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HomeIndiaHow the business of water scarcity can be tackled in India

How the business of water scarcity can be tackled in India

India is one of the 17 countries facing severe water stress. As the World Water Week comes to an end, this is what the state of climate financing looks like.

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After almost a week of highlighting solutions to mitigate an increasingly water scarce future, the World Water Week will draw to a close in Stockholm Saturday.

Pushing for inclusivity and investing in sustainable technology were among the key themes of WWW 2019, organised by the Stockholm International Water Institute. These ideas will also be key investor solutions to addressing the water challenge in India — one of the 17 countries facing severe water stress, according to the World Resources Institute.

The crisis is so acute that when the Narendra Modi government took charge for its second term in May, it made water conservation and management a key focus by merging several ministries into a focused one — the Ministry of Jal Shakti.

India has 4 per cent of world water resources with 16 per cent of the population. Groundwater accounts for 63 per cent of India’s water resources.

Water scarcity now affects over 50 per cent of the country’s population and could impact economic growth by 6 per cent, the NITI Aayog said in a report last year.

Just this year, Chennai, India’s sixth largest city, saw its reservoirs run dry due to low rainfall, rapidly depleting groundwater, rising heat and an inefficient water conservation and management system.

It is only one among 21 Indian cities facing a stark crisis.

With the WWW 2019 coming to an end, the state of climate financing in India bears analysis.

Investment requirement and commitments

Highlighting the massive investment opportunities to finance water and sanitation projects in the region, a Bank of America-Merrill Lynch report last month said India’s pipe water infrastructure programme will require up to $270 billion over the next 5-15 years.

Just on Thursday, the Asian Development Bank (ADB) announced its plans to lend $12 billion over the next three years for the Modi government’s new initiatives, including Jal Jeevan Mission, to tackle the water crisis.

In February this year, the European Union and India decided to invest €40 million in seven research and innovation water projects, including Ganga rejuvenation.

Last year, the Green Climate Fund (GCF) committed $43.4 million in India for ground water and irrigation projects in coastal states like Andhra Pradesh, Maharashtra and Odisha to help achieve the United Nations’ Sustainable Development Goal of clean water and sanitation in the region.

Central and state governments and global development agencies are clearly committing to financing certain projects to meet India’s vast investment requirement. However, this leaves space for private funds to play a key role in financing other projects.

Water projects in areas of sewage treatment, bulk water transmission, seawater desalination and river interlinking will require the most investment. Private players, though, are more willing to invest in smaller WASH projects — water, sanitation and hygiene — which involve lesser risk.

The government is considering public private partnerships to explore ways to encourage private investment in areas of BOT (build, operate and transfer), DBOT (design, build, operate and transfer) and the hybrid annuity model (HAM) in order to meet this demand.

Where do we go from here?

As India undertakes the massive task of addressing its challenges to walk towards a more water efficient future, it needs to look at two major aspects going forward.

Firstly, there is a need to improve efficiency in the agriculture sector. Agriculture irrigation accounts for a majority share of water consumption in India, so improving efficiency will help significantly.

And secondly, India needs to create innovative climate financing options. Many water projects are eligible for climate adaptation or climate mitigation funding from major development agencies — as seen in the GCF case. Government subsidies, tax breaks and insurance policies to deal with climate risks can be ways to bridge the financing gap for such projects.

Suhita Poddar is a former energy research analyst and a London School of Economics alumna, currently writing at the intersection of climate policy, sustainability and industry.

Also read: Modi govt’s promise of water for all faces monsoon challenge, infrastructural woes


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