ECONOMIC COST OF WATER SHORTAGE

RIZWANA BASHIR
Apr 06 - 12, 2009

Pakistan is going to face worst water shortage in future due to increasing demand and depleting water reservoirs with the passage of time. Water crises may cause irrecoverable economic costs. Actual economic impact depends on magnitude of water shortage, as it has its usage in agriculture, industry, drinking, and other consumption etc. According to a study, water availability per person in Pakistan today is 1,000 cubic metres, down from 5,600 cubic metres per person in 1947, which is the least level according to international standards, below which is considered chronic water shortage level.

Water crisis has already had serious consequences on economy by reducing the agriculture production in last few years. Water shortage made Pakistan import many agricultural objects like wheat, raw cotton, sugar, onion etc. creating imbalance in international trade. The increase in imports of textile is fundamentally due to the increase in import of cotton, which has shown a big increasing trend for the last few years, jumping to the largest part (almost 100%) in the year 2007-08.

Water shortages' adverse effects can be classified into three categories: direct effects, indirect effects, and induced effects. Initially, water-sensitive businesses are affected causing jobs and spending loss. This is termed as direct effect. As direct jobs and spending are reduced, supporting businesses lose demands. This implies an indirect effect causing jobs and spending reduced indirectly. As indirect jobs and spending are reduced, supporting businesses also affected begins to touch almost all industries. Businesses shift expenses toward more expensive water and also businesses reduce labor force in reaction to more costly water. People shift expenses toward more expensive water, reduce demand for other goods and services. Now, because our agricultural output is trimmed because of water shortage, as an induced effect raw material of businesses which largely comes from agriculture becomes expensive.

The total land area of Pakistan is approximately 310,322 square miles or 88 million hectares of land, of which approximately 20 million hectares are used for agriculture purposes. The river system of Indus and its branches provide Pakistan some of the most fertile land in the subcontinent. Under the Indus Water Basin Treaty of 1960 Pakistan has its control over the western rivers namely: the Indus, Jhelum and Chenab. But the water availability in our rivers is highly unreliable. The highest annual water availability in the recorded history 1922 to date was 186.79 million acre feet in the year 1959-60 as against the minimum of 95.99 million acre feet in the year 2001-2002. This includes the Kabul River contribution as well.

There were a number of projects initiated with the collaboration of international funding. But on grounds there had been no result in this regard. The projects like Clean Drinking Water for All (CDWA) had flopped due to lack of interest shown by the government. This project was about the supply of clean drinking water for every citizen of Pakistan, as this basic need is unavailable to a large percentage of population.

The only solution to protect the country from chronic water shortage is to store maximum water. There is a strong need of national consensus over construction of maximum water reservoirs so that maximum water should be stored for the future. This will also help Pakistan avoid serious consequences of global economic downturn. Water management and construction of reservoirs will enhance agricultural growth. Growth of agriculture sector will not only support local industry by providing raw material but also overcome the food shortage. There will always remain the need for foodstuff to feed the nation at least, and will save our precious foreign reserve on import of foodstuff. It will also help us overcome electricity shortage problem intensified these days leading to fading economic activity. Therefore, there is a need to divert the concentration towards water management and creation of reservoirs.