Water scarcity an opportunity to solution providers: JP Morgan

The growing issue of water scarcity in India represents an opportunity for companies positioned as “solution providers” said a report by J P Morgan

“Those with a product or service that either improves water efficiency, alleviates water stress, improves the availability of water or removes the need for water from a process entirely.” the report said

India has 18% of the world’s population but just 4% of freshwater resources. Following a period of drought, forecasts are for June to bring an above-normal 2024 monsoon. However, heavy reliance on seasonal rainfall makes the country particularly susceptible to climate change.


Elaborating on its theme, J P Morgan cites companies with businesses exposed to the water theme. These include firms which provide a product or service that either improves water efficiency, alleviates water stress, improves the availability of water, or removes the need for water from specific processes entirely.

The report notes that pressure on agricultural water is also mounting. India is already the world’s largest user of groundwater for example, exceeding the use of the US and China combined. However, the UN estimates that 78% of wells in Punjab, which together with the state of Haryana produces 50% of the country’s rice supply and 85% of its wheat, are overexploited and that the north-west region as a whole will experience critically low groundwater availability by 2025

India has the largest irrigated crop area in the world, with over 8m hectares of irrigated farmland. Innovation in irrigation such as drip irrigation has huge water saving potential, contributing to estimates for 10.9% CAGR in the Indian irrigation market between 2023-2028 as highlighted by the ministry of commerce and industry.

In the power sector, 40% of India’s power plants are located in water-scarce areas. However, projections made by the World Resources Institute show that more than two-thirds of India’s power plants will face high water stress by the end of the decade.

Water challenges in the power sector have already had a meaningful financial impact with 14 of India’s top 20 largest thermal power utility companies having experienced at least one water-shortage related disruption between 2013-2016, costing more than US$1.4bn in total potential revenue. This makes water shortage the fifth most frequent reason for forced outages in Indian thermal power plants during that time, J P Morgan said.

The report also noted that shifting to water-free renewable sources of power such as solar PV will also likely play a long term role in reducing pressure on freshwater supplies in India. For example, under the IEA STEPS scenario, significant decreases in water withdrawals from nearly 15BCM to less than 7BCM in 2040 by the power sector are projected, due to an increasing share of power from renewables and more regulation on water use in thermal plants.