Is it worth investing in water in China, India?
June 21, 2010

Water may soon be one of the most precious natural resources China and India would fight over. The elixir of life, portable water is getting scarce as contaminants from flourishing factories flush out fish and agriculture in this region of 2.6 billion people. As a result, a recent report entitled World Water Markets by the Deutsche Bank estimates investments in providing people with pure, portable water to be Euro 400-500 billion (US$492-615 billion).  Since governments will not be able to raise the funding needed on their own, the report suggests governments enter into partnership deals with the private sector.

In adjudging which markets might be particularly attractive for investment, the report says that oil rich, arid, politically stable countries like Qatar, the United Arab Emirates and Bahrain would be the best places to invest in water. The Top 20 countries on the list also include two major industrial countries, Germany and the US, as well as two of the world’s most populous nations, India and China.

Fear of water scarcity recently led China and India to sign an information sharing agreement, where they agreed to inform of developments being made on rivers the two nations share.  The most recent controversy is over fear of China damming or changing the course of the Brahmaputra, a river that originates from Tibet and winds its way through the fertile plains of East India, merging into the Ganges to form a vast delta, the Sunderbans before flowing into the Indian Ocean. While China has already exploited the Brahmaputra at several points, damming it for power and a reduced carbon footprint, India which is highly dependant on the river for irrigation and transportation is worried over the consequences if the river runs dry Yet no formal treaty of water sharing has been signed between the two nations.

Besides ruining two large agrarian economies that are grain starved, water which is unevenly distributed across India and China is also causing social unrests. In India Coca-Cola which has a large plant in South India denied drawing huge amounts of water from underground tubewells, depleting water tables which farmers had depended on for decades. Southwest China, saw mass social uprisings as it experienced its worst drought in a century this year, prompting Premier Wen Jiabao to say that the country would face a test to meet its grain output target.

Water demand in the next two decades will double in India and rise 32 percent in China, according to the 2030 Water Resources Group, a research collaboration between the World Bank, management consulting firm McKinsey & Co. and industrial water users such as Coca-Cola.

China’s 1.33 billion people each have 2,117 cubic meters of water available per year, compared with 1,614 cubic meters in India and as much as 9,943 cubic meters in the United States, according to the Food and Agriculture Organization of the United Nations. The 1.2 billion people in India, where farmers use 80 percent of available water, will exhaust their fresh-water supplies by 2050 at the current rate, the World Bank estimates.


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