Unpredictable water supplies and difficulties financing water infrastructure could constrain Thailand’s push into high-tech manufacturing, a UOB Thailand executive and a United Nations environment official told a sustainability conference.
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Thailand’s expansion into data centres and electronics manufacturing is increasing the need for reliable water supplies, adding to competition with agriculture, said Chow Wong Yuen, Chief Sustainability Officer at UOB Thailand.
But projects that protect businesses and communities from water shortages or floods can struggle to attract bank financing because their wider economic benefits do not necessarily generate dependable revenues, he said.
“When it comes to bankability, the central financing problem for both water resilience and water treatment projects is that they have huge economic value, but this value cannot be translated into predictable cash flow,” Chow said.
He was speaking at the opening plenary of Unlocking capital for sustainability Thailand, held in Bangkok on 23 September, which examined how water governance affects economic resilience.
Chow, who also heads financial institutions at the bank, said Thailand’s shift from agriculture towards automotive manufacturing and, more recently, high-tech industries had changed the demands placed on its water resources.
Investment in data centres, printed circuit board manufacturing and electronics was concentrated in the Eastern Economic Corridor, a manufacturing hub spanning three provinces, he said.
Those industries require reliable supplies for cooling and production, while agriculture remains a major water user, creating potential competition over access, he added.
Chow said the pressure would encourage greater attention to irrigation efficiency and cooling systems that do not use water. For lenders, however, the immediate challenge was establishing how water projects would repay their loans.
A household backup water tank illustrated the problem, he said. Owners incur costs to keep it available, but its use depends on interruptions to the main supply, making revenues based on water consumption difficult to predict.
Flood protection presents a different financing challenge: a seawall can benefit numerous businesses and communities without a clear mechanism for determining who pays, he said.
By comparison, power purchase agreements give lenders standardised contractual terms against which they can assess solar projects and model repayments, Chow said.
Water financing also raises questions about lenders’ rights if a borrower defaults or authorities redirect supplies during a drought, he added.
He called for water contracts with minimum purchase commitments from industrial users, alongside government guarantees that could support continuity if a project owner withdrew. Blended finance and renewed public-private partnerships could also help fund water infrastructure.
Chow Wong Yuen, Chief Sustainability Officer at UOB Thailand (left), Kate Lazarus Senior Environment, Social and Governance (ESG) Advisory Lead for Asia Pacific, International Finance Corporation (centre) and Sudhir Sharma, Regional Coordinator for Finance and Economic Transformation at the United Nations Environment Programme (right), speking at the opening plenary of Unlocking capital for sustainability Thailand, held in Bangkok on 23 September. Image: Eco-Business
Sudhir Sharma, Regional Coordinator for Finance and Economic Transformation at the United Nations Environment Programme (UNEP), said investment decisions also needed to account for the ecosystems that provide water.
“We don’t look at the supply infrastructure. Where does the water come from? And that’s where addressing ecosystem becomes important,” Sharma said.
Water planning often assumes supplies are available and focuses on collecting, treating and distributing them, he said. Ecosystem degradation, pollution and climate change can undermine that assumption by reducing both the quantity of water and the amount suitable for use.
Competition between users would intensify if those pressures were left out of investment and planning decisions, he said.
Sharma said water pricing needed to reflect expenditure on ecosystem protection, adaptation and cleaning up rivers, as well as the infrastructure used to deliver supplies.
“If that price is not factored in, it is going to have a very significant negative impact, not necessarily in terms of the cost paid by users, but it will be cost paid by economic loss,” he said.
He called for better coordination within Thailand, more efficient water use and greater disclosure of information, alongside cooperation with neighbouring countries on shared water risks.
Cross-border pollution and flooding required common standards, compatible information and connected early warning systems, Sharma said. He pointed to UNEP’s work with Asean on harmonising standards as a basis for further cooperation.
For banks, Chow said, the financing test ultimately remained whether tariffs and savings for industrial users could support repayment under long-term contracts. For Sharma, those decisions also needed to account for the cost of maintaining the water sources on which the projects depended.
