Water Security is Asia and the Pacific’s Next Financial Imperative

By Vivek Raman 22 September, 2026

Water insecurity has become an economic risk, so ADB's Raman explains why APAC must move beyond "laying pipes" to ensure resilient, equitable & effectively governed water systems

Asia and the Pacific has achieved one of the most significant water security gains of the past decade. According to the Asian Development Bank (ADB)’s Asian Water Development Outlook (AWDO) 2025, 2.7 billion people or 60% of Asia and the Pacific’s population have been lifted out of extreme water insecurity since 2013. This is a major achievement, built through years of investment, reforms, and efforts across the region.

But the work is far from over.

AWDO 2025 shows that, though many now have basic access to water and sanitation, around 4 billion people still live with unreliable services, poor water quality, declining ecosystems, or growing exposure to floods, droughts, and storms. Around $250 billion every year will be needed for water, sanitation, and hygiene investments between 2025 and 2040. Current budgets meet only about 40% of that need.

Infrastructure alone cannot achieve water security…

…water systems must be reliable & resilient in changing climate

This is why water security can no longer be seen only as an infrastructure issue. Pipes, pumps, treatment plants, and drainage systems remain essential, but infrastructure alone is not enough. What matters now is whether water systems are reliable, well managed, financially sustainable, and resilient in a changing climate.

For governments, businesses, and investors, this makes water security a financial issue.

Whether through floods that damage cities, factories, farms, and transport systems, or droughts that disrupt food production and energy supply, water risks quickly become economic risks. When water services are unreliable, businesses face higher costs and households face greater insecurity. When rivers, wetlands, and groundwater systems are degraded, the costs eventually show up in public budgets, utility operations, health systems, and supply chains.

The solution is not only to spend more. It is to spend smarter!

First, we need smarter financing. Public resources alone will not close the gap. Instead, public resources need to be used in ways that reduce risk and attract more private capital. But finance must also shift from funding infrastructure alone to funding outcomes. Blended finance, green bonds, sustainability-linked financing, and other risk-sharing tools can help, but the test should not be whether money was spent or assets were built. The test should be whether investments improve reliability, resilience, efficiency, inclusion, and ecosystem health.

Reducing leaks & digital monitoring can deliver significant gains

Smarter financing also means getting more value from existing systems. Reducing leaks, cutting non-revenue water, improving maintenance, using digital monitoring, and reusing wastewater where appropriate can deliver significant gains without always requiring large new infrastructure. Businesses also need to treat water risk as a core business risk, because water stress, flooding, drought, and ecosystem degradation can affect operations, supply chains, insurance costs, and long-term investment decisions.

Second, we need better policies. Water systems must be inclusive, efficient, and financially sustainable. That means improving cost recovery while protecting poor and vulnerable households. It also means restoring and conserving ecosystems, reducing waste, and applying circular approaches such as reuse and recovery where they make sense.

Strong & inclusive governance can ensure water systems adapt over time to provide water security

Third, we need stronger governance. Water security depends on local institutions that can plan, operate, maintain, and adapt systems over time. It also depends on social inclusion, so that women, poor communities and vulnerable groups are not left behind. The focus must shift from building infrastructure alone to building resilient systems that are governed effectively and delivered fairly.

One of the clearest messages from AWDO 2025 is that nature itself is part of water security. Rivers, wetlands, forests, aquifers, and watersheds help store water, reduce floods, filter pollution, and support livelihoods. When these systems decline, the cost does not disappear. It is transferred to households, businesses, utilities, and governments.

Degraded ecosystems are hidden liabilities

Environmental water security has now become one of the region’s most serious challenges. Across Asia and the Pacific, more than half of the economies saw environmental health decline or stagnate. Ecosystems are under pressure from pollution, land conversion, overextraction, and unchecked development. This matters to finance because degraded ecosystems are hidden liabilities. They increase the cost of treating water, managing floods, sustaining agriculture, and recovering from disasters.

The solution is clear: shift from financing water infrastructure to financing water security.

In conclusion, AWDO 2025 offers a message of cautious optimism. Asia and the Pacific have shown that progress is possible. Billions of people have moved out of extreme water insecurity in just over a decade. But climate risks, ecosystem decline, and underinvestment could reverse these gains if the region does not act differently.

Water security is no longer only a public service challenge. It is a matter of economic resilience, business continuity, and long-term financial stability.

For Asia and the Pacific, investing wisely in water is not optional. It is a financial imperative.

Further readings

• Financing Glacier Bonds with ADB’s Noelle O’Brien – With a US$100mn bond for glaciers now launched, O’Brien shares that ADB is on a mission to translate cryosphere risks into bankable opportunities
• A Conversation with ADB’s Yasmin Siddiqi on “Glaciers to Farms” – How are Central & West Asia adapting to disappearing glaciers? We ask ADB’s Siddiqi about their US$3.5bn project to support agriculture, disaster readiness & water security in the region
• Water in the Global Goals for Adaptation – Why It Matters – World leaders at COP30 will finally decide on how to measure climate adaptation. Which metrics will make the cut? Get the inside scoop from Hu, member of the UN’s technical expert group, on where water & ice fit into this evolving agenda

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• Financing Resilience at Scale: Water Conservancy REITS & Water Asset/Revenue Backed Securities – Find out how Asia can unlock trillions of dollars in water resilience investments by scaling China’s financing innovations in CWR’s new white paper with HSBC & HKGFA
• Coastal Water Security: 3 Things to Know and 3 Must-do’s About Saltwater Intrusion – Saltwater intrusion not only causes coastal water insecurity during typhoons, but also poses long term risks – CWR’s Cai demonstrates how this threat unfolds and how we can prepare for it