Valuing Water for Food Security in Pakistan

Explore the economic value of water in Pakistan's agricultural landscape. Learn how effective irrigation policies can enhance food security, improve resource management, and support rural prosperity while ensuring equitable reforms for small farmers.

POLICY BRIEFS

Nadeem Riyaz

8/27/2026

What is a liter of water worth to Pakistan’s economy? It is a simple question, yet one that rarely receives the attention it deserves. National discussions about water typically focus on scarcity, declining groundwater levels, inefficient irrigation, climate change, and rising demand from a growing population. We measure how much water is available, but far less often ask how much economic, social, and nutritional value we generate from each drop. For Pakistan, this distinction is critical. Water is not merely a natural resource; it is an economic asset that supports agriculture, livestock, industry, households, employment, exports, and food security. Yet water is frequently treated as if it were virtually unlimited. This encourages waste and weakens incentives to invest in efficient technologies and better management.

The real challenge, therefore, may not simply be that Pakistan has too little water, but that it obtains too little value from the water it already has. World Bank assessments have highlighted Pakistan’s very low water productivity compared with major economies, with output generated per unit of water substantially below that of India, China, and the United States. For a water-stressed country, such inefficiency represents serious economic vulnerability.

This perspective changes the policy question. Instead of asking only how Pakistan can find more water, we should ask how existing supplies can generate greater value. Can the same quantity of irrigation water produce more food and farmer income? Can better irrigation reduce water use without reducing yields? Can water-intensive crops be shifted toward higher-value production? Can improved storage, processing, and markets increase the economic return generated from the water embedded in agricultural products?

Answering these questions requires moving from a “more water” mindset to a “more value per drop” approach. Water productivity should become a central indicator of agricultural performance and resource management. Every drop saved, every unit of output increased, and every additional rupee generated from water represents progress toward a more productive, resilient, and sustainable Pakistani economy.

From Free Water to Valuable Water: Rethinking Pakistan’s Water Economics

For decades, Pakistan has treated irrigation water primarily as a public input to be delivered to farms rather than as a scarce economic resource with competing uses and real opportunity costs. This perception creates a dangerous illusion: water may carry little or no effective market price for many users, but it is far from free. Canals, reservoirs, irrigation networks, and groundwater systems represent enormous public and private investments, while every aquifer depleted today reduces the resource available to future generations. Similarly, every liter allocated to one crop cannot simultaneously serve another crop, a household, an industry, an ecosystem, or a future period of drought. When scarcity has no visible economic value, incentives to conserve and use water efficiently remain weak.

Pakistan’s water policy has consequently focused heavily on the supply side, building, storing, conveying, and distributing water, while giving insufficient attention to the economics of demand. Yet every water allocation involves a choice and therefore an opportunity cost. Agriculture must remain a major beneficiary because of its importance to food security, employment, rural livelihoods, and exports. The more important question is whether each unit of water is generating sufficient economic and social value.

Traditional measures such as yield per acre and cultivated areas remain important, but they are increasingly inadequate in a water-stressed economy. Policymakers should also ask: How much income, food, employment, or economic value are we generating per liter of water? This perspective could fundamentally change how agricultural productivity is assessed.

Such an approach does not mean simply maximizing monetary returns. Food security, farmer welfare, rural employment, environmental sustainability, and ecosystem needs must also be considered. Nevertheless, water use cannot remain economically invisible. A crop may be profitable for an individual farmer while generating relatively low value per unit of scarce water at the national level.

The answer is not to impose blanket restrictions or dictate cropping choices. Instead, Pakistan needs incentives that reward water-efficient production, encourage high-value crops where appropriate, promote modern irrigation technologies, improve water accounting, and strengthen farmers’ access to information and markets. The objective should be clear: not merely to produce more from every acre, but to create greater economic and social value from every drop.

The Hidden Cost of Groundwater Depletion and the Need for Smarter Water Policy

Pakistan’s water challenge extends far beyond its rivers and canals. Beneath the surface lies an increasingly stressed groundwater reserve that has served as a critical safety net for farmers whenever canal supplies fall short. Yet this reserve is not limitless. In many areas, groundwater is being extracted faster than natural recharge can replace it. What appears to be an immediate solution, pumping more water to sustain another crop or overcome a dry spell, is gradually creating a much larger economic liability.

