World Water Day at CERB – How do you prepare for future business risks?

With the advent of climate change, numerous uncertainties exist with respect to the climate change agenda for the entire world.  For Pakistan, which relies on water from the Indus River Basin for its entire water needs in a primarily agrarian economy, the premier risk exists in the uncertainty of supply from the Indus River Basin.  With the Indus River Basin, a number of threats related to upstream water management.

The geography of the Indus River Basin is such that it follows a mountain to reef approach as water flows from the glacial melt and monsoon flows from the mountainous regions in the north down to the coast of Pakistan. As the availability of water flow changes throughout the year, 120 million people in Pakistan face severe water scarcity during part of the year (Hoekstra, 2016). These numbers will undoubtedly increase, and it is expected that water availability will reduce to 1,000 m3 per capita per year by 2035 (WWF, 2012).

In terms of water use, 90% of the available freshwater in the country from the Indus River Basin and its tributaries is diverted for agriculture, supplying water to the largest contiguous irrigation system in the world. By 2025, 250 billion cubic meters (BCM) may be required for irrigation compared to the potential surface supply of 185 BCM. Supplementing with groundwater may increase this to 190 BCM. (Qureshi, 2011).

Farmers in Pakistan have long been supplementing water needs by boring wells for groundwater. This overexploitation of groundwater has reduced the water table significantly and the quality of available groundwater is also questionable since water from the Indus River to the canal system brings salts, of which about half are accumulated in the irrigated land and underlying aquifers. The increasing soil salinity “reduces the production potential of major crops by 25%.”

As the mainstay of Pakistan is the agrarian economy, and many of its exports rely on the agricultural base, there is a need to focus on how future business risk can be reduced from the reduced water supply. CERB’s survey on ‘Environmental Stewardship in the business sector of Pakistan’ identified how companies only a handful of companies ask their suppliers to quantify their inputs of water, fertilizers, and pesticides. Considering the impact of how reduced water will impact crop production and hence the value chain – companies which have started this process will face a lower risk in the future.

Examples exist of how both training of farmers and a requirement to document the inputs, has increased productivity and decreased freshwater input. Through an initiative by the WWF and Better Cotton Initiative, it was shown that cotton farmers in Pakistan reduced their use of water by 20 percent, pesticides by 18 percent and chemical fertilizer by 19 per cent across over 128,000 hectares by 2014.

A number of barriers exist for improving water use in the agricultural sector. On the policy forefront: there is the lack of both National Water Policy and a comprehensive groundwater policy. Other related environmental factors include deforestation and the pollution of freshwater from agricultural runoffs, which change the chemical composition of water in the lower Indus Basin affecting both the agricultural outputs and the ecological diversity of the basin. These are all business risks to be considered for future planning.