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DATA coming from the results of a recent global research showed that the Philippines will suffer an average annual gross domestic product (GDP) loss of 0.7 percent due to water risks such as droughts, floods, and storms. It also points out that the country’s agricultural and retail sectors could be hit hardest, and that these rising threats need to be tackled now with greater focus on water recycling, desalination, and smarter irrigation.

The report titled titled “Aquanomics: The economics of water risk and future resilience,” which was published by global professional services company GHD revealed that the agricultural sector in the Philippines is particularly vulnerable, with projected annual output losses of over 5 percent by 2030 and 8 percent by 2050. In 2020, the sector generated a gross value added (GVA) of about P1.78 trillion, equivalent to a 10.2-percent share of the country’s GDP.

Globally, the report revealed that floods and tropical storms are predicted to amount to over 90 percent of direct losses, or about US$89 billion between 2022 and 2050.

The study highlights the potential impact of extreme weather events on five critical sectors within the global economy: agriculture, banking and insurance, energy and utilities, FMCG and retail, and manufacturing and distribution. While these sectors are diverse, with very different types and levels of water risks, they are all expected to face significant output losses in the years up to 2050.

Storms are expected to have the greatest direct impact on the Philippine economy (US$47 billion), followed by floods (US$42 billion), and droughts (US$3 billion). This is the first time that the economic impact of these three types of events have been calculated at a GDP and sector level.

With about three million Filipinos currently relying on unsafe water sources, and seven million lacking access to improved sanitation, water supply and sanitation services, are a key focus.

Rod Naylor, Global Water Lead of GHD shares, “The Philippine Water Supply and Sanitation Master Plan calls for a total investment of around P1.1 trillion to achieve universal access to water and sanitation for all Filipinos by 2030. GHD partners with the country’s major water utility providers to achieve universal access to safe, sufficient, and sustainable water supply.”

No matter what size or sector, all businesses are dependent on water as they require it to function. This makes water a connector between sectors, crucial to enabling circular economies and global supply chains. It also means no sector is protected against operational disruption in the face of water-related disasters.

By focusing on economic impacts, as we have done with this study, we aim to help identify and unlock the social and environmental benefits of tackling water risk head-on. As well as highlighting risk, this study explores some of the ways in which our focus countries can adapt to change and build resilience in their water systems. With water risk on the rise, we need to adopt a proactive, holistic, and inclusive approach in understanding and addressing fast-developing challenges,” adds Naylor.

When it comes to flood management, the study indicates that investment needs to be targeted to building infrastructure in the right areas and working with nature to channel water away. This means carrying out flood studies and building infrastructure out of flood zones where possible—a challenge when retrofitting solutions in densely populated urban areas.

At GHD, we are focused on working with stakeholders to develop and implement integrated solutions to this challenge. This means understanding and optimizing the infrastructure already in place and collaborating with our clients and industry peers to consider different kinds of assets that work in harmony with communities and nature,” explains Naylor.

The Philippines is a tropical archipelago with more than 7,000 islands. Its extraordinary biodiversity is still preserved on many of the smaller islands. However, over 70 percent of its forest cover was lost over the last century. Levels of water pollution are very high in many places due to a lack of wastewater treatment, affecting the health of communities and ecosystems. Major infrastructure and population centers are located on the coastal plains, exposing them to flooding and storm events.

In 2013, Typhoon Haiyan (local name: Yolanda) killed 6,300 people and left 28,689 injured, 1.6 million homeless, and more than six million displaced. Typhoon Rai (“Odette”) in 2021 displaced 10.6 million people, with a death toll of 457, and showed the value of early warning systems and other disaster risk reduction measures put in place.

Although a minority have many options for avoiding these risks, adaptation options are limited for the majority due to their lack of resources. Despite the devastation brought about by frequent natural disasters, inadequate and intermittent water supply remains a challenge across the country. Around one in 10 Filipinos do not have access to improved water sources, with poorer communities being disproportionately affected.

With approximately 20 typhoons entering the country every year often bringing torrential rain and extreme flooding, the Philippines is ranked the fourth most affected country in the world when it comes to water-related disasters, and as global warming intensifies, extreme weather events are expected to increase, resulting in greater water risk to the country.

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