Declining water tables means farmers must drill deeper wells, invest in more powerful pumps, and spend more on energy to obtain the same quantity of water. Over time, continued depletion can reduce agricultural productivity, increase production costs, and threaten the availability of water for future generations. In economic terms, Pakistan is consuming its natural capital. Short-term agricultural gains are being achieved partly by drawing down an asset that cannot easily be replaced.

This makes groundwater depletion not merely an environmental concern but a major economic and intergenerational challenge. The true cost is not reflected in current crop prices or farm incomes because much of the depletion cost will be borne by future users.

Pakistan therefore needs to move beyond a water policy focused predominantly on expanding supply through dams, canals, and irrigation infrastructure. These investments remain important, but they cannot solve a problem driven increasingly by inefficient demand and weak incentives. Water-use decisions must reflect scarcity, opportunity costs, and long-term resource sustainability.

At the same time, simply increasing water charges or imposing rigid extraction limits would be neither practical nor equitable. Smallholders and large commercial farms do not have the same financial capacity, technology, or access to alternatives. A poorly designed pricing system could increase production costs without delivering meaningful conservation.

The better approach is to value water without simply treating it as a commodity. Valuation should incorporate its economic opportunity cost, environmental importance, scarcity, and contribution to future prosperity. Policies should reward efficient irrigation, groundwater recharge, water-saving technologies, and higher-value production. The objective is not to penalize farmers for using water, but to make using every drop more efficiently economically worthwhile.

A New Economic Approach to Water Management

Pakistan must gradually move from treating water primarily as a supply problem to managing it as a scarce and economically valuable resource. The first step is to change how agricultural performance is measured. Alongside acreage and yield per hectare, policymakers should track water productivity, the economic and social value generated from each unit of water used. Reliable data on crop water requirements, groundwater extraction, and returns per unit of water would allow farmers and policymakers to make better decisions.

The next priority should be creating stronger incentives for efficiency. Technologies such as drip and sprinkler irrigation, laser land levelling, improved irrigation scheduling, soil-moisture monitoring, and drought-tolerant varieties can significantly improve water productivity. Government support through targeted subsidies, concessional financing, technical assistance, and agricultural extension can help smaller farmers overcome the initial costs of adoption.

Groundwater management also requires urgent attention. In severely depleted aquifers, authorities should strengthen monitoring, improve information systems, introduce metering where technically and institutionally feasible, and encourage groundwater recharge. However, regulation must be gradual and accompanied by practical alternatives so that farmers are not suddenly deprived of essential irrigation supplies.

Agricultural policy must also begin recognizing the water requirements and economic returns of different crops. Rather than imposing blanket bans on water-intensive crops, governments can use incentives, extension services, credit policies, and market signals to encourage production systems that generate greater value from scarce water resources.

Ultimately, Pakistan needs a water-smart agricultural economy in which every decision, from crop selection to irrigation investment, is informed by the value of water. The objective is not simply to use less water, but to generate more food, income, employment, and resilience from every drop. This shift could strengthen farm profitability while protecting Pakistan’s most critical natural resource for future generations.

Conclusion

Pakistan’s water crisis is not simply a problem of scarcity; it is fundamentally a problem of low water productivity and inefficient resource management. Treating water as an almost free input has weakened incentives for conservation, encouraged excessive groundwater extraction, and obscured the opportunity costs of competing uses. The way forward is to shift from a “more water” mindset toward a “more value per drop” approach. This requires better measurement of water productivity, stronger incentives for efficient irrigation, improved groundwater governance, and agricultural policies that recognize the economic and environmental value of water. However, reform must remain equitable, ensuring that small farmers are supported rather than burdened by new regulations or costs. Ultimately, Pakistan must learn to value water not merely through its price, but through the food, income, employment, ecosystems, and livelihoods it sustains. Using every drop more wisely is no longer an option, it is an economic necessity for Pakistan’s food security, rural prosperity, and long-term resilience.

Please note that the views expressed in this article are of the author and do not necessarily reflect the views or policies of any organization.

The writer is a former Pakistan Ambassador and Permanent Representative to FAO, WFP and IFAD and can be reached at nriyaz60@gmail.com

Valuing Water for Food Security in Pakistan

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