adjustments and greater regulatory certainty.
Multilateral, regional or national development banks should also play a stronger catalytic role in mobilising vastly greater amounts of private finance, including patient, long-term finance for water infrastructure projects, the report noted.
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Partnerships involving development finance institutions and national authorities could be established to build capacity and mobilise investments for low and lower-middle income countries, by leveraging concessional finance and pooling risk through bundling projects across sectors, added the report.
“We have to recognise that there is a large pool of private capital that can be tapped to solve this problem, and it requires that we find creative ways of bringing together public and private finance, so as to lower risk and lower the cost of capital, so that finance is for solutions that are both affordable to users – be they farmers or industry – but also provide a decent rate of return,” said Tharman during a media briefing.
And South-east Asia, which is made up mainly of emerging economies, is more ready to utilise these financing mechanisms than other parts of the developing world, he noted.
The region is also ready to move ahead on the innovations required in rice cultivation.
“We have to start implementing new strains of rice coming out of life science research that leads to them being far more resistant to climate change. And we’ve got to find ways in which we raise yields at the same time – farmers yields, including yields for smallholders,” said Tharman.
Transforming the agricultural sector to reduce its reliance on large quantities of water and improve water productivity is one of the five main objectives set out in the report.
The other four are to conserve and restore natural habitats; establish a circular water economy; enable water-efficient clean energy systems; and ensure no child dies from unsafe water by 2030.
Tharman said that transforming food systems – including how food is produced and what types of food are consumed – is the most important goal out of all five goals.
Speaking during an event where the report was launched, Tharman gave the example of how the Green Revolution during the 1960s lifted millions out of poverty with better irrigation systems, the use of pesticides as well as nitrogen-based fertilisers.
However, these earlier innovations are no longer sustainable today.
“So we’ve got to go to alternative ways in which we can practise agriculture, both to address greenhouse gas emissions and to address the challenges of the global water cycle,” he said.
The need for emerging markets, including those in South-east Asia, to intensify water investments is especially urgent, considering that these regions tend to face more devastating consequences from the water crisis.
While 50 to 100 litres of water per person, per day is required to meet essential health and hygiene needs, the report suggested that to live with dignity – which refers to having adequate nutrition and consumption – the minimum amount should be increased to about 4,000 litres. Food consumption accounts for 3,800 litres, domestic use is 50 litres, while industry takes up 322 litres.
The report noted that freshwater availability is increasingly at risk, given how the earth’s freshwater ecosystems have been damaged and contaminated after decades of mismanagement. The degradation of these systems, in turn, becomes a driver of climate change and biodiversity loss.
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