Water management: the cornerstone of sustainable economic growth in Asia?

Investing in water is key to unlocking sustainable economic growth; a fact which has been especially pronounced in Asian countries undergoing rapid expansion. Singapore’s first Prime Minister, Mr Lee Kuan Yew, made water a top priority in the early years of the Republic of Singapore, recalling “every other policy had to bend at the knees for water survival”. Water supply has also been a driving factor of development in Korea, with its first 10-year plan for water resources development dating all the way back to 1965, decades prior to the inception of World Water Day.

60 years later, Asian economies remain highly aware of the links between water management and sustainable economic growth. In 2022, Thailand's National Dialogue on Water explored how water demand and supply strategies need to be in place to enable the development of new regional growth hubs, starting with the Eastern Economic Corridor. Indonesia’s National Development Planning Agency recognised water as a key factor in its goal of becoming a top-five global economy, developing a comprehensive strategy to realise their ambitions.

Achieving economic growth also requires a careful consideration of expanding physical constraints on water availability. This year, World Water Day centers around glacier preservation, highlighting how the erosion of these vast freshwater, as a result of climate change, further risks global water security. In many Asian countries, this impact is acutely felt. Mongolia, which hosted a National Policy Dialogue on water over 2023-2024, has seen its glaciers shrink by 37% over the past 70 years.

To adapt, Mongolia is looking to invest in infrastructure to collect glacier meltwater, surface water and ice overflow. Infrastructure development will be essential, but it only forms part of the solution. The National Policy Dialogue on water explores how water demand management policies, water allocation and robust water information systems can help meet increasing water demand and enable sustainable economic growth. And all of this requires one crucial element: money.

In spite of the clear economic case, a lack of funding continue to be one of the key barriers in achieving sustainable water resources management worldwide, according to a 2024 UNEP report.

Statistics point to a clear fact: nowhere on Earth is water a better investment than Asia. Although it may have costed $5.06 billion to address water risks in Asia, the maximum potential impact of non-action nearly reached $132 billion in 2020.

How are the National Policy Dialogues on water in Asia helping to shape more sustainable and efficient water management solutions?

1. Increasing water supply is not only about increasing water supply and building reservoirs. Dialogues in Mongolia and Thailand highlighted that there are a range of policy tools, including water allocation, good basin planning, robust water information systems and economic instruments, all of which manage pressures from increasing water demands from different economic sectors.
2. While “cheap” water has a very high societal cost, water pricing remains one of the hardest reforms. Traditional funding mechanisms – Tariffs, Taxes and Transfers (“the three T’s”) are insufficient for covering provision of adequate WASH services whilst the challenges that need to be tackled call for different approaches. Mongolia offers a strong example, having successfully implemented water and pollution charges over the past decade.
3. Streamlining and introducing clear, well-coordinated mechanisms for economic regulation of water services is key. Economic regulation protects the public interest by making water service providers accountable for their performance, overseeing the sector and establishing an independent price-setting process. Several Dialogue countries are looking to strengthen economic regulation, such as Indonesia and the Philippines (where the creation of a centralised Water Regulatory Commission is under review), while Mongolia already has an established regulator.
4. There is a critical role of technical and non-technical innovation to help manage water more efficiently, including robust water information systems, smart metering and non-infrastructural measures for flood disaster risk reduction, such as early warning systems.

The case for investing in water has never been more urgent. World Water Day 2025 should provide us all with a powerful reminder that investing in water is not simply a choice, but a necessity for the future. The time is right to turn our thirst for change, into action.

The National Policy Dialogues on water are a joint initiative between the Ministry of Environment of Korea, Asia Water Council and the OECD. Indonesia, Mongolia, the Philippines, Thailand and Uzbekistan have hosted a Dialogue. National Policy Dialogues on water aim to support national governments in their efforts to reform policies that influence the availability, use and management of water. National Policy Dialogues are a structured, demand-driven process for stakeholder engagement supported by robust and tailored analytical work and lessons learnt from international experience.

OECD (2023), Water Financing and Disaster Risk Reduction in Indonesia: Highlights of a National Dialogue on Water, OECD Studies on Water, OECD Publishing, Paris, https://doi.org/10.1787/3205b20a-en.

OECD (2022), Managing and Financing Water for Growth in Thailand: Highlights of a National Dialogue on Water, OECD Studies on Water, OECD Publishing, Paris, https://doi.org/10.1787/839a4f70-en.

OECD (2022), Climate Tipping Points: Insights for Effective Policy Action, OECD Publishing, Paris, https://doi.org/10.1787/abc5a69e-en.